More on the Credit Card Act of 2009
I thought I would put up another post dealing with some aspects of the Act that I left out of the first post.
The bill outlaws double-cycle billing to determine average daily balance. Most companies figure your average daily balance for the month by adding up your balance each day and dividing it by the number of days in the billing cycle. Then they multiply that by the daily interest rate. But some companies actually go back two months to figure the average daily balance for a billing cycle. So if you pay off a huge chunk of your balance one month, it will still be used for interest calculations the next month.
Due dates will be required to be on the same day each month now. I'm a big fan of this one because I have been tripped up a time or two by one of my cards who keeps changing the date. For like two years it was always due on the 1st. Then out of the blue they started varying it by several days. The thing is, the new date would be good for a couple of months so I would get used to it, and then they would move it up by another two days. It got me once, and by sheer luck I noticed it another day. Clearly a ploy to increase late fee collection.
Mailed payments are now required to be counted up until 5 pm on the day they are received. Some companies would stipulate that only mail received before 10 or 11 am would be counted that day, even when they knew their mail arrived in the afternoon.
Interest rate increases would not be retroactive, unless you were more than 60 days late with a payment. Currently, interest rate increases are allowed to be applied to the entire balance, which was incurred at a lower rate, and not just to future charges.
Penalty interest rate increases will require a 45 day advance notice, so you could theoretically have time to pay off or move the balance. Currently the notice is 15 days, and in many cases it seems to be ignored.
There are a whole slew (well maybe not a slew) of provisions requiring the credit card companies to disclose things about minimum payment, payback times, and cost of credit, which I will detail in my next post because I think they are a fantastic addition to credit card statements and will help educate people about the real cost of using credit cards.