Credit Cards are About to Change Forever
If you’ve got a credit card (whether you use it or not) - there’s some new legislation about to take effect that you should know about and understand - because it will affect the way you handle your cards!
The Credit Card Accountability, Responsibility and Disclosure Act will go into effect little by little over the coming year. Here’s 9 major points from this new law from congress and how they’ll change your life with credit cards forever!
Starting August 2009:
Credit Card Statements. You now will receive your credit card statements 21 days before your credit card bill is due (7 days earlier than previously). This will give you a better chance at resolving any issues or changes in fees and charges before your payment deadline arrives.
Notice of Interest Rate Changes Your credit card issuers now must give you notice before increasing interest rates or fees a month earlier than before, at 45 days instead of 15 days before the change is made. Now you’ll have a little more time to bail out if your company is racking up your costs and you can find a better deal elsewhere.
Starting February 2010:
Rate Increases Your credit card issuer can no longer raise your interest rates on an existing balance, unless your payment is more than 60 days late or a teaser rate expires. In addition, your interest rate on new purchases can’t be increased in the first year, also excepting teaser rates. (You really ought to avoid those teaser rates in the first place - nasty business). On that note, Teaser Rates must also last at least 6 months now.
Extra Payments This might be my favorite change in law - when you make a monthly payment that’s greater than your minimum required payment, the additional funds must must first be applied to the balance with the highest interest rate, and then to other balances in descending order (assuming interest rates have been changed and you have multiple rates on different balances - kind of crazy).
Over-Limit Fees Here’s another favorite! Your card issuer must now ask you whether or not you want to be able to go over the limit on your card! Say goodbye to over-the-limit fees (if you choose) - you can still opt in for approval on going over the credit limit.
Young Borrowers Credit card applicants under 21 years old must have an adult co-sign on their application, or be able to show proof of income in order to be approved for a card. Most smart and conservative institutions already do this.
Stop the GiveAways This is interesting - credit card issuers can no longer offer sign-up gifts on or near college campuses. Apparently the government is afraid our college students aren’t wise enough to avoid the bait.
Universal Default Issuers can no longer practice “universal default” - that is, raise your rates if they learn that you were late on another account.
Starting August 2010:
Repentance If you missed some payments, and your interest rate was increased because of it (hey, you signed the contract, you pay the consequences) you can now repent! You can reclaim your lower rate if you pay on time for six consecutive months.
Hope this information helps! Having and using a credit card will soon become a bit more manageable - just watch out for the credit card companies backlash - I’m quite certain rates will increase across the board, fees will sky rocket, and accounts will be closed and moved around.
August 31st, 2009 at 2:52 am
Thanks for the info.
On the “GiveAways” and college students. I’m of mixed feelings on this. Getting 2 or 3 credit cards in college helped me establish a credit record (I never carried a balance back then) and made life a lot easier in the future. Meanwhile I have a good friend who never got one, never established a credit record, and always has to lean on others for help and signatures and guarantees when getting an apartment or a loan or whatever. I find if used responsibly, those college deals can be a good way to start one’s credit life. Of course I know there are folks too who just think it’s free money, get addicted, and it’s the start of a long, expensive trap. Not so clear cut to me.