New restrictions imposed on credit card providers.

The new credit card rules will come into effect on July 1, 2010. The new rules impose several restrictions for credit card providers. Thus, it can be said that these new rules will give birth to a new era of managing credit.
Go through the following lines to know about 10 new restrictions for credit card providers.
1. Abolition of double billing cycle: Instead of going back to the previous billing cycle, interest charges on outstanding card balances will have to be calculated on the basis of current cycle. This rule will stop issuers from calculating finance charges on previous billing cycles even if the consumers have paid the balance in full.
2. Limits on over-the-limit fees: Consumers need to opt for over-the-limit fees as otherwise card providers will have to reject transactions if consumers exceed credit limits; moreover, fees (for exceeding the limits) need to be reasonable.
3. More time for paying monthly dues: Credit card issuers should give a reasonable time to the consumers for making monthly payments. It means that the issuers need to mail the statements at least 21 days prior to the due date.
4. No more universal default: The new rules will end the practice of raising interest rates on customers based on the consumer’s payment records with other non-related credit card providers.
5. Limited hikes on interest rates: As per new rules, interest rate hikes on outstanding balances will only be allowed under limited conditions, such as, cardholder making late payment, end of promotional rate, etc. Interest rate on transactions can only increase after 1 year and the issuers will have to give 45 day notice period before implementing the changes.
6. Highest interest balance to be paid first: If consumers have multiple accounts with varied interest rates, then the excess payments (more than the minimum payable amount) need to be calculated on the highest interest rate.
7. Transparency in due dates and times: The new rules restrict credit card providers to set arbitrary deadlines for making the payments. Payments due on weekends and holidays will not subject to any late fees.
8. Restrictions for people under 21 years of age: The new rules have imposed restriction on the companies to issue credit cards to consumers, who are below 21 years of age. However, people below 21 can get credit card if a guardian co-signs.
9. Clearer credit terms: While marketing credit cards to cardholders, the card issuers should disclose the consequences of making only minimum monthly payments. The issuers should also provide information on minimum required time to clear the outstanding balance if consumers pay only the minimum monthly dues.
10. No extra charges for online payments: Credit card issuers cannot charge any extra fees if consumers pay their bills online or by telephone.
Therefore, it is clear that the new restrictions for credit card providers will be quite helpful for the consumers in United States of America. Credit cards will be more transparent and much easier to understand; however, experts are of the view that these new rules will make credit cards more costly for all consumers and quite inaccessible for low-income families.
Useful Sites:
Credit Cards Point – Everything your need to know about how to handle your credit cards.