Credit Card FAQ

Are The Laws Capping Credit Card Interest Rates?

3 June 2012 by CreditCardsCo™

Recent credit reform in the United States has implemented a lot of changes to credit card policies that should make consumers very happy. For the past several years credit card customers have been demanding new limits on credit card interest rates, among other changes, and the new reform takes many steps in the right direction.

Credit card reform has been much needed in the United States for a long time but it was not until the past couple of years that significant changes have been made. New limitations and regulations are now in place which helps make credit card management easier for consumers to handle.

It has been a long time coming, but after many years of formal complaints credit card customers can breathe a little easier. That is because recent reformation to credit card policies make them easier to understand and easier to manage.

Credit Cards: An Overview

Credit cards are financial products that can help you to make purchase the things you need or want without having to access your cash. Generally, you pay interest on your purchases until the bill is paid off. Occasionally you may also pay some fees. This is a relationship that is supposed to work because credit card companies provide a service to their customers who are willing to pay the interest rates and charges. Unfortunately, there have been many complaints recently that have lead legislators to evaluate the credit card industry.

The Issue

While credit card interest rates can vary according to your credit history and credit score, credit customers have been complaining that their banks or card issuers have been charging outrageous interest rates. This is nothing new, unfortunately, as the Senate has been trying to pass bills calling for reformation since as early as 2008. One bill in particularly attempted to cap credit card interest rates at fifteen percent. Anyone who has applied for a credit within the past three years knows that this bill never passed.

Credit Reform 2010

Thankfully, though, President Obama has been able to pass new credit reformation laws that help to regulate the amount of fees that a credit card company or bank can charge its customers. There are also other laws that help make it easier to adapt to changes that a company might make to their policies.

  • Interest rates on existing balances can only increase under limited conditions like the expiration of a promotional rate or there is a variable rate that is applied to late payments
  • All payments are applied to the highest interest rates imposed on a card first
  • Universal Default can no longer be generally applied to all credit customers across the board.
  • Limiting of over-limit fees
  • Customers can “opt out” of changes that might apply to their account by paying off the balance of the credit card and closing the account.
  • Restrictions on late fees

There are also new rules in place that provide more room to pay your bill:

  • 45 days advance notice on all changes to your account
  • 21 day grace period on all bill due dates
  • More definitive description of bill due dates

All of these new stipulations are part of a concerted effort to keep interest rates low and credit card fees at a minimum in order to preserve consumer confidence. In general, recent credit card reform helps make credit management easier for consumers.


The new credit card reform does indeed help to put a cap on interest rates, at least for now. It also ensures that credit customers will not be gouged by credit card companies who can find ways to continuously increase rates or additional fees.

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