gold dollarWill The New Credit Card Laws Bring Relief To Credit Card Holders?

You can find plenty of conflicting information regarding the new credit card laws scheduled to be fully implemented February 2010.

After listening to the complaints concerning unfair credit card practices, the US Federal Government has passed legislation to protect credit card holders from unfair or confusing practices by card issuers.

Millions of Americans will see a host of improvements on their credit card accounts, but unfortunately, many have already begun to see higher interest rates and new charges as well.

Credit card lenders have been complaining that the new laws governing credit cards will make it tougher for them to make profits. PLEASE!!! After several years of record profits, that's hard to believe.

The credit card companies are expected to earn nearly 4 billion dollars this year from fees, but the new credit card laws will impose tighter restrictions on them very shortly.

Credit card companies are looking for creative ways to add fees to card holders and recover the potential loss of revenues. Many have already begun to impose new fees that have never been charged previously.

In spite of the new laws, competition is still fierce for consumers with good or excellent credit scores.

Likely due to the credit crisis and the new credit card laws, lenders have shortened the introductory periods on balance transfers to 6 months.

One practice being phased out due to the new credit card laws is Universal Default. Universal Default occurs when a creditor raises the rate of interest on a credit card based on your paying patterns and frequency on any of your other bills. (You can read more about Universal Default - The Contagious Misery Of Credit Card Debt here.)

What You Need To Know About The New Credit Card Laws

checkmark   Credit card companies cannot increase the annual percentage rate (APR) during the first 12 months of opening up a new account.

checkmark  45 Day Notice of Increase
Lenders must give written notice 45 days prior to an interest rate increase or when making a significant change to terms of the account. (15-day notice was previously required.) In the same notice, lenders must inform you of their right to cancel the credit card account before the increase or change goes into effect.

checkmark  Extended Grace Periods
Statements must be sent 21 Days before Due Date giving you more time to make your payment on time.

checkmark  No Floating Due Dates
(Effective February 2010) A cardholders due date will be the same date every month.

checkmark  On Time Payments
Payments received before 5 p.m. on the due date will be considered on time. Due dates that fall on days that issuers don’t process payments will be considered on time, as long as payment is received by the next business day. For example, payments made the Monday after a weekend or December 26 during the holidays would be considered on time. Payments made at a local branch are to be credited the same day. However, the creditor can charge a fee for an in-person payment.

checkmark  More than Minimum Payment Applies to Highest APR Balance
The old laws allowed credit card companies to force you to pay lower interest rate balances off first, before any of your payment could be applied to higher interest rate balances. The new credit card laws require any payment over the minimum due to go to the highest interest balance. This will reduce the amount you pay in finance charges.

checkmark  The Effects Of Minimum Payments
Many people are not aware of how long it will take to pay off a balance when only the minimum payment due is paid. The new credit card laws require that billing statements indicate that paying only the minimum increases the amount of interest charged as well as the time it will take to pay off the balance. Your statement will also include a toll-free number for credit counseling and debt management services.

checkmark  Billing Statements Include Interest and Fees
In order to understand how interest and fees increase the cost of using credit, creditors are now required to include interest and fees in your monthly billing statement, along with the total amount you’ve paid during the year.

checkmark  Free Payment Options
The new credit card laws no longer allow lenders to charge you a fee for making a payment online, by mail or by phone. However, if your payment is due the same day or the next day, an exception is made.

By eliminating some of the arbitrary charges that lenders impose on consumers, the new credit card laws will level the playing field and make borrowing money a bit fairer.

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