Credit Card Base

New credit card late fee laws went into effect this past week that significantly lowers how much you will have to pay. The Federal Reserve has issued its final ruling, placing a cap on the maximum amount a late fee can cost:

• For the first late payment the fee is capped at $25
• If there is more than one late payment in a 6-month period, the fee rises to $35 for every offense after the first
• The late fee can’t exceed the amount that is owed. For example, if the minimum payment due is $15, then the late fee can’t be more than $15.

The above rules also apply to fees for exceeding your credit limit. However on that note, for months now all credit card holders in the U.S. have a right to opt-out of the ability to spend past their credit limit (and therefore, making it impossible to go over the limit).

• Inactivity fees are not allowed. However credit cards can still have policies where an annual fee is levied if certain criteria isn’t met (i.e. having no account activity for more than 12 months).
• If a credit card raises your interest rate (i.e. for repeated late payments) they now must review that decision again after 6 months. That being said, there is no requirement for it to actually be lowered at that time.
• Multiple fees can no longer be given for a single violation. For example, a returned payment and late payment fee cannot both be given.

These laws go into effect on August 22, 2010.

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