Changes due to CARD Act

Impact upon UCFFCU Cardholders

Limited interest rate hikes: Interest rate hikes on existing balances would be allowed only under limited conditions, such as when a promotional rate ends, there is a variable rate or if the cardholder is 60 days late in making his payment. In the case of a new card holder, the issuer cannot raise the card’s interest rate for 12 months regardless of the customer’s payment record .Universal default, the practice of raising interest rates on cardholders based on their payment records with other unrelated credit issuers (such as utility companies and other creditors), will end. This practice is known as “re-pricing for risk”.

None – UCFFCU only offers fixed rate cards, and does not “re-price for risk”.

Highest interest balances paid first: When consumers have accounts that carry different interest rates for different types of purchases (i.e., cash advances, regular purchases, balance transfers or ATM withdrawals), payments in excess of the minimum amount due must go to balances with higher interest rates first. Current industry practice is to apply all amounts over the minimum monthly payments to the lowest-interest balances first -- thus extending the time it takes to pay off higher-interest rate balances.

None – UCFFCU only offers one interest rate for all types of purchases.

More time to pay monthly bills: Credit card issuers would have to give card account holders "a reasonable amount of time" to make payments on monthly bills. That means payments would be due at least 21 days after they are mailed or delivered. Consumers have complained about due dates that change without notice or are moved up, giving them less time to pay their bills and increasing the likelihood of late fees.

None– UCFFCU offers all cardholders a minimum of 25 days before payment is due.

Clearer due dates and times: Credit card issuers would no longer be able to set early morning or other arbitrary deadlines for payments. Cut-off times set before 5 p.m. on the payment due dates would be illegal under the new law. Payments due at those times or on weekends, holidays or when the card issuer is closed for business, will not be subject to late fees.

None – UCFFCU has always offered an end of the business day cut-off time on the payment due date, and it is always effective on a business day.

Limits on over-limit fees: Consumers must "opt in" to over-limit fees. Those who opt out would have their transactions rejected if they exceed their credit limits, thus avoiding over-limit fees.

None – UCFFCU cards are not permitted to exceed their limit thus avoiding over-limit fees altogether.

No more double-cycle billing: Finance charges on outstanding credit card balances would be computed based on purchases made in the current cycle rather than going back to the previous billing cycle to calculate interest charges. So-called two-cycle or double-cycle billing hurts consumers who pay off their balances, because they are hit with finance charges from the previous cycle even though they have paid the bill in full.

None – UCFFCU calculates finance charges only on purchases made in the current billing cycle.

Minimum payments: Credit card issuers must disclose to cardholders the consequences of making only minimum payments each month, namely how long it would take to pay off the entire balance if users only made the minimum monthly payment. Issuers must also provide information on how much users must pay each month if they want to pay off their balances with 12, 24 or 36 months, including the amount of interest.

Minor – Statements will be modified to conform to the new law.

Subprime credit cards for people with bad credit: People who get subprime credit cards and are charged account-opening fees that eat up their available balances would get some relief under the new law. These upfront fees cannot exceed 25 percent of the available credit limit in the first year of the card.

None – UCFFCU does not charge any credit card account-opening fees.

Aggressive marketing to college students: Hooking college students on credit cards will all but disappear. The Act makes it illegal to issue a credit card account to someone under the age of 21 unless an adult co-signs the agreement or the minor can demonstrate he has “independent means” to re-pay his debts. College-age applicants’ account limits will be limited to 20% of their annual income or $500, whichever is greater.

Students who apply will have to conform to the new law.

MISCELLANEOUS UNINTENDED CONSEQUENCES:

Annual fees: The free ride is likely to end for many who use their credit cards as a convenience and pay off their balances in full every month. Squeezed by the economy and further by this law, banks will now target people who have avoided paying an interest charge or an annual fee — until now.

None – UCFFCU will not change it’s policy on annual fees.  We offer 2 card types that have a $15 annual fee and 2 card types that have no annual fee.

Lost Grace Period: Trying to make up for lost revenue, banks are considering charging interest from the date of a purchase instead of allowing a grace period, now typically 20 to 25 days. The best that cardholders may be able to hope for is an option from their issuer: Either pay an annual fee or lose your grace period.

None – UCFFCU will always offer at least a 25-day grace period.

Other fees & penalties: The new regulations put no restrictions on fees for balance transfer, cash advance or late payment. All are likely to rise. Currently, card companies impose penalty rates averaging about 28 percent, or double the average standard rate. But that could rise to 30 or 35 percent as the companies scramble to make money where they can.

None – UCFFCU has no plans on implementing any fees for balance transfers, or cash advances. We currently charge a small deterrent fee for late payments beyond 15 days. We have no plans to increase this fee.

Cutback in Rewards Programs: Card companies have long used reward programs to retain cardholders' loyalty, giving them cash-back rewards, frequent-flier miles and other perks. Now they won't be able to subsidize those programs when they are not making as much from finance charges and penalty fees under the new regulations. Industry officials' threats during the lobbying process to cut them back sharply could prove to have been a bluff, but analysts and consumer experts still expect them to be trimmed to some extent.

None – UCFFCU does not offer a credit card rewards program, which are almost always funded through higher finance charges and penalty fees. We feel the best value we can provide our members is by offering one of the lowest credit card rates available anywhere, with almost none of the fees that other card issuers charge.