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Credit Card Penalties

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A series of new credit card regulations becomes effective on August 22, 2010.  This post briefly explains how those new regulations affect some of the fees that your credit card company can charge you for certain penalties.

Currently, your credit card company can charge you a late fee as high as $39, regardless of whether you are late with a $20 minimum payment or a $100 minimum payment.  Under the new rules, your late payment fee is generally limited to $25.  However, if one of your last six payments was also late, they can increase it to $35.  Also, if their actual costs incurred as a result of your late payment were more, they can increase their fee; however, I have a hard time envisioning any circumstances that a late payment by any typical consumer to a multi-billion dollar credit card company would justify a higher late fee.

Also, your credit card company will not be able to charge you a late fee that is higher than your minimum payment.  For example, if your minimum payment is $10, then they cannot charge you more than $10 as a late fee.

Similarly, they cannot charge you an over-limit fee that is more than the amount by which you went over the limit.  This way, if you go over your credit limit by $5, the most you can be charged for your over-limit fee is $5.

As a result of the new rules, your credit card company cannot charge you more than one fee for a single event that triggers penalties under your cardholder agreement.  So, if you make a late payment, then cannot charge you multiple fees for violating multiple provisions of your agreement.

Some additional regulations that are effective August 22, 2010 include:

  • They cannot charge you any fees for not using your credit card
  • They must explain the reason for any increases to your card’s annual percentage rate
  • If they increase your annual percentage rate, they must re-evaluate the increase every six months and, if appropriate, lower that rate

Although these rules seem to be common-sense, they weren’t there to protect you in the past.