ALBANY -- New federal rules designed to offer more protections to credit card users are in effect starting today.
Among the new protections, credit card issuers will be barred in most cases from charging a penalty fee of more than $25, unless you’ve been late on one of your last six previous payments, in which case it can increase the fee to $35. The company can’t charge you a late payment fee that’s more than the minimum payment you owe. So if your minimum payment is only $10 this month, $10 is all the company can charge you as a late fee.
So-called "inactivity" fees based on the consumer's failure to use an account to make new purchases also will be banned. They also prohibit credit card companies from charging you more than one fee for a single event or transaction that violates your cardholder agreement.
“If you pay your bills on time, you probably don’t worry about late fees but so many of us miss those deadlines,” said David Polino, Better Business Bureau President. “Many households are still struggling to make ends meet. Granted there’s a lot of good news from the new credit card act, but if you miss a payment or go over your credit limit, you’ll still get hit with extra fees. They may be more reasonable fees however it’s still more cash out of your pocket so the best policy may be to pay on time.”
The State Consumer Protection Board is advising consumers to check their billing statements carefully for the application of penalty fees and to ask questions of credit card issuers if they think they see improper or excessive fees.
Earlier this week, a new law went into effect banning banks from automatically signing up customers for overdraft protection on their debit accounts, and subsequently charging fees for the use of it.
Rules that previously took effect in February required credit card companies to give you 45 days notice for interest rate changes and gave you the ability to opt out of changes and pay off your balance over five years. The rules also put restrictions on credit cards for persons under 21 years’ old and required companies to eliminate double billing cycles.
Details of the new credit card rules are posted on the Federal Reserve's website.
Information from the Associated Press and Better Business Bureau was used in this report.
