The new federal law signed by President Obama might be his first real milestone for “change” as credit card companies will now be required to make things a little easier on the consumer. But don’t expect them to only change for the better. Here are some highlights of what is to come with the new legislation, and what is already happening:
The Good:
New credit card laws affect changes for everyone.
- More transparent about their charges
- Easier to understand terms and statements
- More costly (making it just about inaccesible for low income families)
- Limited interest rate hikes
- “Reasonable amount of time” to pay bill – which means about 21 days after the due date.
- Limited over-the-limit fees – if you don’t “opt-in” then your transactions will simply be rejected.
- Single-cycle billing. Only charges in the current cycle can accrue interest rates.
- Limited fees on pre-paid card setups. Again, looking out for the little guy.
- Minimum payment disclosures. No, not every understands how long it really takes to pay off a credit card if you only pay the minimum every month.
The Bad:
- Credit card companies will probably reestablish annual fees to make up costs.
- Reducing “rewards” – to make up costs, companies will reduce what.
- Companies will require charges to be paid every month instead of letting them slide.
The Ugly:
- In the limited time before this new law takes place, credit card companies are already jacking up their rates to unheard-of levels. Surprised? Remember, we are dealing with for-profit institutions that have their stockholders on priority one, not you, the consumer. Read this fantastic CNN article for further, ugly details.
Remember, even though we live in a world where credit is a necessary evil, you just have to no a few rules to stay ahead of their game. And in this case, the rule is: keep balances low, so they can’t control you through interest rates.
ILCR
Tags: credit card, interest rates, legislation, low balances, new laws, subprime