Credit CARD Act of 2009 – what it means to you – Part 2 of 7 – Protections re: rate increases for future transactions

Under the Credit CARD Act of 2009, lenders are now a bit more limited in how they can go about raising your interest rate for future transactions. Mind you, they can still be raised, though:

-Notice – Lenders must give you a written notice before increasing the rate. The rate applies only to purchases made on and after fourteen days following the date that the notice is sent.

– One year (first year) ban – Lenders cannot raise interest rates even on existing purchases on the account nor future purchases and transactions on the account until after one year has passed on the account unless one of several exceptions applies. The exceptions are (a)variable rate cards (e.g. prime rate plus 7.0%); (b) teaser rate cards, but the rate cannot increase for the first six months, it should be noted and (c) if your minimum payment is more than sixty days late.

-Mandatory review and adjustment every six months – Commencing August 2010, a lender increasing a rate must review the account ever six months and should reduce the rate if things have changed such that a reduction might be appropriate. Note: This should give you the opportunity to argue with them if the interest rate is not decreased.

Special thanks to the National Consumer Law Center’s "Guide to Surviving Debt", 2010 edition, pages 74-81, available at for a mere $20.00 or so. I highly recommend it.

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