The Obama Government, on August 22, 2010 has introduced the third phase of the new Credit Card Act known as the Credit Card Accountability, Responsibility and Disclosure (CARD) Act. The purpose of this Act is to safeguard the credit card holders from unfair rate hikes and hidden fees.

Key changes and provisions in the new CARD Act

Certain provisions of the Act have taken effect from Monday, August 23, 2010. These provisions are expected to provide extensive protection to credit card holders and put more restrictions on credit card companies. The following are main provisions in the new act.

• The credit card companies will not be able to charge inactivity fees from the consumers, such as fees for not using the card.
• The Act requires the credit card companies to charge you a late payment fees not higher than the consumers’ minimum payments. As for example, if a consumer has a minimum payment of $15, his late payment fee would not be higher than $15.
• The new Act prohibits credit card companies from charging more than a single fee for a single transaction made by the card holder. So, if you have a single late payment, you will be charged only one fee.
• Under this new Act, the credit card companies should give proper explanations to the consumers for increasing the Annual Percentage Rate (APR) on their cards. It will prevent credit companies from misleading consumers and charging them more.
• The new Credit Card Act also requires the credit card companies to re-evaluate their Annual Percentage Rate increase, if they do so, every 6 months. If feasible, the companies must reduce the APR within 45 days from the date of the evaluation.

The new CARD Act has certainly brought the provisions which will help consumers to have a clear idea about how much the credit cards can actually cost them. It will, hopefully help to lower the huge load of credit card debts incurred due to misleading and illegal practices of credit card companies.