How The New Credit Card Law Can Help You
It was on May 22, 2009 when President Barack Obama finally signed the New Credit Card Law
. Every credit card holder should spend time to study this new law. The major changes will surely help you cut back your costs and stay away from bad credit.
The first batch of changes already took effect last August 2009 while the rest of the provisions will be effective starting February 22, 2010. In this article, let us discuss the highlights of the New Credit Card Law and how it will affect consumers especially credit card holders:
Controlled Interest Rate Hike. The increase of interest rate will only be allowed under certain conditions: when a promotional rate expires, when the Index Rate rises, and when the cardholder defaults payment for 60 days or more.
Under the New Law, the "Universal Default" clause is permanently banned. That means credit card Issuers cannot increase your current rate on account of late payments with other creditors. In addition to this, changes on the rate is only possible after the first year of issuance. In case of change, the issuer must give notice at least 45 days in advance before the new rate applies.
The privilege to opt out. If you are not happy about the NEW Terms and Conditions of your credit card issuer, you can opt out or decline by closing the account. Opting out means the cardholder has the right to pay the remaining charges under the old Term. You can ask for an extended repayment period up to 5years.
Student credit card restrictions. Young people under the age of 21 cannot open accounts on their own unless they can show proof of independent income or they have a co-signer to guarantee the account.
Add to this, credit card companies are forbidden from launching advertising campaigns within 1,000 feet from college campuses. This reformation protects young people from the risk of bad credit as a result of overspending, mismanagement or owning too many student credit cards.
More opportunity to make payments on time: With this new law, all issuers are required to send their billing statements at least 21 days before the cardholder's due date. Compared to the present 14-day billing notice, the new law gives the cardholder the chance to pay their balances without incurring late fees or interest rate fees.
The cut-off time should be set after the official business hours which is 5pm. Furthermore, late fees cannot be imposed if the payment due date falls on a weekend or a holiday, when the bank is closed.
Highest rate balance must be slashed off first. In the past, payments in excess of the minimum due are deducted from the lowest rate balances first. The high rate fees can make it harder for you to pay off your full balance. That is about to change.
Now, if the Issuer imposes varying rates on cash advances, regular purchases, and balance transfers, payments must be slashed off from the highest rate debt first.
No double-cycle billing. One of the good news is that cardholders won't have to deal with double-cycle billing anymore. This method of billing can be a great burden since you can be charged with interest rate based on your previous and current charges. It doesn't matter if you submitted payment the previous month you will still incur finance charges. The double-cycle billing is completely eliminated under the New Law.
Lower fees for sub-prime credit cards. People who use credit cards for bad credit can find relief knowing that their upfront fees cannot exceed 25% of their credit limit.
Copyright (c) 2010 Liz Roberts
by: Liz Roberts
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