Honorable Steve Kagen, M.D.

Wisconsin's former 8th District Representative

January 4, 2007 to December 22, 2010

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Consumer Alert: More Credit Card Protections Now Effective


August 23, 2010



Explanation of rate increases among new rules for credit card companies


APPLETON, WI – Today, Congressman Steve Kagen, M.D., highlighted additional protections that became effective yesterday as a result of the CARD Act.  The new rules protect credit card holders from unreasonable fees and require credit card companies to justify interest rate increases.

“We are once again leveling the playing field for consumers,” said Dr. Kagen.  “No longer will Big Banks be allowed profit by taking advantage of good people.”

“I’m proud to have fought hard for these protections that begin to give working families an even break.”

The new rules that went into effect on August 22, 2010 will fully put in place the "Credit Cardholder’s Bill of Rights.”  A listing of the protections that went into effect earlier this year can be found here.

As of August 22, 2010, credit card companies must adhere to the following rues:

Explanation of rate increases

  • If your credit card company increases your card’s Annual Percentage Rate ( APR), it must tell you why.

Re-evaluation of recent rate increases

  • In the past: Your credit card company can increase your card’s APR with no obligation to re-evaluate your rate increase.
  • Under the new rules: If your credit card company increases your APR, it must  re-evaluate that rate increase every six months. If appropriate, it must reduce your rate within 45 days after completing the evaluation.

Reasonable penalty fees

  • In the past: Your late payment fee may have been as high as $39, and you likely pay the same fee whether you are late with a $20 minimum payment or a $100 minimum payment.
  • Under the new rules: Your credit card company cannot charge you a fee of more than $25 unless:
    • One of your last six payments was late, in which case your fee may be up to $35; or
    • Your credit card company can show that the costs it incurs as a result of late payments justify a higher fee.

In addition, your credit card company cannot charge a late payment fee that is greater than your minimum payment. So, if your minimum payment is $20, your late payment fee can’t be more than $20. Similarly, if you exceed your credit limit by $5, you can’t be charged an over-the-limit fee of more than $5.

Additional fee protections

  • No inactivity fees. Your credit card company can’t charge you inactivity fees, such as fees for not using your card.
  • One-fee limit. Your credit card company can’t charge you more than one fee for a single event or transaction that violates your cardholder agreement. For example, you cannot be charged more than one fee for a single late payment.

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