Most Interesting Findings
On the one hand, the new credit card rules require that banks give you a more advance warning before increasing your interest rates – as a matter of fact they will have to give you at the very least 45 days before increasing your rates, this number is up from 15 days previously. Also, they are going to have to send your bill to you at least 21 days before the credit card’s due date, this number is up from 14 days, giving you a week more time to pay and hopefully making it a great deal less likely you’ll suffer late fees due to postal service inadiquicies.
Those changes, which will go into effect Thursday, are just the first of a flurry of new consumer protections under the new Credit Card Accountability Responsibility and Disclosure Act (CARD), enacted earlier this year. Other rules, including but not limited to a ban on interest rate hikes on existing balances and limits on the banks ability to charge over-limit fees, will take effect next year.
Interest rates and fees are likely to increase.
However, some analysts say that not everything is well and good. They point out, for example, that many credit card companies are trying to get a jump on the new law by jacking up interest rates and fees already. In fact, if you’ve received any letters from your lender in the past few weeks, you better look it over carefully – it may have some very unpleasant surprises. If you have already thrown the letter out, access your account online or over the phone and check for any recent notifications.
Be prepaired as well for any upcoming changes; it’s extremely recommended for at least the next year that you read your billing statement very carefully for any unexpected notifications of changes in your credit card terms. Of course, that’s a good idea anyway, even though many Americans often ignore it among the blitz of monthly bills that arrive in the mail.
Many specialists expect that credit card companies are going to try to counter the new regulations with creative new regulations of their own or do something else that will be sneaky to try and make up for lost revenues. Higher APRs are more than likely for many people, you may also see your credit card company going to a variable rate program where the interest rate on your card fluctuates. You can also expect to see fewer rewards programs, as well as many cards that are currently no-fee may be adding annual fees in the near future.
Even card holders who regularly pay their balance off in full every month may find themselves getting hit with unexpected fees, for such things as receiving paper statements, service calls that involve a live employee, balance transfers, cash advances and other services.
Be alert for notifications from your issuer.
Be alert as well for reduced credit lines. A lower than expected limit could put you at risk of an overcharge if you make a major purchase after a credit limit reduction. In addition, a lower credit line on a credit card account where you’ve been carrying a balance could have an adverse effect on your credit score, if the reduction means you’re using up most of your available credit on that one card. It is better to spread your purchases over a few different credit cards or, better yet, pay it off and leave the cards alone!
Even with the changes, experts say the best way to avoid getting burned by new fees and rates is still the same old advice – avoid carrying a monthly balance on your charge card. Pay off your balance completely each month, if at all possible, and if you can’t do that, put yourself on a schedule to pay it off in the near future. For most credit card holders, paying twice the monthly minimum, assuming that there will be no new charges, should enable them to pay off their balance in full within 2 and a half years, and you’ll be amazed at how much more financial freedom you have once you’re no longer dragging that debt around.
For more information on this topic or if you need any other advice regarding credit cards, budgeting, or over all finances feel free to contact us:
By phone – (561) 355-0069
By email – Support@JemCreditCards.com
On the web – www.JemCreditCards.com
Also, one of the lenders with the least changes is Discover card I advise them as a first choice credit card!
Tags: credit card, credit card law, credit card laws, credit cards, credit cards law
Posted in Finances · March 21st, 2010 · Comments (0)
Consumers are going to be in for a shocking surprise to be shown on billing statements for credit card accounts. Did you know that the average card holder only pays off only $2,000.00 every 3 years on their credit cards. If I would have told you this 2 years ago, you probably would think that I am a nut! How can it be within the laws for banks to charge you over 20% interest and on top of that keep you in debt for such a long period of time. Well, now you are going to notice that I was not lieing 3 years ago! Due to the new credit card reform, credit card companies are going to have no choice but to show you how long it will take to pay off your debts. The scary aspect of this is that on some of these statements credit card companies will have to clearly print that YOU WILL NEVER PAY OFF THIS ACCOUNT PAYING ONLY THE MINIMUM PAYMENT. I can already see your reaction! It’s probably something like “What! Are you kidding me, how, why, can they do that?”. The answer is yes they can and they will! I want to explain how, and why:
How:
The vast majority of credit card companies with the exception of few such as Discover credit cards, structure minimum payments as 1% of the balance plus interest charges. Some of these banks will even charge less as a minimum payment! Just for this example I am going to use 1% plus interest charges so you can fully understand how this works! Lets say you have a balance of $25,000.00 on one of your credit card accounts. On this card you are paying 20% interest. Well 1% of this balance will be $250.00 which is all you will put toward the balance this month. Interest this month will be $416.67 meaning your overall payiment will be $666.67 for the month. Knowing that only $250.00 of that payment will actually go toward the balance is anoying enough but now hopefully you can see how they can keep you in debt for so long!
Why:
Well when you look at it from the banks point of view this is actually a great thing for them. Over the term of your debt they are going to make more than what they loaned to you in the first place. Even if you don’t ever pay the debt off, the bank still stands to make a huge profit from your account! Now that you understand how and why they do this, I would like for you to go to www.JemCreditCards.com and learn how to get around it and actually get the chance to pay your debts off!
For more information on this topic or to discuss any other topic, feel free to contact us:
By phone : (561) 355-0069
By email : Support@JemCreditCards.com
On the web : www.JemCreditCards.com
Tags: credit card, credit card law, credit card laws, credit cards, credit cards law
Posted in Credit · March 15th, 2010 · Comments (0)