How the
New Credit Card Law Can Help Us
by Liz Roberts
The New Credit Card Law was signed by President Barack Obama
on May 22, 2009. As a credit card holder, you'll be glad to know that the major
changes can help you cut back your costs and stay away from bad credit.
The first batch of changes already took effect last August 2009 while the
rest of the provisions will be effective starting February 22, 2010. In this
article, let us discuss the highlights of the New Credit Card Law and how it
will affect consumers especially credit card holders:
Controlled Interest Rate Hike. The increase of interest rate will
only be allowed under certain conditions: when a promotional rate expires, when
the Index Rate rises, and when the cardholder defaults payment for 60 days or
more.
Under the New Law, the "Universal Default" clause is permanently banned.
That means credit card Issuers cannot increase your current rate on account of
late payments with other creditors. In addition to this, changes on the rate is
only possible after the first year of issuance. In case of change, the issuer
must give notice at least 45 days in advance before the new rate applies.
The privilege to opt out. If you are not happy about the NEW Terms
and Conditions of your credit card issuer, you can opt out or decline by closing
the account. Opting out means the cardholder has the right to pay the remaining
charges under the old Term. You can ask for an extended repayment period up to
5years.
Student credit card restrictions. Young people under the age of 21
cannot open accounts on their own unless they can show proof of independent
income or they have a co-signer to guarantee the account.
Add to this, credit card companies are forbidden from launching advertising
campaigns within 1,000 feet from college campuses. This reformation protects
young people from the risk of bad credit as a result of overspending,
mismanagement or owning too many student credit cards.
More opportunity to make payments on time: With this new law, all
issuers are required to send their billing statements at least 21 days before
the cardholder's due date. Compared to the present 14-day billing notice, the
new law gives the cardholder the chance to pay their balances without incurring
late fees or interest rate fees.
The cut-off time should be set after the official business hours which is
5pm. Furthermore, late fees cannot be imposed if the payment due date falls on a
weekend or a holiday, when the bank is closed.
Highest rate balance must be slashed off first. In the past, payments
in excess of the minimum due are deducted from the lowest rate balances first.
The high rate fees can make it harder for you to pay off your full balance. That
is about to change.
Now, if the Issuer imposes varying rates on cash advances, regular
purchases, and balance transfers, payments must be slashed off from the highest
rate debt first.
No double-cycle billing. One of the good news is that cardholders
won't have to deal with double-cycle billing anymore. This method of billing can
be a great burden since you can be charged with interest rate based on your
previous and current charges. It doesn't matter if you submitted payment the
previous month you will still incur finance charges. The double-cycle billing is
completely eliminated under the New Law.
Lower fees for sub-prime credit cards. People who use credit cards
for bad credit can find relief knowing that their upfront fees cannot exceed 25%
of their credit limit.
© 2010 Liz Roberts. Since 1989, New Horizon Business Services,
Inc NHBS, Inc has been providing consumers and business owners with financing.
Join our mailing list for
Free Tips on Rebuilding and Repairing Credit. Click here for the
list of
bad credit cards that suit your needs.
|
