The Credit Card Laws Regarding Past Due Payments

The Credit Card Accountability, Responsibility and Disclosure (CARD) Act went into effect in the U.S. in February 2010. While consumer advocates still say there is work to be done, the CARD Act changed how creditors deal with past due accounts. Consumers are afforded greater protections against creditor practices that encouraged past due payments under this law.

Statements and Due Dates

Under the CARD Act, credit card companies must establish a single recurring due date for payments. If your credit card company used to switch due dates around on you to induce late payments and associated fees, such behavior is no longer legal. Additionally, statements must be sent to you via postal or e-mail by your credit card companies no later than 21 days prior to the next payment's due date. If you do not receive a statement, notify your creditor that you did not receive it in writing within 60 days. As long as you do this, you are protected under the Fair Credit Billing Act, and your creditor cannot charge you additional interest because of their error. You may still need to dispute the nature of your past due payment, however, as this is not addressed directly in the law.

"On-Time" Payment

Credit card payments received by creditors before 5 p.m. on a business day must be credited to your account on that day. Additionally, if your scheduled due date falls on a holiday or weekend, rather than a normal business day, creditors must consider your payment as being "on-time" if it is received by 5 p.m. on the next business day following the weekend or holiday. Your payment can no longer be considered past due if it arrives by that time.

Interest Rate Hikes

Credit card companies can only raise your interest rate if your payment is 60 days or more past due. However, be aware that they can do so retroactively. On the plus side, if you make consistent payments for six months after such an incident, creditors must give your old, pre-penalty interest rate back to you.

Universal Default

Universal default used to mean that credit card companies could hike your interest rates based on any negative activity occurring in your credit history or score---not just past-due payments on your credit card accounts. For example, if you were late with utility payments or even missed a payment on Card A, the issuer of Card B could hike up your interest rate even though you paid it on time. Under the CARD Act, past due payments on one account cannot trigger universal default interest rate hikes with any of your other accounts.