A few years ago, it was indeed a serious offense to forget making your credit card payments on time. The impact it had on your credit report for tremendous and it could take a long time for any person to erase that mark off their credit history.
The good news is that in present times, not making one payment on time is not treated with such severity. With the new rules of the CARD Act 2009 coming into effect from this month onwards, consumers need not lose sleep over defaulting on one payment. The new regulations of the CARD Act clearly specify that the banks are not supposed to increase the APR on the card if the customer defaults just once. The amount to be collected as late fees is also capped now, thus curbing the banks` profits further. In order to ensure you don`t fall prey to the older rules, it is imperative that you know the new ones that have been enforced and how they can protect you.
One of the notable facets of the CARD Act is the curb on the late fees. Now, banks cannot charge in excess of $25 as late fees. Also, the amount being charged as late fees by the bank should not exceed the total amount to be paid to the bank. For example, if you have to pay $15 to the bank, then the late fees being levied on your account should not be in excess of $15. This is a really big change considering that the previous median payment for late fees stood at $39. However, in exceptional cases, if the banks feel the need to levy more than the stipulated amount, they have to clearly outline the reasons for the same before collecting the money from the consumer.
Credit card lenders now cannot increase the interest rate on the card without given the consumers an advance notice. The lenders have to notify the consumers at least 45 days in advance and wait for their response. The customer now has the right to deny the rate change and opt for closure of the card and clear the pending balance on the card over a period of five years.
Another rule that works in the favor of the consumer is that the banks have to review each customer account every six months. If the customer has been making payments on time, then, the bank has to restore the original rate to the consumer.