2009 Credit Card Study
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New credit card law will impact terms

So statements must disclose the late fee, payment deadline and any rate increase that will apply as a result of a late payment.

Payments made at local branches will count as payments made on that day.

Over-the-limit fee: Like late fees, overlimit charges must be reasonable to the offense. The law cracks down even further on overlimit fees and caps them at one per billing cycle.

Consumers will no longer be surprised by overlimit fees. The law mandates that issuers cannot charge consumers overlimit fees unless the cardholder has elected to let the issuer approve overlimit transactions. People without fixed limits can only be charged an overlimit fee if a transaction, not a fee or finance charge, pushes the cardholder over the limit. Cardholders can later cancel their election.

Arnold isn't impressed by the notion of hard credit limits. He says he's enjoyed fixed limits on his cards for years -- by calling his issuers and asking them not to approve any transactions over the credit line. "Most of your issuers are going to honor that these days," he says.

Balance transfers: The law doesn't cap balance transfer rates or fees.

Promotional rates have to last for six months, and no APRs can increase the first year after account opening, unless one of the four exceptions for rate increases applies. Variable rates, for example, may change with index movement even inside of the promotional rate.

Arnold predicts that a year from now consumers will have a tough time finding a decent balance transfer offer. Zero percent balance transfer offers, with no transfer fee and a zero percent interest rate for six months or more, are going to cease to exist, he says.

Cash advance: The law doesn't cap cash advance rates or fees.

Payment-related fees: Fees charged for processing payments over the phone, Internet, mail, electronic transfer or any other means will be banned under the new law except for "expedited service by a service representative of the creditor." So you may still have to spend a few bucks to pay the bill through a live human being.

Other fees: The law does limit the fees charged on subprime cards. Issuers of these cards can't use up more than 25 percent of the credit limit with nonpenalty fees during the first year after the account opening.

Other than that restriction, the Credit CARD Act doesn't crack down on miscellaneous fees, leaving plenty of room for issuer creativity. "I have a feeling that they will find loopholes or they'll find ways to impose fees," says John Pachkowski, a senior banking analyst at CCH Inc. based in the outskirts of Philadelphia. "Just as long as they disclose them, they can add on something."

Depending on whom you ask, annual fees are one such charge that consumers could see tacked onto their accounts.

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Annual fees are already popping up on credit card offers. Solicitations for cards with annual fees increased in volume to 27 percent during the first quarter of 2009, up 9 percent from last year, according to Mail Monitor, the direct-mail offer tracking service from global market research firm Synovate.

Arnold contends that annual fees could show up on some rewards cards and other cards with low interest rates, but other rewards cards and most "plain Jane" credit cards will remain without annual fees. "I don't expect mass annual fees to crop up overnight at all, nor in the next six months," he says.

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Product Rate Change Last week
Balance Transfer Cards 15.76% --0.00 15.76%
Cash Back Cards 16.44% --0.00 16.44%
Low Interest Cards 11.04% --0.00 11.04%
 
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