New credit rules could make for a happier 2010 for consumers

By Michelle Singletary
Thursday, December 31, 2009; A11

I'm happy to see the end of 2009.

It was a tough year of painfully high unemployment and rising foreclosures and debt levels. It was hard to see so many people I care about lose so much.

But I'm excited about what 2010 will bring. Already things are turning around. We are not clear of the burdens of the recession, but we are getting closer.

I especially love that in 2010, consumers will see a lot of changes in how they are treated by their lenders. And I'm hoping that next year, people will have an easier time accessing their free credit reports.

I'd like to think of 2010 as the Year of Consumer Power.

Do you know what your new powers will be? If not, here's a roundup of some key rule changes that you need to keep an eye on in 2010:

-- Credit cards. This is the biggie. The Credit Card Accountability, Responsibility and Disclosure Act of 2009 (also known as the Credit CARD Act) established sweeping changes intended to help prevent crazy credit card fees and hefty interest rate increases. Companies will be required to make more disclosures and they face new limits on certain credit card practices.

Regulations relating to interest rate increases, over-the-limit transactions, and the marketing of credit cards to college students become effective Feb. 22. For example, credit card issuers will not be able to increase interest rates on existing balances unless a cardholder is at least 60 days late paying the bill. Credit card issuers can't impose over-the-limit fees unless a consumer has given the company permission to accept transactions that go over his or her credit limit.

In other changes starting in February, if your credit card due date falls on a weekend or holiday, issuers can't penalize you for being late if the payment comes in the next business day. Additionally, payments received by 5 p.m. must be credited the same day.

By July, if your interest rate was increased because you were 60 days late on a credit card payment, your issuer will have to revert back to the original rate if you've had six months of on-time payments.

The same law that expanded the protections on credit cards also included changes for gift cards. In July, new rules will limit fees on gift cards and stored value cards. The remaining provisions of the Credit CARD Act become law on Aug. 22. For instance, the Federal Deposit Insurance Corp. says at least every six months, card issuers must review interest rate increases dating back to Jan. 1, 2009.

If you want more information on the provisions that will go into effect, go to In the search field, type in "New credit card provisions."

-- Credit reports. Every person is entitled to a free credit report every 12 months from each of the three nationwide consumer-reporting agencies -- Equifax, Experian and TransUnion. By Feb. 22, the Federal Trade Commission has to come up with changes to the rule governing this access to prevent deceptive marketing of the credit reports.

The FTC has one proposal that would prohibit the credit bureaus from offering any product or service until after consumers get their free reports. The law currently permits the credit reporting agencies to advertise their proprietary products and services through the centralized source, in this case

It would be great if the FTC could prevent the marketing of any products by the credit bureaus before, during and even after the process of getting a free credit report. By the way, the FTC is lowering from $11 to $10.50 the maximum amount that consumer reporting agencies are allowed to charge consumers for an extra copy of their credit reports.

-- Overdraft protection. For some, what's called overdraft protection has turned into a financial nightmare. By next summer, financial institutions will be prohibited from charging customers overdraft fees on ATM and debit card transactions unless consumers have given their informed consent to use overdraft services. Institutions have a mandatory compliance date of July 1.

As part of the rule change, existing and new account holders will be sent a notice telling them that if they want overdraft protection for ATM and one-time debit-card transactions, they have to opt in. The notice has to explain the financial institution's overdraft services, including the fees associated with the service, and the consumer's choices. The institutions are required to provide written confirmation of your opt-in choice.

Here's wishing that 2010 will be the beginning of pro-consumer rules that will keep many people from financial hardship in coming years.

Readers can write to Michelle Singletary c/o The Washington Post, 1150 15th St., N.W., Washington, D.C. 20071. Her e-mail address is Comments and questions are welcome, but due to the volume of mail, personal responses may not be possible. Please also note comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.

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