New Federal Laws Protect Consumers from High Credit Card Fees

New Federal Laws Protect Consumers from High Credit Card Fees

New Federal Laws Protect Consumers from High Credit Card Fees

The Credit Card Accountability Responsibility and Disclosure Act is now in full effect, after being signed into law over 15 months ago. The last and most recent part of the act to go into effect focuses on penalty fees charged by credit card companies. A $25 cap has been placed on late fees that apply to most cards, lowering them from the usual $39. The company is also prohibited from charging a late fee that is more than the missed payment amount. Repeat offenders who miss more than one payment deadline within six months can be charged up to $35 per offense.

Fees for not using a credit card regularly are also illegal now. Consumers have been given the right to opt out of the ability to spend over their approved credit limit, which has generated a lot of income for credit card companies in penalty fees. Interest rate changes require a valid reason and a 45 day notice to all credit holders. These changes have all been designed to protect consumers from unfair credit practices and to help them understand how the credit system works. Merchants also get a break from the high cost of accepting credit cards, with some parts of the act limiting the amount a company can charge for providing the payment acceptance service to stores.

These changes could cost credit card companies over $3 billion dollars in lost revenue, so many experts warn the public to watch out for changes in annual fees and the cost of balance transfers or cash advances. While consumers may have some added protection against high late fee charges and unwarranted interest rate hikes, that doesn’t mean that they won’t end up paying just as much in other fees.