What changes will you have on your Discover credit cards? Are they good for you?

 Discover has reported the details of how it is going to apply the new Credit CARD Act of 2009 to its customers being thus the first largest US credit card issuer to unveil such kind of information, as reported by the CreditCards.com. While the new terms under the Act eliminate some fees and practices the new regulation does not stipulates any statutes related to other unfair actions.

In its notices sent to the customers Discover says: "We are making changes to your Account in response to new federal law and regulations that impact all credit card companies."

Discover is implementing some of the changes well before the deadline of Feb. 22, 2010 set under the law. Thus a number of alterations are effective starting December 1, the same startup date selected by lawmakers lobbying for faster implementation of consumer credit card protections.

Discover notes throughout its letter to customers that the new terms are not due to their credit reports: "We made these changes due to the impact of new federal law and regulations, taking into account the extent to and manner in which you use your Account." Discover spokesman Matthew Towson pointed out that although they are rolling out changes before Feb. 22, they still need more time to implement other requirements. 

"Discover has already implemented many provisions of the CARD Act and even gone beyond the requirements in some cases," Towson wrote in an e-mailed response. "However, we have stated previously that it would be nearly impossible for us to be in full compliance of the CARD Act by Dec. 1, but we hope [to] be fully compliant before the effective date of the new law, Feb. 22, 2010."

The changes Discover will introduce on December 1 include the following:

• Interest rate hikes on existing balances. APRs won't increase for existing card balances if card users pay late or exceed their limits. However, one late payment will trigger a default interest rate for future purchases made with the card. The default rate will be up to 5 percentage points higher than the normal APR.
• Some fees are out. The new law requires issuers to show that fees are reasonable and related to the infraction and that consumers must "opt-in" to over-limit fees. The law bans charging consumers fees for making payments unless they are for last-minute, expedited payments. Discover is eliminating both over-limit and pay-by-phone fees beginning Feb. 1, 2010.
• No penalty interest rates for the first year. Starting Jan. 1, 2010, Discover won't hike interest rates due to late payments or over-limit charges during the first year of new accounts. Accounts with variable interest rates can still go up if the prime rate does.
• APR reductions. Starting Jan. 1, consumers paying default interest rates may have their APRs reduced after the issuer reviews the account. The credit card law requires a rate reduction after six months if the review shows good payment behavior. 
• Payment allocation. When cardholders pay more than the minimum amount due each month, the excess payment will be applied first toward balances with the highest APR. The law requires that issuers apply that excess amount to the higher APR balances first or equally across all accounts. Discover has chosen the method that benefits consumers the most. Currently, most credit card issuers apply payments to balances with the lowest APRs first, prolonging the time it takes to pay off high-APR balances and adding to consumers' finance charges.
• Payments are due by close of business. Discover is abandoning its policy of requiring that payments are due by 1 p.m. on the due date. Instead, payments will be due by 5 p.m. local time at the company's payment processing center.