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The New Credit Card Bill and how it Aims to Protect Young Consumers

Credit Card Debt News

For many of us, college is the time we received our first credit card. We all remember the credit card companies coming to our college campuses and pushing credit cards with added perks and gifts. And for many more of us, it is also the time we remember first getting in over our heads in credit card debt.

Credit Card Responsibility

Often times, young adults accept credit card offers without being fully prepared to handle the responsibility. Although the majority of the responsibility lies with the young adult accepting the credit card, many credit card companies, in the past, have willingly given credit cards to young adults who were simply unaware of the related fees and expenses, and were certainly unable to repay the debt.

The new credit card bill, recently signed into law by President Obama on May 22, and set to go into effect on July 1, 1020, will protect, in part, young credit card customers.

Protecting Young Customers

The new credit card bill will essentially prohibit creditors from extending credit to young adults under the age of 21 unless they can prove that they have the means with which to pay off the debt. Otherwise, a parent or guardian must sign for the credit card.

This new law will prevent many young adults from obtaining credit, charging purchases and then having no money to pay off the debt. This will certainly apply for many college students who are already bogged down in debt with student loans and college expenses.

Although the credit industry predicts that this bill will cost them nearly $12 billion in lost revenue, many legislators are hailing this bill as a much-needed respite from the current practices of credit card companies; particularly, soaring interest rates, surprise rate hikes and loads of fees.

Other highlights of this bill will limit credit card companies from imposing interest rates hikes unless the customer is over 60 past their due date, and will prohibit credit card companies from automatically changing interest rates – without notice – on customers that pay their bills.

Tackling your Credit Card Debt One Card at a Time

Credit Card Debt Credit Repair

If you are feeling utterly overwhelmed by your credit card debt and unable to get out from under the balances that seem to go nowhere then you’re not alone. Currently, one in 20 American households owes more than $8,000 on their credit cards.

Luckily, most of us have options regarding our credit card debt. Consolidation loans or home equity loans are often taken out to address the problem of numerous credit cards with high interest rates. But if your credit isn’t strong enough or you are unable to secure a home equity loan, then you may have to tackle your credit card debt one card at a time.

Here are several steps to assist you in reducing your credit card debt.

1. Organize all of your credit cards and separate them according to their interest rates.
2. Start with the credit card with the highest interest rate and work on paying that one off first.
3. Pay the minimum payments on your other credit cards and put any extra money onto the highest interest rate card.
4. Look for ways to cut back or save on your monthly budget, and put the additional money towards your highest interest rate card.
5. Once the card is paid off, move onto the card with the next highest interest rate and continue the plan of paying only the minimum payment on the other cards.
6. As each card is paid off, take the money you would have been paying towards that card onto the next highest interest rate card.
7. As you continue to pay off cards, you will free up more money every month to put towards another credit card, thereby paying off subsequent cards sooner.
8. Once you pay off a card, cut it up – but don’t cancel it! Canceling credit cards may have a negative affect on your credit score.
9. Once you have paid off all your credit card debt, put the extra money you would have been using to pay off your credit cards into an interest-bearing account that will serve as an emergency fund. Aim to put at least six months worth of your salary into your emergency fund.

How Will the New Credit Card Bill Affect Creditors and Consumers?

News

The new sweeping regulations on credit card practices recently signed into law by President Obama has many credit card customers jumping for joy.

Learning from Past Mistakes

In past years, credit was flowing freely and creditors were more than anxious to lure consumers in with promises of teaser rates, gimmicks and reward programs. Many of us took the bait and began charging to our heart’s content.

Fast forward to 2009 and things don’t look quite so rosy anymore. Many of us now find ourselves in quite a precarious position; the economy is in a recession and our credit card debt is piling high as creditors dramatically raise our interest rates and add over-the-top fees. Not only are many of us unable to pay down our credit cards, but some of us are simply unable to keep up with the payments and fees.

New Changes Underway

The new credit card bill, which is due to go into effect July 1, 2010, is designed to come to the rescue of the millions of Americans bogged down in credit card debt and unable to get out from under it. But will this new law affect the way creditors lend out money?

Perhaps. We may see fewer promotional rates, fewer rewards programs, higher interest rates and tougher credit criteria, particularly for those with a short credit history. But in the end, credit card companies are still a business, and for those of who have worked hard to maintain our credit, credit will still be available. In fact, competition among creditors will still exist, thereby providing consumers with excellent credit plenty of options regarding credit cards.

In addition, the new law requires that credit card companies must provide cardholders with notice of a rate or fee increase at least 45 days ahead of time, thereby enabling consumers to make a change, if desired.

The bottom line is that the new credit card laws will put the responsible credit card consumer back into the driver’s seat, and will prohibit credit card companies from imposing certain practices that will only leave credit card customers in a no-win situation.

Is a Promotional Interest Rate Right for you?

Introduction

Credit card companies know just how to pull us in. Promotional interest rates, also known as “teaser rates,” are a common reason many of choose to apply for a card. But are these promotional rates all they’re cracked up to be?

The answer is decidedly both yes and no.

Promotional rates can be quite beneficial for many credit card customers who are looking to pay off debt or make large purchases. However, to make a low promotional interest rate worth your while, you need to make sure you can pay off the debt within the time frame of the promotional rate. And that time frame is typically between 6 and 12 months for most credit card companies.

If you are unable to pay off your debt within the promotional interest rate time frame, expect to see a dramatic increase in your interest rate, which means a dramatic increase in your monthly finance charges. Some credit card customers simply switch to another promotional rate credit card once their current card’s promotional rate has expired, but that may be tricky, particularly if your credit rating has recently slipped.

Which brings up another point: don’t expect to snag a great, low, promotional rate unless you have excellent credit.

A low, promotional rate should also not be a time when you freely charge purchases because of the low interest rate, as this could create a credit card balance which you can’t pay off before the promotional rate ends. It is therefore extremely important to not view your low, promotional interest rate, as a green light for making expensive purchases.

Finally, it is important to remember that promotional rates may only be applicable on balance transfers or future charges; it is therefore important to read the details of the promotional rate before applying for the card.

Many balance transfer promotional rates come with a balance transfer charge, which can prove to be quite costly, depending on the balance amount you are transferring. Therefore, you will need to decide if a promotional rate is worth your while, considering the card’s balance transfer fees.

Details of the New Credit Card Bill

News

President Obama recently signed the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act, which will protect credit card customers from outrageous fees and skyrocketing interest rates.

The CARD Act is designed to take control of out-of-control credit card practices that have left many credit card customers in over their head and unable to find their way out.

The CARD Act, which takes effect on July 1, 2010, will regulate the practices of many credit card companies of raising interest rates and imposing fees that have left many cardholders simply unable to reasonably repay their debts.

Highlights of the New Credit Card Bill

Within the guidelines of the new credit card bill, a creditor may only raise a cardholder’s interest rate after he or she has been more than 60 days delinquent. The creditor must then reinstate the cardholder’s original interest rate after he or she has made payments on time for six months.

Another positive feature of the CARD Act is that creditors may not raise a cardholder’s interest rate during the first year on a new or existing account unless the interest rate is variable, or if the cardholder fails to make a payment within 60 days of the due date.

Other features of the bill include: limiting over-the-limit fees; providing cardholders with a reasonable amount of time to make a payment; putting any monies which exceed the minimum payment toward the higher interest debt on the same credit card; eliminating two-cycle billing; and providing cardholders with a 45-day notice of a interest rate increase.

The CARD Act is a positive law for trustworthy, responsible credit card holders who consistently pay their bills on time.

Most of us have been in a situation where we missed the due date for a credit card or fell on bad luck and were not able to make a payment by the due date. With old credit card practices, most creditors would automatically raise our interest rates dramatically, thereby causing many of us to simply be unable to pay down our credit card debt.

The CARD Act will protect responsible credit card holders and enable consumers to be better equipped to handle their credit card debt and pay it off in a reasonable amount of time.

How to Procure a Lower Interest Rate

Credit Card Debt

If you are more than frustrated to see your credit card balances going virtually nowhere each month while you struggle to pay them down, then you’re not alone. Millions of credit card holders are dealing with high interest rates that make it nearly impossible to pay off their credit card balances in a reasonable amount of time.

Luckily, you do have options, provided your credit is healthy. If you have consistently paid at least the minimum payments on your credit cards, and paid them on time, then you are in a great position to obtain a much better interest rate and save yourself hundreds, if not thousands, of dollars in finance charges every year.

Contact your Credit Card Company

The first – and arguably the easiest – way to get a better interest rate is to simply call your credit card company and request one. Most credit card holders can lower their interest rates on their current credit cards if they plead a case with their credit card company. Simply threatening to transfer your balance to another credit card will often produce results, as well. But remember: you must have a pristine history with your current credit card company if you expect to see results.

Transfer your Balances

If your credit card company isn’t willing to offer you a lower interest rate, then you may want to consider transferring your balances to another credit card with a lower interest rate. There are many types of cards you may want to look for, including those with low, promotional APRs.

Promotional APRs can save you loads on finance charges, but beware of associated balance transfer fees, which can be quite costly. Also, pay attention to the duration of the promotional APR to decide if the savings are worth your while.

Otherwise, simply look for a credit card with a lower, fixed interest rate that will allow you to pay off your balances and save on finance charges.

Pay off Higher Interest Rate Cards First

If you find yourself in a position where you can not get a lower interest rate credit card or balance transfer, then you’ll want to line up your credit cards and find the one with the highest interest rate and pay that off first. Pay the minimum payments on the remaining cards and use the extra money to pay off the high interest rate card first. Then, continue down the line with the same game plan until all of the cards have been paid off.

How to Avoid Paying Credit Card Late Fees

Credit Card Debt

You’ve done it again – you missed your credit card payment and incurred another late fee.

If late payments and interest charges are consuming you, then you’re not alone! Busy schedules and shortened credit card cycles often result in missed or late payments, which then leave us with late payment fees and related charges.

Late or missed payments on any monthly debts can result in hikes in your interest rate (credit card companies often raise interest rates on cardholders who miss just ONE payment), loads of interest charges and related fees, and a blemish on your credit report.

How to Avoid Late Payments and Keep your Credit Score Squeaky Clean:

• Become organized! One of the easiest ways to organize your monthly bills is with a simple organizational system from your local office supply store. As you receive your mail every day, you can simply sort bills, statements, medical bills and junk mail into separate categories. You can also sort your bills by due dates, thereby facilitating the job of locating your bills and paying them on time.
• Use an online bill payment system through your bank. It takes only minutes to set up an online bill payment system through your bank, yet it can save you a great deal of time every month. Paying your bills online is simple, easy, quick and secure. Plus, payments are usually received by your debtor sooner than if you were to mail them.
• Set up automated payments. Once you have established an online banking system account, you can use the automated payment feature so that your payment will be sent on the same day every month. You can also sign up for electronic billing, as well, and eliminate your paper bills altogether.
• Pay your bills as soon as they come in. Many individuals find that simply paying the bill when it arrives every month takes the guesswork out of due dates. Late payments will surely be a thing of the past if you adopt this daily practice!

How to Begin the Process of Rebuilding your Credit Rating

Credit Repair

If you have a damaged credit score from past problems or indiscretions, don’t despair. There are ways in which you can work to rebuild your credit rating so that you can look forward to a more positive financial future. Below are initial tips that will get your credit on the road to a positive credit score.

1. Order a copy of your credit report. Hiding from your credit problems will not make them go away. Therefore, ordering a copy of your credit report from all three credit reporting agencies is an excellent, first step in taking accountability for your past credit mistakes. It is also the best way to simply see where you are and to leave no credit blunders left unturned, so to speak.
2. Call your creditors. There is no better way to address your credit problems than to simply contact your creditors. Most creditors will be more than happy to work with you to find easier repayment terms so that you can begin righting your credit wrongs.
3. Pay off your existing debt to lower your debt-to-income ratio. Repairing your credit is an important step, but lowering your debt-to-income ratio is also important. It is therefore extremely important to develop a game plan to pay off your existing debt, and to stick to it!
4. Do not apply for any new credit. Instead of incurring more debt, avoid taking out any new credit cards, personal loans or auto loans during this time. Instead, focus all your attention on your existing debt and how you can pay it off.
5. Don’t ignore other types of monthly bills. It’s often the bills we don’t think about that have the biggest impact on our credit scores. Water bills, electric bills, phone bills and gas bills are just some of the monthly bills we all pay. But many of use fail to recognize that not paying these bills in full or on time can have an adverse effect on our credit. Bottom line: don’t forget about even the smallest of debts when it comes to rebuilding your credit score!
6. Find ways to increase your payments. One of the best ways to improve your credit is to reduce your debt. And a great way to make a greater impact on your debt is with larger, monthly payments. Don’t think you have extra money each month? Make a budget and stick to it! You may be surprised to find that your monthly “incidentals” are preventing you from paying off your debt!

Why Credit Cards are often better than Cash

Credit Card Rewards Introduction

It would make sense that cash is better than credit when making purchases. However, given the many benefits of today’s credit cards, this is not always the case.

For both business and personal use, credit cards may prove to be a very effective financial tool for credit card holders.

Credit Card Benefits

• Purchase Protection – If you receive an item that is unsatisfactory and the company or manufacturer is unwilling to grant you a refund, or if you purchase an item that arrives damaged, or not at all, the purchase protection feature on your credit card may cover your expenses.
• Extended warranty – Many purchases on a credit card come with the protection of an extended warranty. For example, electronics may be covered with a warranty that covers the purchase on top of the store or manufacturer’s warranty. Most credit cards offer a 90-day extended warranty on most purchases.
• Rewards – Many of today’s credit cards offer rewards of many kinds, such as cash-back rewards or rewards for products and services. For example, some credit cards enable credit card holders to earn points toward free hotel stays, airfare or reduced vacations. In other words, simply using your credit cards for purchases may earn you cash rebates or free products or services.
• Access to Emergency Money – A credit card in your back pocket may provide you with financial protection during an emergency situation where cash isn’t available. An emergency airline ticket, rental car, vehicle repair costs or even a new furnace are all necessary purchases that may not be attainable if it weren’t for the convenience of a credit card.
• Financial Bookkeeping – Credit cards are a very useful financial tool for tracking expenditures and maintaining finances. Credit cards, for both personal and business use, provide an individual with a clear record of all expenses.
• Convenience – Perhaps the most popular reason for using a credit card is the sheer convenience of it. Most individuals who use frequently use credit cards cite the practicality of not carrying cash as the biggest reason for using a credit card for purchases.

How to Protect your Credit Card from Credit Card Thieves

Card Security

On any given day there seems to be a news story or two about credit card thefts and scams. We all know that protecting our credit cards and personal information has become very important, yet few of us really know what we need to do to fully protect ourselves.

What can you do to prevent yourself from becoming yet another credit card theft victim?

1. Never leave your credit cards unattended at any time. Many studies have found that the highest incidences of credit card theft occur at an individual’s place of employment. It is therefore important to not only keep your purse or wallet with you at all times (or locked up), but to also avoid placing your credit card in your desk or other area where others may see it.
2. Immediately report a lost credit card. Most of us would report our card to our credit card company if it were stolen, but not many of us would think to report a lost credit card. The time it takes to search for your misplaced credit card is all the time a credit card thief needs to obtain your credit card information.
3. Always check and double check your monthly credit card statement. Many of us who make multiple purchases on our credit cards on any given month do not take the time to study our credit card statements and the purchases that appear on them – and credit card thieves are counting on it. Did you know that many credit card thieves will make sporadic purchases in the hopes that the credit card holder will not notice the charges?  Remember that next time you receive your monthly credit card statement!
4. Never give your credit card information over the phone unless you initiate the phone call. If you receive a phone call or email from your credit card company asking to verify your personal information, do not give it out! Instead, immediately contact your credit card company to report the communication.
5. Don’t keep the pin number of your credit card in the same place as your credit card. This is simply an invitation for a credit card thief to obtain cash from your credit card!