 Health & Nutrition
Potty Pointers
Credit Card Changes
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Audio/Video Script:
Laura Connerly
Financial Management
[Title Slide – Credit Card Changes;
Laura Connerly – Financial Management, U of A Division of Agriculture. Picture of
someone holding a credit card.]
[Laura Connerly] New credit card rules go into effect February 22, 2010. Now this is part of
the credit card reforms that were enacted into legislation back in May of 2009.
And a few things went into effect in August of 2009, and there are a few more
remaining to go into effect in August of 2010. But the bulk of the important
parts of this legislation will begin on February 22nd, so I’m going to tell you
some of the things that consumers really need to know.
[Slide - picture showing folders labeled by months] There are new credit card rules about how and when a company can change your
interest rate. Introductory rates have to last for at least six months. For new
accounts, regular rates cannot be increased for at least 12 months, that is
unless you default on your payment agreement – if you’re, for example, more than
60 days late in making a regular, minimum monthly payment. The credit card
company must notify you at least 45 days in advance of any increases to your
interest rate or fees. When rates do increase, they can only be applied to your
new purchases. [Slide - picture showing a woman holding a credit card working on
a computer. New Credit Card Rules - Interest Rate ; 1. Introductory rates must
last for 6 months; 2. New account rates cannot increase within 12 months; 3.
Must notify of rate or fee increase 45 days prior; 4. Rate increases only apply
to new purchases.]
There are also some changes to the new limits to fees. Annual fees and/or
application fees are limited to 25 percent or less of your beginning credit
limit. Over-the-limit fees can’t even be charged unless you choose to allow
over-the-limit purchases. Otherwise, if you’re at your credit limit, the
purchase won’t be permitted. If you do choose to allow over-the-limit purchases,
the company can charge you only one over-the-limit fee per billing cycle. [Slide
- picture showing a family at a restaurant. New Credit Card Rules - Fees ; 1.
Fees are limited to 25% of the beginning credit limit; 2. Over-the-limit fess
charged only if allowed. 3. Only one over-the-limit fee per billing cycle.]
You should also look for changes in your bill and in your statement. The
credit card company must deliver your bill at least 21 days before the payment
is due and the due date should be the same every month. The new statements
should include information about paying off your balance. The statement will
reveal how long it will take to pay off the balance if you make only the minimum
payment and how much you would need to pay in order to pay off your balance in
three years. Consumers typically see a considerable savings in interest paid
when they pay off credit balances sooner rather than later. [Slide - picture
showing a check book, bills, and a calculator. New Credit Card Rules -
Statements; 1. Bill must be delivered 21 days before payment due; 2. Must
include balance pay-off information; 3. Must include 3-year balance payoff
information.]
New protections will be put in place for young adults. Consumers under age 21
who want a credit card will need proof of their ability to pay or they will need
a co-signer. Also, co-signers will have to agree to any limit increases. [Slide
- picture showing a young girl on the phone making a purchase with a credit
card. New Credit Card Rules - Young Adults; 1. Under age 21 must provide proof
of ability to pay; 2. Co-signers must agree in limit increases.]
Finally, two-cycle billing will no longer be permitted. In the two-cycle
billing method of calculating charges, the finance charge is based on the
average daily balance of the last TWO billing cycles (the current one and the
previous one). Consumers who carried a credit card balance ended up paying more
interest under the two-cycle billing method than they do under the average daily
balance method. The new credit card rules will eliminate two-cycle billing.
[Slide - picture of credit cards. New Credit Card Rules - Two-Cycle Billing; 1.
Charges based on A D B (average daily balance) of last two billing cycles; 2.
Two-cycle customers paid more interest on balance; 3. Two-cycle method
eliminated.]
[Slide - Screen shot of Federal Reserve web site page What You Need to Know:
New Credit Card Rules.] More details about the rules are available in an online publication from the
Federal Reserve: "What You Need to Know: New Credit Card Rules."
[Laura Connerly] You can learn more about personal finance and credit management at your local
office of the Cooperative Extension Service or by visiting our website at
www.arfamilies.org.
[Narrator] To learn more, contact your county extension agent and follow
the links in this section. [U of A University of Arkansas Division of
Agriculture]
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