New federal credit policy takes effect

A federal credit policy that seeks to protect consumers from what President Barack Obama referred to as “deceptive, unfair tactics” practiced by credit card companies took effect Monday.

The Credit Card Accountability, Responsibility and Disclosure Act, signed into law last May, aims to limit the influence of credit card companies and increase transparency to credit card holders.

The law dictates that to open a credit card account, all individuals under the age of 21 need a cosigner or proof of independent income or assets for repayment.

Banks are prohibited from advertising at college events or campuses, and from offering freebies to students for opening a credit card.

Universities must also disclose any marketing relationships with credit card companies.

According to a 2008 survey by the U.S. Public Interest Research Groups, 80 percent of college students support some controls on credit card marketing at their schools.

Current card holders can expect changes as well, including fixed interest rates for the first year and a 45-day notice of any alterations thereafter. Companies cannot raise rates on existing balances. Statements must be issued 21 days prior to the payment due date — which will be held the same date every month to help customers avoid late fees — and must also indicate how much needs to be paid on a monthly basis to clear a balance within three years.

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