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"With this new law, consumers will have the strong and reliable protections they deserve. We will continue to press for reform that is built on transparency, accountability, and mutual responsibility - values fundamental to the new foundation we seek to build for our economy," President Obama said.

In the Senate and throughout the campaign, President Obama called for measures to strengthen consumer protection in the credit card market. This legislation was led by Chairman Frank and Representatives Maloney and Gutierrez in the House, and Chairman Dodd, Ranking Member Shelby and Senator Levin in the Senate. It builds on the recent regulatory changes announced by the Federal Reserve toward improving disclosures and ending unfair practices.

Bans or Restricts Certain Credit Card Rate Increases

• Bans rate increases on existing balances due to "any time, any reason" or "universal default"
• Restricts retroactive rate increases due to late payment
• Contract terms must be clearly spelled out and stable for the entirety of the first year. Firms may continue to offer promotional rates with new accounts or during the life of an account, but these rates must be clearly disclosed and last at least 6 months.

Restricts Credit Card Fees

• Banks will have to give card holders at least 21 calendar days from time of mailing to pay the monthly bill. The act also ends late fee "traps" such as weekend deadlines, due dates that change each month, and deadlines that fall in the middle of the day.
• Banks will be required to apply excess payments to the highest interest balance first
• The act ends the practice of "double-cycle" billing by which issuers use the balance in a previous month to calculate interest charges on the current month
• Consumers will find it easier to avoid over-limit fees because banks will have to obtain a consumer's permission to process transactions that would place the account over the credit limit.
• Fees on subprime, low-limit credit cards will be substantially restricted.
• The act restricts inactivity fees on gift cards and stored value cards unless the card has been inactive for at least 12 months.

Enhancing Disclosures for Credit Cards, Gift Cards and Other Stored Value Cards

• Creditors will be required to give consumers clearer disclosures of account terms before consumers open an account, and clearer statements of the activity on consumers' accounts afterwards. For example, pre-opening disclosures will highlight fees consumers may be charged and periodic statements will conspicuously display fees they have paid in the current month and the year to date as well as the reasons for those fees.
•  Model disclosures will be updated regularly based on reviews of the market, empirical research, and testing with consumers to ensure that disclosures remain clear, useful, and relevant.
• Issuers will need to display on periodic statements how long it would take to pay off the existing balance - and the total interest cost if the consumer paid only the minimum due.
• Issuers will also have to display the payment amount and total interest cost to pay off the existing balance in 36 months.
• The act enhances disclosure on fees for gift and stored value cards
• Issuers will be required to make their contracts available on the Internet in a usable format.

Requirements of Credit Card Regulators

• Regulators will be required to report annually to the Congress on their enforcement of credit card protections
• Regulators will be required to request public input on trends in the credit card market and potential consumer protection issues on a biennial basis to determine what new regulations or disclosures might be needed.
• Regulators will be required either to update the applicable rules, or to publish findings if they deem further regulation unnecessary.

Increases penalties

Card issuers that violate these new restrictions will face significantly higher penalties than under current law.

Marketing of Credit Cards to College Students

The act contains new protections for college students and young adults, including a requirement that card issuers and universities disclose agreements with respect to the marketing or distribution of credit cards to students.

Source: The White House