Credit Card Holder

In May of 2009 the credit card holder’s bill of rights act was signed which completely changed what it means legally to be a credit card holder. While this might not be the most interesting topic in the world it is important for you to know your rights as a credit card holder. Many things changed with the passage of this bill:

1. The payoff order changed, when you send in a payment to your credit card company the company must apply the payment to the cards with the highest interest first. If you have multiple accounts and cards with a company this will pay off big time because every percentage point in APR matters over time because of compound interest. Before you would have to specify which account the money would go towards.

2. Monthly statements must now be mailed to you at least 21 days before a payment is due, before the passage of this bill the rule used to be 14 days, so you get an extra week to budget, prepare, and plan to pay off your credit card balance. This rule will help you out as much as any other new rules as long as you take advantage of it.

3. Promotional rates must be kept for at least six months. The introductory APR that many credit cards offer must be valid for at least half of a year which is great news for credit card holders. You can enjoy ultra-low or non-existent rates for at least half of a year when starting up with most credit cards.

4. Credit card companies cannot arbitrarily raise your rates at all during the first year you own a credit card. This is one of the most important changes; in the past credit card companies could raise your rates whenever they wanted to for whatever reason, that is no longer the case.

5. Certain fees are now not allowed. While credit cards will still have late payment fees and many cards will still have annual fees a few fees here and there have been banned, which is good news for credit card holders. Late payment fees cannot exceed the amount of the violation in question and credit card companies cannot charge you more than 25 dollars for your first violation.

6. The interest rate you pay on your credit card balance cannot be raised because you missed a payment to a different creditor. For example, you cannot be penalized via an increase in credit card APR if you miss a mortgage, auto, or loan payment of any kind. In the past credit card companies would use a missed payment to a different creditor as an excuse to raise their rates, that is no longer allowed. This is called the “universal default clause” and it is now banned!

Above is a sample of the changes made two years ago, meant to protect credit card holders. While it is still not a perfect world for credit card holders, legislation is being brought up to make owning a credit card a better experience overall.

Just because you are a customer of a company like Visa, Discover or MasterCard does not mean that they rule over you. The credit card company needs you more than you need the credit card company. You can live without credit cards, credit card companies cannot live without their customers. If you ever experience any injustice with your credit cards [Your APR rises unfairly, unfair fees, not being able to use your rewards points] do not be afraid to stick up for yourself. Give your credit card company a call, explain your case and demand that the situation gets fixed. You will be surprised at how far a simple phone call can get you.