Credit card companies have been prohibited from charging their customers inactivity fees under the latest set of protections that went into effect from the Credit Card Act.
The new rules, which took effect Sunday, also cap late payment fees at $25 for most credit card customers unless one of their last six payments was late, in which case the late payment fee may go up to $35, or the credit card company can show that the costs it incurs as a result of the late payments justify a higher fee.
In addition, a credit card company cannot charge a late payment fee that is greater than the customers minimum payment. In addition, if a customer exceeds their credit limit by $5, they can't be charged an over-the-limit fee of more than $5.
The new rules also impose a one-fee limit, according to the Federal Reserve. A credit card company can't charge a customer more than one fee for a single event or transaction that violates the cardholder agreement. For example, a customer cannot be charged more than one fee for a single late payment.
In addition, if the credit card company increases the annual percentage rate on a customers card, it must explain the reason. In addition, the credit card company must re-evaluate the rate increase every six months, and if appropriate, it must reduce the customers rate within 45 days after completing the evaluation.
This set of rules is the latest in a series of regulations that implement the Credit Card Accountability, Responsibility, and Disclosure Act, also known as the Credit Card Act. For information on protections under the Federal Reserve's other credit card rules, read What You Need to Know: New Credit Card Rules Effective Feb. 22.
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