In response to the Credit Card Act of 2009, the Federal Reserve Board made recent changes to Regulation Z, the set of rules that implement the Truth-in-Lending Act. These new legal provisions, which became effective on February 22, 2010, change the way your credit card works.
Previously, credit card companies could simply send you a monthly statement that gave your full balance and the minimum payment. If you paid the minimum balance every month, it would take many years to pay it off. Now credit card companies are required to disclose the amount of time it will take you to pay off the card if you make only the minimum payment and also, the amount that you need to pay in order to pay off the balance in three years.
Credit card companies cannot increase your interest rate during the first year after you get the card unless:
Any rate increase that is permitted will not apply to your existing balance, which will continue to accrue interest at the rate that applied before the charges were made.
If your card requires you to pay a fee, such as an application fee or an annual fee, it can be no more than 25% of the original credit limit on the account. This does not apply to late fees or over-the - limit fees.
If you pay more than the minimum payment, the extra money goes to pay whichever balance has the highest interest rate.
The above does not pertain to accounts when you have more than one line of credit with different interest rates. It deals with rates on balances that existed before a rate increase (they're called "protected balances" under the rule). The rate on protected balances can't be increased, so if the company raises your rate when you owe $400, and then you charge $200 more, you'll have a protected balance of $400 at the old (lower) rate, and $200 at the new (higher rate), the rule says that if you make a payment that exceeds the minimum payment in a month, it goes to pay the new balance first (because that one is at the higher rate).
Previously, some credit card companies charged interest based on the sum of the average daily balances for two billing cycles. This meant you would have to pay interest on portions of the balance that you may have already paid. The new rules prohibit this practice.
If a creditor violates these rules, you can sue for double the amount of the finance charge and also recover attorneys' fees. In most cases, you only have one year to sue, so if you think your credit card rights have been violated, you should contact a consumer credit attorney as soon as possible.