What the New Credit Card Bill Means for You

Limited Retroactive Rate Increases: This legislation would also prohibit companies from applying rate increases retroactively unless you’re at least 60 days behind on your payments.

Appreciation for Good Behavior: If your credit card interest rate is increased due to a delinquency or default, but you pay your bills on time for six months, your previous lower rate must be restored.

Elimination of Universal Default: Currently, some credit cards may raise your interest rate to their default interest rate if you’re delinquent or you default on a card issued by another company. Legislators are proposing a ban on this practice.

Elimination of Double-Cycle Billing: Currently, you’re spared finance charges when you pay your balance in full, but when you go from paying your balance in full to carrying a balance, your previous month’s balance is used in calculating your finance charges, even though that amount was paid off. This is a policy known as double-cycle billing. According to the American Bankers Association (which opposes the legislation), many credit card companies have eliminated this practice because it’s a turnoff for consumers, but pending rules would make sure no credit card companies use this practice.

Protection for Cardholders Under 21: Pending legislation would require prospective cardholders under 21 to show proof they can pay off their credit card debt or require a parent or guardian to co-sign and promise to pay off the debt if their child defaults.

Retained Gift Card Validity: Credit card-branded gift cards would be required to remain valid for at least five years. All information about dormancy fees (money charged against a gift card when it goes unused for a period of time) must be printed on the gift card itself.