Credit Card Act of 2009 & You

1. Credit Card Act of 2009 & You Everyone will need to rebuild their credit score

2. Important Credit Score Issues • Credit History • Percentage of Credit Used • Payment History • New Request For Credit

3. Consumer Rights Before 2010 • Dispute the Purchase • No Liability for Fraudulent Purchasers • Control over Payment Options I am writing to dispute a billing error in the amount of $______on my account. The amount is inaccurate because the merchandise I ordered was not delivered. I ordered the merchandise on (date) . The merchant promised to deliver the merchandise to me on (date), and the merchandise was not delivered.

4. Abuses That Led to 2009 Credit Card Act • Universal Default • Changes in Billing Cycles • No Changes without Adequate Notice • Interest rates • Fees • Cash transfer charges

5. Three Major Dates • August 2009 • February 2010 • July 2010

6. August 2009 • Credit Card Companies must provide written notice to consumers 45 days before: • Increase in Annual Percentage Rate • Change of terms on the account • Change benefits or “Rewards” structure

7. August 2009 • The same notice must inform the consumer of their right to cancel the card account BEFORE the new interest rate goes into effect. • All open ended consumer credit accounts must mail or deliver periodic statements 21 days before payment is due.

8. February 2010 • Retroactive interest rate increases are banned unless the cardholder is more than 60 days late. • Payments exceeding the minimum payment are to be applied to the balance with the highest rate or pro rata among all balances • If your interest rate has been increased your account must be reviewed after 6 months • If you have paid on time the interest is returned to the previous rate

9. Feb 2010 Continued • Interest rates cannot be increased during the first 12 months. • Teaser or promotional rates must last 6 months • The issuer must tell you all interest rates that will be applied to the account at the time it is opened • The initial rate may expire. You must be told the final rate and if that rate is a variable rate

10. February 2010 Continued • After the first year the bank can increase the interest rate for new transactions after giving 45 days notice • The bank may increase the rate if a minimum payment is received more than 30 days late • No universal default or double cycle billing • No “over credit limit” fees unless specifically allowed by the consumers

11. 2010 Feb One more time • Bill to be sent at least 21 days before due • Payments received by 5 P.M. credited same day • Enhanced consumer disclosure • How long to pay if only the minimum is paid • Total cost if only minimum is paid • Clear late payment date and time

12. Subprime Credit Cards • It is subprime if • Upfront fees must be paid • Tied to savings or checking • Credit Limit fluctuates with the balance of the linked account • Has a very high interest rate Rules for subprime credit cards must be disclosed

13. Protection of Young Consumers • Credit Cards cannot be issued to someone under 21 years of age without a co-signer and/ proof of income • Under 21 years of age a co-signers permission needed to raise limit • No pre-screened credit card offers unless they opt-in

14. July 2010 • New format for the summary table • Creditors must disclose the duration that penalty fees may be in effect • Simplified disclosures on costs, variable rates and grace periods • Revisions to periodic statement format • Must disclose “Effective Annual Percentage Rate”

15. So What • Changes in Rules = Actions by Creditors • Actions by Creditors = Changes to Consumer’s Credit • Changes to Consumer’s Credit = Change in Credit Score • Changes in Rules = Change in Credit Score • Project that Credit Scores will decline • Cost of Credit goes up

16. What’s a Consumer to Do • Pull free credit report • Verify status of all accounts • Dispute all mistakes • Make sure debt equals less than 25 to 30% of amount of credit available to you • Try to keep oldest and best accounts open • Begin a rebuild immediately • New turn around time is 2 years

17. Gift Cards • Gift cards must be active for at least 5 years • Fees must be disclosed to buyers • No dormancy or inactivity fees unless the card has been inactive for a 12 month period • Cards that expire after 5 years the terms must be clearly disclosed

18. Websites • WWW.fdic.gov • WWW.whitehouse.gov • WWW.DSEF.org • www.bankrate.com/calculators/credit-score-fico-calculator.aspx

19. Book by Maryland Money Team sbhmarylandmoneyteam@gmail.com