The new bill calls for credit card companies allowing consumers more time to pay their balance and “clearer due dates and times.” Payments would be due at least 21 days after the notice is mailed. This would prevent random changes in the due date of payments and the resulting late fees. Time deadlines, such as before 5pm, would also be illegal.
Cut-off times set before 5 p.m. on the payment due dates would be illegal under the new law. Payments due at those times or on weekends, holidays or when the card issuer is closed for business will not be subject to late fees.
Hikes in interest rates would also be limited. Interest rates on a transaction could only increase after the first year and drastic changes cannot be made sooner than 45 days after the consumer was informed. “Universal default” would also be done away with, meaning that interest rates would no longer be affected by the consumer’s payment history with any other institution.
The credit card company must tell the consumer about the implications of only paying the minimum balance each month, as well as tell the consumer how much to pay monthly if they want their debt off in a specific amount of time. The consumer would have the option to eliminate over-limit fees. One option is to have their card rejected if a transaction would exceed the limit and thus avoid late fees. Double cycle billing is also done away with.
Upfront fees for subprime credit cards would also not be allowed to exceed 25% of the first year’s credit limit.
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