Eliminate your credit card debt but make sure you understand the new Credit CARD Act that takes effect February 22nd—Use it to your benefit…
The Credit Card Accountability Responsibility and Disclosure Act (CARD Act) takes effect February 22, 2010. This act establishes new rules for credit card issuers, and is designed to protect the consumer. But do these new rules really benefit all consumers? Or just the ones that are savvy about the loopholes and caveats credit card issuers can take around these rules? Take a look at just some of the changes, and their loopholes:
Interest Rates and Fees
· No rate increases for the first 12 months after opening an account.
However, rate hikes are allowed if you’re more than 60 days late with a payment.
· No more over-limit fees, unless the card holder opts in.
Credit card companies have been contacting card holders asking them to opt in for over limit fees in exchange for lowering that fee. What card holders aren’t being told is that there is no longer a fee for going over your limit, the charge will just be declined.
Statements and Notifications
· Billing statements must be sent 21 days before the due date.
· Payments above the minimum must be applied to the highest-rate balance first.
· Monthly statements must now include:
o How long it would take to pay off your balance if only the minimum payment was made, and the total you’ll pay (including interest and principal).
o How much you need to pay each month to pay off your balance in 36 months and the total you’ll end up paying, including interest and principal.
o A warning that you will pay more interest and it will take you longer to pay off your debt if you only make the minimum payment each month.
o A toll-free number to call if you want to be referred to a credit counseling service.
· For deferred-interest plans (“no interest for six months” for example), you may select to apply extra amounts to the deferred-interest balance or for the two billing cycles before the end of that promotional period, the entire payment will have to be applied to that balance.
Deferred-interest balances can be risky, if you don’t pay off the balance within the specified period, you will get charged all the interest deferred retroactively.
Young Adults and College Students
· College students must now secure a parent co-signer or demonstrate an “ability to pay” to be issued a credit card
· Credit-limit increases to card holders under 21 with a co-signer will not be given with the co-signer’s permission.
· No more credit card marketing on college campuses
Issuers have the option of keeping the co-signing parent responsible even after the young adult turns 21, so as long as that young person keeps the credit card, the co-signer could be liable.
For more information read the full article here:
http://www.smartmoney.com/personal-finance/debt/the-new-credit-card-rules-what-to-expect
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