With more than a little fanfare, the rest of the federal Credit Card Holders Bill of Rights took effect last week. With a lot less fanfare, one state agency that watches out for consumers’ credit matters invited its customers to weigh in on their concerns.
The legislation was designed to reform the way credit card issuers do business. Congress had been getting lots of complaints about retroactive rate hikes, bait-and-switch promotions and all manner of practices that prompted some former lovers of credit to set fire to their cards.
Several parts of the reform measure took effect last year. Most major credit card companies used the period from then until the rest of the changes became law to do three things: get into compliance, juggle rates while they still could, and figure out new ways to attract customers to credit buying.
As Maine’s Bureau of Financial Institutions noted in a news release, the new rules take aim at the ways companies set and change interest rates. The bureau cited six major changes:
— Issuers may not raise interest rates sooner than 12 months after a customer opens a card. If a rate increase was announced in the agreement, it may take effect — so read anything you sign carefully.
— Promotional rates must last at least six months. Customers must be told before signing what the rate will be once the promo period is over.
— Increases may not affect pre-existing balances. If an issuer raises rates, the higher rate can apply only to new purchases, not those previously charged. If a card holder gets more than 60 days behind on payments, this provision won’t apply.
— Customers must have 45 days’ notice of rate hikes; the old requirement was 15 days. And customers must have the right to opt out if they don’t like the new rate.
— Card issuers must review their increases. If customers are doing better in paying off their debts, those reviews should note that fact and rates should be lowered to reflect debtors’ improvements.
— Credit cards may not be issued to customers under 21 years of age unless there’s a co-signer over age 21. If there’s no co-signer, the applicant must demonstrate the ability to make payments as required.
Lloyd LaFountain III, superintendent of the Bureau of Financial Institutions, said the new regulations will make it harder for credit card companies to charge “over the limit” fees (unless cardholders sign up for them in advance). The new rules should also bar companies from charging for payments made over the phone or online.
“As always, the bureau’s message to consumers is to read credit card agreements, to understand the terms, and to contact us any time questions or concerns arise,” LaFountain said. You may call the bureau toll-free at 800-965-5235 or visit www.maine.gov/pfr.
Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s membership-funded, nonprofit consumer organization. Individual and business memberships are available at modest rates. For assistance with consumer-related issues, including consumer fraud and identity theft, or for information, write Consumer Forum, P.O. Box 486, Brewer 04412 or go to http://necontact.wordpress.com.