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Congressman Murphy Announces New Credit Card Rules Taking Effect Sunday

Press Release

Location: Hyde Park, NY

Today, Congressman Scott Murphy (NY-20) was at the Hyde Park Free Library to discuss new credit card rules to protect consumers that will take effect Sunday, August 22rd. Congressman Murphy helped pass the Credit Card Accountability Responsibility and Disclosure Act, or the Credit CARD Act, in the House in 2009, and has been a strong proponent of new credit card rules to protect consumers, especially seniors and young people, the most likely to be the victims of credit card abuse.

"I helped pass these new protections because we need to stop the credit card companies' predatory practices that have let them take advantage of people for years," said Rep. Murphy. "The rules going into effect Sunday take important steps to protect consumers from exorbitant fees, provide better explanations of rate increases, and allow for the automatic re-evaluation of changed APR rates. These reforms will help bring transparency and fairness to the credit card industry and will provide consumers with the information they need to make smart financial decisions."

While the majority of the provisions included in the Credit CARD Act went into effect by February 22nd of 2010, a number of additional provisions will go into effect on Sunday, August 22nd.

Murphy continued, "These new provisions will help protect young people and seniors, the two groups most often hit by their shadiest practices. This is a common sense solution to a problem that has touched the lives of millions of people across the country."


On May 22, 2009, President Obama signed The Credit Card Accountability Responsibility and Disclosure Act, legislation designed to protect consumers from unfair practices used by credit card companies. For example, the new rules prevent restrictions on unfair or unjustified rate increases, and ends "any time, any reason" interest rate increases as well as the practice known as "universal default." The CARD Act also restricts retroactive rate increases due to late payment and puts an end to double-cycle billing.

Below are the credit card reforms taking effect on Sunday, August 22nd, 2010:

Reasonable penalty fees

Today: Late payment fee may be as high as $39, and cardholders are likely to pay the same fee whether you are late with a $20 minimum payment or a $100 minimum payment.

Under the new rules: Credit card companies cannot charge cardholders a fee of more than $25 unless:

* One of a cardholder's last six payments was late, in which case the fee may be up to $35; or

* The credit card company can show that the costs it incurs as a result of late payments justify a higher fee.

In addition, credit card companies are no longer able to charge a late payment fee that is greater than one's minimum payment. So, if a minimum payment is $20, the late payment fee cannot be more than $20. Similarly, if a cardholder exceeds their credit limit by $5, they cannot be charged an over-the-limit fee of more than $5.

Additional fee protections

No inactivity fees. Credit card companies cannot charge inactivity fees, such as fees for not using your card.

One-fee limit. A credit card company cannot charge more than one fee for a single event or transaction that violates a cardholder agreement. For example, one cannot be charged more than one fee for a single late payment.

Explanation of rate increases

If a credit card company increases the card's Annual Percentage Rate (APR), it must tell the cardholder why.

Re-evaluation of recent rate increases

* Today: A credit card company can increase a card's APR with no obligation to re-evaluate rate increases.

* Under the new rules: If a credit card company increases an APR, it must re-evaluate that rate increase every six months. If appropriate, it must reduce the rate within 45 days after completing the evaluation.

* When they plan to increase your rate or other fees. Your credit card company must send you a notice 45 days before they can
o increase your interest rate;
o change certain fees (such as annual fees, cash advance fees, and late fees) that apply to your account; or
o make other significant changes to the terms of your card.

For more information go to:

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