Credit Card Quick

Understanding your Responsibility when it comes to Credit Cards

Introduction

The credit card reform enacted by Congress last year did a lot for credit card consumers. From requiring credit card companies to alert consumers to changes in their card’s terms and conditions to putting an end to outrageous fees and less-than-transparent credit card practices, the new legislation has allowed consumers to use their credit cards without fear of confusing terms and skyrocketing fees.

However, it is important to realize that, even though the government has changed some of the ways in which credit card companies operate, it does not dismiss your role in becoming — and remaining — an educated and aware credit card consumer. In other words, it does not negate your responsibility when it comes to handling your own finances.

Here’s what you need to be doing:

• Carefully checking your credit card statement each month – Instead of ripping open your credit card bill and paying the amount in the “due” box, take the time to read each transaction and compare it with your receipts. It is possible that errors and discrepancies exist on your credit card – errors and discrepancies that you may be paying for if you don’t take the time to review your statement.
• Reading all literature sent by your credit card company – Because the new legislation requires credit card companies to be more forthcoming when it comes to changes in your credit card’s terms and conditions, you may begin receiving letters and notices from your credit card company. Although it may be a bit annoying to take the time to read this information, it is important because it may include important changes to your credit card that you can choose to accept or reject. If you don’t respond to the correspondence, you may be forfeiting your right to reject the changes to your card.
• Taking advantage of the new statement features – The new legislation requires that credit card companies show consumers the result of paying just the minimum payment on their credit cards. Because of this, you should find a chart on your statement detailing the interest you will pay, and the amount of time it will take, to pay off your credit card paying just the minimum balance. Often times, it is this information that serves as a prompt to begin paying more on our credit cards each month.

What Credit Card Reform Means to Those With Current Debt

News

July 2010 is right around the corner, and that means the new credit card reform laws will go into effect. Many consumers are looking forward to this, as it will ease the pain associated with flexible due dates, ever-increasing interest and other concerns that can make the convenience of a credit card a real headache. For those who already have credit card debt to pay, you may or may not benefit from these3 new laws. Read on to find out more.

Current Card Holders and New Card Holders

If you currently hold a credit card and are paying on your debt each and every month, or you are planning to apply for a new card, you can count on benefiting from the new credit card reform laws. The credit card companies will now face tighter regulation regarding when and why they raise interest rates, seeing to it that your bill is due the same day every month and not using shady tactics to overcharge and get you in a financial bind.

While you still will have a bill to pay, every month, of course, you can breathe a sigh of relief. There will be fewer surprises and the experience of owning a credit card might just become a bit more pleasant for you.

Credit Card Debt and Canceled Accounts

If you owe outstanding debt on a credit card you no longer own – an account that has been canceled or closed, you’re not going to have the privilege of benefiting from the new credit card reform laws. The debt you owe will remain the same, interest included. The only time you will see any reduction is with each subsequent payment made. While it does not seem fair, it is considered older debt, which is not covered under the reform provisions. This is not a time to count on the credit card companies to cut you a break anyway. With the losses they face under the new law, credit card companies are sure to take advantage of reaping added profits whatever way they can.

The 2010 Credit Card Act: Who Won’t Be Affected?

Introduction

Credit card companies are in the money business, meaning money (and lots of it) is their utmost concern. Of course, they do care about the consumers somewhat, offer certain protections. After all, the consumer is what makes up their bottom line. Still, concerns about consumers and fair practices are not always first and foremost on the minds of the credit card companies.

Since the last major reform 30 years ago, credit card companies have not always been fair, employing sneaky practices to increase their profits and make up for their losses. It is a risky game they play to begin with, and the consumer, who wants to keep their good name and their credit card, often has to just live with what the credit card company has done.

Changes in 2010

On July 1st, 2010, the FTC’s new Credit Card Act will go into effect. This is to ensure more fair practices and consumer protections. In the meantime, credit card companies have been employing their same old tactics at a more rapid speed, raising rates to protect themselves from loses and gear up for the coming changes. Consumers can look forward to new laws that protect against the practice of double-cycle billing, put new standards on how, when and why interest rates can be increased, put forth a set grace-period without penalties and even allocate payments toward higher interest debt first.

Not Everyone is Covered

This new credit card reform is a good thing for most consumers. However, there are some who will not have the benefit of being covered under the new laws. There are those who carry credit cards who are not considered consumers and others who are already protected under other laws. The current reform will only protect the average American credit card holder; the everyday consumer.

Businesses are also a Target

Commercial credit cards – those held buy all kinds of businesses – will not be covered under the new laws. These are not considered consumer credit cards. many businesses rely on credit cards to help with cash flow, expenses and accounting practices. Unfortunately, due to the lack of added protection under the new law, credit card companies could see this as an opportunity to gain back some of their losses. Business cardholders should brace themselves for a rate increase.

Military Returning from Deployment

Members of the military are covered under a law that demands their interest rates be set at 6% while they are deployed. When they return to American soil, their rates can then be returned to the original, often much higher amount. Currently, this is not one of the approved sets of credit card holders affected by the law. Perhaps it was an oversight, as a question about this subject baffled the Federal Reserve Attorney. The situation is being reviewed, and perhaps by the time the law goes into effect, military personnel will be covered as well.

Credit Card Reforms may Happen Sooner than Previously Thought

News

Capitol Hill is now considering whether the legislation that will protect millions of Americans from deceptive credit card practices is not coming soon enough.

Speeding up the Credit Card Legislation

A proposal, which would speed up the implementation of the credit card legislation, is now being considered by Congress. The many credit card reforms, which are a part of the Credit Card Accountability Responsibility and Disclosure Act of 2009, were set to go into effect in February 2010; however, the many changes being made by creditors in an attempt to get around the legislation and prevent too much loss have made many financial experts wonder whether the new credit card legislation has caused more harm than good.

Because of the many last-minute measures being taken by creditors in attempt to boost their profit margins before the February deadline, Congress is considering moving up the effective date of the new legislation to December 1.

Opposition Meets Change….and Loses

There are some individuals and groups, however, that oppose the idea of moving up the effective date of the legislation, such as Federal Reserve Chairman Ben Bernanke, because they argue that creditors still need more time to implement new policies and to deal with any regulatory issues that may be a result of the legislation.

The members of the House Financial Services Committee were clearly not in agreement, however, when they voted unanimously to speed up the effective date for the credit card legislation. Now that the House Financial Services Committee has voted to move up the effective date, the legislation will now move onto the House for a vote, and then onto the Senate.

Many financial experts and politicians see this move as a way for Congress to protect consumers from a hike in interest rates, among other things, especially as the holidays approach.

Although many see this reform as long-overdue, there are many individuals that see it as a way to control the credit sector, instead of placing the responsibility on the consumer.

Now it is simply up to the powers of Capitol Hill to decide whether consumers will receive the protection of the credit card legislation sooner than later.

Five Surefire Ways to Negatively Impact your Relationship with Credit Cards

Introduction

Credit cards have gotten a bad rap as of late, mainly as a result of the Credit Card Reform Act recently signed into law by President Obama. It is important to remember, however, as these new credit card changes begin to take place, that you also have a degree of responsibility when it comes to your credit cards and your credit score.

Many consumers, however, fail to consider this until they find themselves in an unhealthy relationship with their creditors and in over their heads in credit card debt.

What did they do wrong?

1. They didn’t shop around for the best card. Keep in mind, even with the current state of the credit card industry that it is quite competitive and that, although it may take some searching, there is likely a card out there for you. From low interest rates to excellent rewards programs, there are a slew of attractive offers from creditors.
2. They never paid more than the minimum. The minimum payment amount set forth by creditors is not written in stone. In other words, your check each month to your creditor should not reflect just the minimum payment. The more you pay on your card each month, however trivial you think that amount may be, will get you out of debt all that much quicker.
3. They never searched for more money in their budget. If you don’t think you can afford more than the minimum payment on your credit card each month then you’re doing yourself a huge injustice. Some of the smallest changes in your budget can make the biggest difference in your credit card balance. Sit down, write out a comprehensive budget, and find ways to save so that you can put that extra money on your credit card each month.
4. They used cash advances and convenience checks way too often. Cash advances and convenience checks are often a problem in disguise. However convenient they may seem, they often come with many fees and charges, all of which can do nothing but plunge you further into debt.
5. They lived beyond their means. Simply recognizing the difference between your wants and needs can do wonders for your budget and your credit card balance. Instead of purchasing things that are simply out of reach for you financially, take a moment to visualize your overall goal of financial independence and say “no thanks” to living beyond your means.

The First Credit Card Reform Rules get Underway

News

August 20 marked the first day of the new credit card reform. Although the majority of the new laws won’t take effect until February 2010, there were a select few that made their way into the newest credit card legislation last week.

The new credit card rules, under the Credit Card Accountability, Responsibility and Disclosure Act, include: creditors must give their customers a 45-day notice of interest rate or fee increases; and creditors must allow their customers at least 21 days to pay their bill each month.

The Credit Card Accountability, Responsibility and Disclosure Act, which was signed into law back in May by President Obama, is designed to put an end to questionable practices by credit card companies. The many rules of this law include placing restrictions on credit card billing practices.

Although many agree that credit card reform is long overdue, it’s important to see both sides of the equation. In an effort to fight back against these regulations – and control the amount of money they will lose – many creditors have already begun imposing their own set of new regulations.

What to Expect from Creditors

As many of us have already seen, creditors have begun raising interest rates. In fact, according to Bankrate.com, the average variable interest rate on new cards is about 11.22%, up from 10.69% just three months ago.

Many creditors have begun revamping their terms and conditions and have found ways around the new credit card restrictions. In other words, many credit card holders have seen their creditors switch up the rules in just the last, few months.

For example, many creditors have begun not only hiking up interest rates, but also slashing credit limits and canceling cards for less-than-stellar credit card customers.

In addition, don’t expect many mail solicitations for credit cards – although that may not be a bad thing – and don’t expect many credit card companies to offer introductory or “teaser” rates for new credit cards.

Whether we like it or not, we all must be prepared for creditors to fight back against the new credit card regulations. As with anything else, sometimes we all must take the good with the bad and learn to adjust accordingly.