New Credit Card Protections Taking Effect

Phases of federal legislation known as the CARD Act (Credit Card Accountability, Responsibility and Disclosure), signed by President Barack Obama in May, take effect Aug. 20 that change rules related to notification to consumers.

Credit card issuers must give card holders 45 days notice, up from 15, before any increases to interest rates, fees or finance charges; and before any other significant changes to an account. The present requirement is 15 days.

If you get such a notice, you may shop around for better rates or, under the CARD Act, you are allowed to reject the rate increase by closing down the credit card account. A caveat is that you would have to pay off the balance within five years at your existing interest rate.

There is another consumer benefit kicking in.

Card holders must receive their monthly billing statements 21 days before the due date in order for credit card companies to charge a late fee, rather than the current leeway of only 14 days.

“The new rules of the road established by the Credit CARD Act will shield credit cardholders from widespread abusive practices. New protections will give American families more time to pay their credit card bills every month, and time to shop around for a better deal if their rate is being raised,” U.S. Senate Banking Committee Chairman Christopher Dodd, D-Conn., said in a statement.

Dodd introduced the legislation to Congress.

Credit card companies, however, have been trying to offset likely drops in revenue that would result from the CARD Act provisions by eliminating fixed rates and implementing variable interest rates only; introducing annual fees on cards that did not charge them; and raising other charges such as balance-transfer fees, said Bill Hardekopf, chief executive officer of Lowcards.com and author of the Credit Card Guidebook.

Lowcards.com is a Web site that allows consumers to compare terms and rewards offered by various credit card companies and to keep up to date on credit card industry news.

Hardekopf hosted a live chat with the New Haven Register on Aug. 12 about the legislation and how credit card industry changes affect consumers.

Dodd said the first set of provisions are "important first steps" for American consumers. “Unfortunately, some credit card companies are trying to squeeze their customers before the clock runs out on ‘any time, any reason’ rate increases. These companies will be held accountable for rate hikes when the full Credit CARD Act takes effect.”

The CARD Act will go into effect fully in February 2010.

Dodd has asked Federal Reserve Chairman Ben Bernanke to enforce a provision that requires credit card companies to review accounts every six months if they raised the interest rate. If the credit card holder has improved his or her credit standing and the circumstances causing the increase no longer exist, then companies must reduce the rate.

Click here for a summary of the CARD Act.

Ten Tips for Renters

Leases are rental agreements that outline the rights and responsibilities of both the property owner and the tenant. A lease can cover an apartment or a house.

If you are searching for a rental unit, be sure to read the lease carefully and ask questions about any clauses that you do not understand.

Make sure the landlord gives you a signed copy for your records and store it someplace you will remember, that way you can refer to it whenever necessary.

There are both federal and state laws that protect tenants’ interests. The use of security deposits is regulated at the state level. Here in Connecticut, landlords can not require a security deposit any greater than two months’ rent, which can be in addition to rent for the month of move in.

When it comes to tenants age 62 or older, landlords may not demand more than one months’ rent, which can be in addition to rent for the month of move in, under Connecticut law.

Connecticut landlord/tenant law can be found on the Judicial Branch's Web site.

For a state-by-state directory of landlord/tenant law visit the U.S. Department of Housing and Urban Development (HUD).

Here are 10 Tips for Renters, courtesy of the Federal Citizen Information Center:

1. Be prepared to provide a prospective landlord with written references from previous landlords, employers, friends and colleagues; and have a current copy of your credit report with you.

2. Carefully review all the important conditions of the tenancy before you sign a lease.

3. To avoid disputes or misunderstandings with the landlord, get terms and conditions in writing.

4. Ask about your privacy rights before you sign the lease.

5. Know your rights to live in a habitable rental unit – and don’t give them up.

6. Keep communication open with your landlord.

7. Purchase renters’ insurance to cover your valuables.

8. Make sure the security deposit refund procedures are spelled out in your lease or rental agreement.

9. Learn whether your building and neighborhood are safe and what you can expect your landlord to do about it if they aren't.

10. Know when to fight an eviction notice and know when to move. Unless you have the law and provable facts on your side, fighting an eviction notice is usually shortsighted.

Live Chat Transcript: Your Money, Your Credit Cards

I was joined by Bill Hardekopf, chief executive officer of Lowcards.com, for a live, online chat about new regulations affecting credit card use. Here is a copy of the chat from earlier today.