Credit Card Quick

Your Guide to Making the CARD Act Work for You

News

The CARD Act, the new credit card legislation enacted earlier this year, was designed to help credit card consumers manage their credit and keep creditors in line by eliminating outrageous fees and difficult-to-read (if not nearly impossible) terms and conditions.

However, it is important to point out that, in response to the CARD Act, many creditors took steps to protect themselves and, as such, some credit card consumers may benefit from the legislation while others may not. Here’s what you’ll need to do to ensure that the CARD Act is working for you:

• Keep a close eye on your credit card paperwork – You may be receiving more correspondence from your credit card company, and some of it may be just small notifications that appear to be junk mail. Because the CARD Act requires creditors to give you adequate notification of changes in your card’s terms and conditions, it is important to keep a close eye on any correspondence you receive from your creditor. In other words, you must read those annoying little pamphlets if you expect to be kept in the loop of any changes to your credit card!
• Take advantage of the charts now provided on your statement. Creditors are now required to provide consumers with payoff information regarding their account. A typical chart on your credit card statement will likely show how long it will take to pay off your account paying just the minimum balance (and the total interest you will pay!) and how long it will take you to pay off your balance paying a higher payment each month. This information can be very useful when budgeting yourself and working towards paying off your credit card debt.
• If you don’t use your card, expect it to be canceled. If you have a credit card that you use just for emergencies, the creditor may very well cancel that card. To avoid this, make it a point to use your card at least a couple times a year and pay the balance off when the bill arrives.
• Expect to pay a higher interest rate on your credit card. Creditors, in response to the strict regulations set forth by the CARD Act, raised their interest rates to recoup some of their losses. However, these higher interest rates can still be negotiated, and you have the right to cancel the card and pay off the remaining balance under your old interest rate if your credit card company raises your interest rate and doesn’t want to negotiate with you for a lower rate.

The Effects of the New Credit Card Legislation

News

If you are sick and tired of the confusion with credit cards and the vague language that comes along with credit card statements, you will no doubt welcome the new credit card legislation recently enacted by Congress.

In addition to enjoying easier-to-read credit card statements, the credit card legislation may mean other positive changes for consumers like you.

Clearer Communication between Creditors and Consumers

Creditors must be more communicative when it comes to your credit card account. Any changes in your account must be addressed in writing, and you must be given ample time to either accept or reject these changes. For example, if your creditor raises your interest rate, you must be informed, in writing, at least 45 days in advance of the increase in interest. In addition, if you choose to reject the interest rate increase, you can cancel the card and pay off your remaining balance with your current interest rate.

Budgeting Made Easy

Another change the credit card legislation has brought about shows up on your credit card bill. Creditors are now required to show, in clear language, the amount of time it will take to pay off your credit card if you pay only the minimum payment and the amount of time it will take to pay off your credit card if you send in more money. This change will provide an easy-to-understand explanation of the effects of just paying the minimum balance on a card.

Other perks of the new credit card legislation include:

• Any payment you send in goes toward the balance with the highest interest rate. This is particularly helpful if you have purchases from different promotional periods.
• Creditors cannot raise your interest rate during the first year of having an account (unless you default on the credit card’s terms and conditions).
• Double cycle billing will be eliminated, preventing creditors from calculating finance charges from the previous, as well as current, billing cycles.
• Creditors are under strict rules regarding granting credit cards to consumers under the age of 21, thereby protecting many college-age students from obtaining credit and possibly destroying their credit score at a young age.

The CARD Act and its Impact on College Campuses

News

The CARD Act, which was enacted earlier this year, is perhaps the most sweeping credit card legislation in history. And one of the most instrumental parts of this legislation is designed to protect young consumers.

The College Campus Game

For over a decade it was quite common to see creditors sitting at tables lined up along any college campus lawn. In fact, most creditors saw young consumers as a great way to build their businesses. As a result, credit card companies would push easy-to-get student credit cards at college students, complete with plenty of free gifts and incentives.

For most college students it was the first time that they were able to receive credit; therefore, it was quite easy for credit card companies to sign up college students. Heck, in any given day you could apply for multiple cards!

College Students and their Mounting Credit Card Debt

The college-student market was a hit among creditors, and for good reason. According to Sallie Mae, 42 percent of college students carry a credit card. As of 2008, college students graduated with an average credit card debt of $4,100; that an increase from $2,900 from just four years earlier.

Sallie Mae also notes that 69 percent of college freshmen had a zero credit card balance in 2004; that number plummeted to just 15 percent in 2008.

Although there were many college students who used credit cards for useful purposes, such as purchasing text books and school supplies, there were just as many that abused credit, thereby resulting in a great deal of credit card debt, even before they graduated from college.

For years, lawmakers complained that the giveaways and other incentives on college campuses were luring college students into credit cards that they could not handle or afford.

As a result, Congress passed strict regulations regarding college students in its CARD Act. Now, creditors can no longer issue credit cards to college students unless they have the income to back it up. Although this may be inconvenient for college students, it may prove to be gift because college students will no longer be starting their professional lives with mountains of debt.

Is a Credit Card-Free Lifestyle for you?

Introduction

Has the entire credit card industry got you down? Does the constant fight between creditors and the government have you confused regarding your rights as a consumer?

Many consumers, particularly over the past year and a half when creditors tightened their belts and denied credit to millions of consumers, have become jaded towards the credit card industry. Combine that with the new credit card legislation and the ways in which many credit card companies have found a way to skirt the current legislation, and it’s no wonder why so many consumers are now heading toward a “cash only” philosophy.

Although this can certainly eliminate much of the hassle and grief associated with credit cards, it does make establishing a good credit score very difficult to achieve.

The bottom line is that, in order to obtain a loan for anything from a car and home to a student loan, you must have a credit score. Often times, no credit is as often as detrimental as bad credit.

With that said, there are ways in which you can enjoy a relatively credit card-free lifestyle without jeopardizing your credit score in the process:

• Find one, great credit card with a low, fixed interest rate – Avoid dealing with low, promotional rates that will expire. Instead, do your research and find a card that has a low, fixed interest rate.
• Make regular purchases and pay them off each month – You must make purchases on your credit card in order to establish a strong credit history. You can simply make one or two purchases each month and then pay those purchases off when the bill arrives to begin building your credit score.
• Consider rewards to make your credit card purchases work for you –Credit cards can end up saving you big, provided you understand how reward credit cards work. Making purchases – and paying them off each month – may allow you to earn anything from cash back to airline points, so consider the advantages of credit cards instead of just the disadvantages.

What your Credit Card Company must Disclose to you

Introduction

The new credit card legislation that was recently enacted by Congress is designed to protect consumers from unscrupulous practices by credit card companies. One of the requirements under the new law is that credit card companies must disclose rules for solicitations, agreements and period billing statements to consumers.

The “small print” that must be disclosed must also be disclosed in an easy-to-read, easy-to-understand format. Here are some of the highlights of the new disclosure rules:

• Credit card offers must be easy to read. The fees of the credit card, along with the credit card’s APR, must be boldly displayed on the offer. In addition, the APR of the credit card must be displayed in at least a 16-point font. Any related credit card fees must be shown in an easy-to-understand table.
• If you apply for a credit card and are approved, the credit card company must send you a one-page agreement summary detailing the card’s terms and conditions. Although you will still likely receive the lengthy credit card summary you normally receive, the key terms will be highlighted on the one-page agreement summary.
• Your credit card statement will also be much easier to read. Large boxes on the front of the credit card statement will provide you with important information, including your account activity summary and your payment information. Other information that will be displayed prominently will include your new balance, the due date, the statement closing date, you previous payments and credits, and your minimum payment information.
• Your credit card company will also be required to provide you with a minimum payment warning that will show how long, and how much it will cost, to pay off your balance if you only pay the minimum payment. This may be a vital component to your credit card statement, as it will really detail the amount of money it will cost you if you only continue to pay the minimum payment on your card. This information must also be displayed prominently on the first page of your credit card statement.

How to Secure a Credit Card when you have no Credit

Credit Repair

You’ve finally made your way through college and are a full-fledged graduate. Now that you have a job under your belt you’re ready to take on the world; but are you?

Making your way out into the world beyond college takes hard work, determination, a good work ethic, and good credit. Although it sounds a bit weird that credit should play such a big role when it comes to independent living, the fact of the matter is that it is quite important for everything from renting an apartment to purchasing a car.

With the recent credit card legislation changes enacted by the CARD Act, many college students are no longer eligible to receive a student credit card unless their parents co-sign for it. Although the new legislation was brought about as a way to protect young adults from getting into debt even before they graduate from college, it has also made it incredibly difficult for them to establish credit during their college years.

The fact of the matter is that establishing credit is very important when heading out into the real world, and having no credit can make the process of moving on from college quite difficult. With that said, if you desire to establish a credit history, there are some things that can get you started:

• An active bank account – Make sure to keep your checking and savings accounts in good standing, and make sure to not overdraw them. Your bank accounts will likely be the first factor that will go into your official credit score, so make sure to keep them in good standing, as this clearly shows creditors that you are responsible with your money.
• Once you have maintained an active bank account at one, particular bank, go to the bank and open a credit card account. The company through with you have your bank account is the most obvious option when applying for your first credit card, as you have a history with them that they can draw from when determining whether you are eligible to receive a credit card.
• If you are unable to secure a major credit card right away, consider applying for a retail credit card. Although retail cards typically come with higher APRs than major credit cards, they are often an easy way to begin establishing a positive credit history. Just be sure to pay off your bill each month as to avoid costly finance charges.

A Sign of the Times: Credit Users Slowly becoming more Responsible Spenders

News

Many of us have been guilty of it: spending way beyond our means over the last few years. And it’s no wonder; we all were in overdrive, enjoying a booming economy and a healthy housing market. However, all good things had to come to an end, that the economy was no exception.

As a result, many Americans found themselves in record debt; savings depleted, homes foreclosed; and credit cards maxed.

Fiscally Responsible Spending

The other side of this chaos, however, has been a silver lining, of sorts. Fiscally responsible consumers have emerged, giving way to more responsible spending. Late credit card payments have dropped and the personal savings records has jumped 3.6 percent after many months of freefalling.

In addition, it appears that many credit card customers are now making more than the minimum payment on their credit cards and the country’s outstanding credit card debt has fallen nearly $100 billion over the last year.

A Glimmer of Hope

Even though the unemployment rate across the country is still problematic in terms of credit card repayment, there does seem to be more than just a glimmer of hope on the horizon.

Many credit card consumers have learned one important lesson: that we alone are responsible for our credit card debt and that we must make adjustments in our lives to overcome our debt and lead a more financially responsible lifestyle.

Although the credit card legislation has helped many credit card customers, in realty it has been the customers themselves that are simply tired of living in credit card debt. Many people, as such, have learned that credit cards can be a very useful financial tool without becoming a burden or worse, a nightmare.

Many credit card companies have also begun restructuring their businesses, lowering credit card limits and tightening standards on credit card approval. From clearer repayment terms to upfront interest rates and fees, credit cards have jumped on the responsible bandwagon, and there’s sure to be many credit card customers that will benefit as a result.

Your Rights under the new Credit Card Legislation

News

You may be quite confused with the new CARD act. However, there are a number of benefits to this new credit card legislation that you should know about. Don’t let all of the language and confusing terms overwhelm you; just pay close attention to your credit card statement and educate yourself on all of the changes that are taking place, courtesy of the new credit card legislation.

• Your creditor can not raise the interest rate on your card unless you are more than 60 days past due. Even then, they must give you 45 days notice before they can raise your rate.
• Your creditor can no longer raise your interest rate because you were late on another bill. Before the credit card legislation went into effect, credit card companies could actually raise your interest rate if you were late on another payment, as they felt as if you were a greater credit risk.
• Your minimum monthly payment can change at the discretion of your creditor, so pay close attention to any changes regarding your credit card’s minimum payment.
• You must give your creditor permission to allow you to exceed your credit limit; otherwise, your credit card company cannot charge you an over-the-limit fee.
• Don’t expect to secure a credit card easily if you are under 21 years of age. Unless you can prove a steady income, expect to need a co-signer for your credit card if you are under 21.
• Your creditor must clearly outline how long it will take to pay off your credit card if you only continue to make the minimum payment. Many times, this type of disclosure can provide consumers with the knowledge to pay off their cards sooner than later.
• Your creditor must give you 45 days notice before they raise your interest rate. However, even with an increase in your interest rate, your creditor can only charge you the higher rate on future purchases, not on purchases made under your old interest rate.
• You still need to keep a close eye on your card’s fees and charges, as the new credit card legislation does not restrict how much creditors can charge for these fees.

How to Protect yourself from the Credit Card Legislation Loopholes

Introduction

It is no secret that credit card companies are looking for ways to make money given the new credit card legislation. As a result, many credit card companies have found quite a few loopholes in the new legislation; loopholes that you may not be aware of and loopholes that can cost you big.

There are, however, a number of things you can do protect yourself, even given the loopholes being enacted by credit card companies:

• Look closely at your credit card statement each and every month and take note of any changes in your credit card’s terms and conditions. The CARD act requires that credit card companies must notify you 45 days in advance of any credit card changes, thereby providing you with the opportunity to find another credit card or close your account. Remember: credit card companies can charge all the fees they want, but in the end it is up to you as to whether you will accept these fees or not.
• Regardless of what you have been told in the past, if you don’t like the terms and conditions of your current credit card, cancel the account and find another one. The small hit you may take on your credit score due to a closed account will be minor, so get rid of the unwanted card and make a better choice. It is important to close any accounts that you no longer use, as you will likely incur inactivity fees as a result inactive accounts.
• To find the most competitive credit card, check out popular bank, credit card, and lending websites. These websites compare all of the latest credit cards, side by side, so can shop for a new credit card in one place. In addition, don’t forget to check out credit cards through your local credit union or bank; often times the interest rates charged by these local institutions are quite attractive and competitive.

It is important to remain in charge of your financial future, and the only way to accomplish this is to remain educated, informed and aware.

New Credit Card Legislation Filled with Loopholes

News

So you think you are fully protected now that the new Credit Card Accountability Responsibility and Disclosure Act of 2009 has taken effect.

Think again.

The new law, which essentially requires credit card companies to end unfair and deceptive practices, was enacted by Congress to be a savior to credit card-weary customers. However, the new laws have their share of loopholes; loopholes that credit card companies are quick to take advantage of.

In short, there is simply no law that can fully protect consumers from deceptive credit card practices.

• For example, the new law doesn’t prohibit credit card companies from charging outrageous fees. In fact, the law does not cap interest rates at all. Credit card companies are also permitted, under the law, to cancel a credit card at any time.
• Credit card companies are also permitted, under the new legislation, to impose new fees and even charge more for fees currently in place. In other words, your credit card company is still permitted to raise everything from cash advance to account transfer fees.

Although there are plenty of positive aspects of the current credit card legislation, unfortunately there are just as many negative aspects of which consumers need to be made aware.

• One of the new charges that credit card companies are imposing, likely as a result of the credit card legislation, is a credit card inactivity fee. This fee, which can be as much as $36 per year, is charged by the credit card companies when you don’t use your credit card enough.

Still, other credit card companies have begun charging their customers for everything from paper statements to foreign transactions.

• Did you also know that credit card companies can also charge a “minimum finance charge?” Yep, that means, regardless of how small your balance, your credit card company can charge you a minimum fee.
• Many credit card companies are also bringing back annual fees.

The bottom line is that it is up to you, the consumer, to continue to monitor you credit card statements very carefully and to always, always take the time to read the terms and conditions of your credit card.