FACTBOX-Key provisions of the U.S. credit card reform act

Feb 22 (Reuters) - Rules protecting U.S. credit card holders from certain fees and rate increases came into effect on Monday. The rules, laid out under the Credit Card Accountability, Responsibility and Disclosure (CARD) Act signed into law in May, are also designed to help credit card customers understand how much the cards cost to use.

The following are some of the card act's key provisions:

* Prohibits arbitrary interest rate increases and "universal default" on existing balances. In universal default, a lender can change a cardholder's account to costly "default" terms from normal terms when the lender learns the cardholder missed a payment on an account with another lender, even if the cardholder has not defaulted with the first lender.

* Requires a credit card issuer that raises a cardholder's rate to periodically review and cut the rate if warranted.

* Prohibits card issuers from raising rates on a cardholder in the first year after an account is opened, and requires that promotional rates must last at least six months.

* Bars issuers from charging a fee to pay a credit card debt, whether by mail, telephone or electronic transfer, except for live services to make expedited payments.

* Bars issuers from charging over-limit fees unless the cardholder elects to allow the issuer to complete over-limit transactions, and restricts any over-limit fees.

* Requires penalty fees to be reasonable and proportional to the cardholder's omission or violation.

* Requires payments in excess of the minimum to be applied first to the balance with the highest rate of interest.

* Prohibits interest charges on debt paid on time, known as the "double-cycle billing" ban.

* Requires credit card companies to consider a consumer's ability to pay when issuing cards or increasing credit limits.

* Requires that cardholders must get 45 days notice of interest rate, fee and finance charge increases.

* Requires issuers to provide disclosures to consumers upon card renewal when card terms have changed.

* Requires that cardholders get information about how much time it would take and the interest cost involved in paying off a card balance if they make only the minimum monthly payments.

* Requires full disclosure in billing statements of payment due dates and applicable late payment penalties.

* Requires issuers extending credit to consumers under the age of 21 to obtain the signature of a parent, guardian, or other person 21 years or older who will take responsibility for the debt, or proof that the applicant can repay the credit.

* Increases protections for students against aggressive credit card marketing, and increases transparency of affinity arrangements between credit card companies and universities.

* Requires that gift cards are valid for five years.

* Requires the Government Accountability Office study the impact of interchange fees on consumers and merchants.