How the Upcoming Legal Changes Will Affect Your Credit Cards
View PDF | Print View
by: barrywaters
Total views: 72
Word Count: 623
Huge changes are coming to the credit card industry, and its going to affect your credit cards. The Credit CARD Act of 2009, new legislation designed to protect consumers by curbing some of the worst abuses of the credit card industry, has already started going into effect. The first stage took place on August 20, 2009 with relatively minor changes, and the biggest changes are due to take effect on February 22, 2010. Whats going to change? This is just a small selection of the changes that are coming:
* Interest rate changes will no longer be retroactive. For example, if you miss a payment and your credit card issuer hikes your interest rate, the rate hike applies only to new purchases you make with the card. The older, lower interest rate still applies to your existing balance. The only exception is if you are at least 60 days delinquent on your account, in which case the interest rate hike can apply to your entire balance.
* The credit card company must apply your payments to the parts of your balance with the highest interest rates first. Right now, credit card companies decide which part of your balance they will allow you to pay off first. That means that if you roll over $2,100 to a new credit card at a promotional lifetime rate of 1.99%, then charge $150 to the card at the normal rate of 12%, you will not be able to pay off the $150 until the entire $2,100 at the lower interest rate is paid off first. The $150 sits at the back of the account until then, accruing interest rapidly. The change to the credit card laws will prevent you from paying more in interest for that $150 purchase than you paid for it in the first place.
* You can no longer accidentally run up huge bills by going over your credit limit. Right now, credit cards usually allow you to exceed your credit limit, but charge you $35 or more per charge over the limit, letting you accrue substantial fees without realizing it. After February 2010, you will need to give your credit card issuer permission to allow you to exceed your credit limit, reducing the likelihood that you will find extra fees on your statement at the end of the month.
* People under the age of 21 will no longer be able to get credit cards without a cosigner unless they can prove that they have sufficient income to repay their debts. Credit card issuers will also not be allowed to send offers for credit cards to people under 21 unless the person has signed up to get credit card offers. Companies that target college students by offering them "gimmes" to sign up for new credit cards will no longer be allowed to offer gimmes on campus.
Even more things are changing, far too many for a signle article to cover. But before the official changes go into effect, youll see unofficial changes as well: Credit card companies are hurrying to change the terms of your credit cards before the new law makes it difficult for them to make the changes. Be on the lookout for letters announcing rises in interest rates, reductions in the benefits you get from rewards programs, and other changes that will have the long term effect of making credit more espensive. Its the downside of the new credit card legislation. But once the wave of unofficial changes is past and the Credit CARD Act of 2009 goes into effect, you may find that your credit cards are safer and more secure than ever.
About the Author
For more on credit cards for bad credit, click to www.getsmart.com/credit-cards.
Rating: 0.00