You have heard of all the changes that were outlined in the CARD act of 2009 that went into effect February 22, 2010.
Well, credit card companies were forced to make additional changes that affect consumers which go into effect August 22, 2010. Here is a highlight of some of the changes developed by the Federal Reserve that may affect you.
1. If you make a late payment credit card companies can only change up to $25 for fee unless one of your last 6 payments was late or they can provide justifiable cause that the costs it incurs as a result of a late payment require charging more than $25. If you repeatedly make late payments you can be charged a higher fee but no more than $35.
2. You cannot be charged a late payment fee greater than your minimum monthly payment. This also applies to over-the-limit-fees.
3. You will no longer be charged inactivity fees for not using your credit card.
4. You will not be charged more than one fee for multiple offenses such as a late payment and over-the-limit. Some consumers were being charged multiple fees which made it impossible to stay current on their monthly bills.
5. Credit card companies must explain in detail any rate increases and must reevaluate your interest rate every six months. This will be helpful for those who made late payments in the past but are now current on their payments. If the evaluation determines that you can receive a lower interest rate, it must be applied within 45 days after the evaluation.
Showing posts with label credit card fees. Show all posts
Showing posts with label credit card fees. Show all posts
Saturday, August 14, 2010
Wednesday, February 17, 2010
CARD Act Credit Card Changes on February 22nd
The Credit Card Accountability, Responsibility and Disclosures Act or CARD Act that was signed on May 22, 2010 provides changes to credit card guidelines and goes into effect on February 22, 2010.
According to the Act credit card regulations and disclosures will be easier to understand and more transparent but at a higher cost to consumers. There will be additional or higher upfront costs for the consumer because of the CARD act. This will greatly impact lower to middle income consumers and consumers with bad credit who are only able to make the minimum monthly payments. Here are some key facts to be aware of regarding the CARD act:
1. Interest Rate Hikes. Interest rate hikes would not be applied to existing credit card balances but is still allowed provided credit card companies give at least 45 days advance notice.
2. Existing Balances. Limits interest rate hikes on existing balances in certain instances.
3. Minimum payments. Credit card companies must disclose the risks of making only minimum payments each month including how long it would take to pay off the entire balance if they only made the minimum monthly payment.
4. Term Changes. Changes in terms on accounts cannot occur without 45 days advance notice.
5. Paying Bills. Credit card payments are due at least 21 days after the monthly statement is mailed.
6. Due Dates. Credit card companies have to set payment cut-off times no sooner than 5pm on payment due dates and payments due on weekends or holidays are not subject to late fees.
7. Over-the-limit Fees. Consumers will now have the option to "opt in" for being charged over-the-limit fees. Those who opt-out would be unable to exceed their credit limits and will be charged a fee.
8. Subprime Credit. Consumers with bad credit who get subprime credit cards are charged upfront fees but cannot exceed 25% of the available credit limit in the first year of using the card.
9. Requires easy explanation of disclosures. Disclosures would also be available online.
10. Under 21. Credit offers can not be made to anyone under 21 unless they have an adult co-signer or can provide proof that they have enough income to repay the debt.
According to the Act credit card regulations and disclosures will be easier to understand and more transparent but at a higher cost to consumers. There will be additional or higher upfront costs for the consumer because of the CARD act. This will greatly impact lower to middle income consumers and consumers with bad credit who are only able to make the minimum monthly payments. Here are some key facts to be aware of regarding the CARD act:
1. Interest Rate Hikes. Interest rate hikes would not be applied to existing credit card balances but is still allowed provided credit card companies give at least 45 days advance notice.
2. Existing Balances. Limits interest rate hikes on existing balances in certain instances.
3. Minimum payments. Credit card companies must disclose the risks of making only minimum payments each month including how long it would take to pay off the entire balance if they only made the minimum monthly payment.
4. Term Changes. Changes in terms on accounts cannot occur without 45 days advance notice.
5. Paying Bills. Credit card payments are due at least 21 days after the monthly statement is mailed.
6. Due Dates. Credit card companies have to set payment cut-off times no sooner than 5pm on payment due dates and payments due on weekends or holidays are not subject to late fees.
7. Over-the-limit Fees. Consumers will now have the option to "opt in" for being charged over-the-limit fees. Those who opt-out would be unable to exceed their credit limits and will be charged a fee.
8. Subprime Credit. Consumers with bad credit who get subprime credit cards are charged upfront fees but cannot exceed 25% of the available credit limit in the first year of using the card.
9. Requires easy explanation of disclosures. Disclosures would also be available online.
10. Under 21. Credit offers can not be made to anyone under 21 unless they have an adult co-signer or can provide proof that they have enough income to repay the debt.
Wednesday, January 13, 2010
Upcoming Credit Card Changes in 2010
The Credit Card Accountability, Responsibility and Disclosures Act or CARD Act that was signed on May 22, 2010 provides changes to credit card rules and guidelines. The CARD Act will protect consumers from illegal and deceptive tactics used by credit card companies for years to earn extra money from unsuspecting consumers. Many of the changes go into effect on February 22, 2010, however some changes began in August 2009 and additional changes won't begin until August or December 2010.
Shortly after the bill was passed through summer 2009 many credit card companies began closing accounts of consumers with high balances; increased balance transfer fees, annual, late and over-the-limit fees such as Chase and Bank of America. Bank of America was also the first bank to begin charging the $3 ATM fee.
Credit card regulations and disclosures will be easier to understand and more transparent but at a high cost. They will be additional or higher upfront costs for the consumer because of the CARD act. This will greatly impact lower to middle income and consumers with bad credit who are only able to make the minimum payments. Here are some high points of the CARD act:
1. Existing Balances. Limit interest rate hikes on existing balances in certain instances.
2. Term Changes. Changes in terms on accounts cannot occur without 45 days advance notice.
3. Under 21. Credit offers can not be made to anyone under 21 unless they have an adult co-signer or can provide proof that they have enough income to repay the debt.
4. Universal Default. Universal default which increases interest rates based on payment history for other accounts would not be applied to existing credit card balances but is still allowed provided credit card companies give at least 45 days advance notice.
5. Paying Bills. Credit card payments are due at least 21 days after the monthly statement is mailed.
6. Opt Out. Consumers can opt-out or reject certain changes in the terms on the credit cards. Opting out allows the consumer to pay off the balance in five years in exchange for closing their account.
7. Due Dates. Credit card companies have to set payment cut-off times no sooner than 5pm on payment due dates and payments due on weekends or holidays are not subject to late fees.
8. Over-the-limit Fees. Consumers will now have the option to "opt in" for being charged over-the-limit fees. Those who opt-out would be unable to exceed their credit limits and will be charged a fee.
9. Subprime Credit. Consumers with bad credit who get subprime credit cards are charged upfront fees but cannot exceed 25% of the available credit limit in the first year of using the card.
10. Minimum payments. Credit card companies must disclose the risks of making only minimum payments each month including how long it would take to pay off the entire balance if they only made the minimum monthly payment.
Unfortunately, the CARD act does not cover everything but does provide some help to consumers. The act does not address the issue that there is no maximum interest rate for credit cards and interest rates are not regulated by the government. Interest rates are regulated by each state.
Some credit card companies have raised annual fees to $99 a year including Bank of America and American Express. One bank is offering a credit card with a 79.9% interest rate.
For those who are addicted to their credit cards you may be forced to use cash soon.
Shortly after the bill was passed through summer 2009 many credit card companies began closing accounts of consumers with high balances; increased balance transfer fees, annual, late and over-the-limit fees such as Chase and Bank of America. Bank of America was also the first bank to begin charging the $3 ATM fee.
Credit card regulations and disclosures will be easier to understand and more transparent but at a high cost. They will be additional or higher upfront costs for the consumer because of the CARD act. This will greatly impact lower to middle income and consumers with bad credit who are only able to make the minimum payments. Here are some high points of the CARD act:
1. Existing Balances. Limit interest rate hikes on existing balances in certain instances.
2. Term Changes. Changes in terms on accounts cannot occur without 45 days advance notice.
3. Under 21. Credit offers can not be made to anyone under 21 unless they have an adult co-signer or can provide proof that they have enough income to repay the debt.
4. Universal Default. Universal default which increases interest rates based on payment history for other accounts would not be applied to existing credit card balances but is still allowed provided credit card companies give at least 45 days advance notice.
5. Paying Bills. Credit card payments are due at least 21 days after the monthly statement is mailed.
6. Opt Out. Consumers can opt-out or reject certain changes in the terms on the credit cards. Opting out allows the consumer to pay off the balance in five years in exchange for closing their account.
7. Due Dates. Credit card companies have to set payment cut-off times no sooner than 5pm on payment due dates and payments due on weekends or holidays are not subject to late fees.
8. Over-the-limit Fees. Consumers will now have the option to "opt in" for being charged over-the-limit fees. Those who opt-out would be unable to exceed their credit limits and will be charged a fee.
9. Subprime Credit. Consumers with bad credit who get subprime credit cards are charged upfront fees but cannot exceed 25% of the available credit limit in the first year of using the card.
10. Minimum payments. Credit card companies must disclose the risks of making only minimum payments each month including how long it would take to pay off the entire balance if they only made the minimum monthly payment.
Unfortunately, the CARD act does not cover everything but does provide some help to consumers. The act does not address the issue that there is no maximum interest rate for credit cards and interest rates are not regulated by the government. Interest rates are regulated by each state.
Some credit card companies have raised annual fees to $99 a year including Bank of America and American Express. One bank is offering a credit card with a 79.9% interest rate.
For those who are addicted to their credit cards you may be forced to use cash soon.
Friday, October 30, 2009
Can the CARD Act Stop Creditor Tricks to Keep You in Debt
Credit card companies use hundreds of tricks and gimmicks to keep consumers in debt. According to R.K. Hammer, the credit card penalty fees revenue will reach $20.5 billion in. Credit cards generate more than $2.5 trillion a year. The credit card industry is one of the largest fraud industries in the country. Here are some common traps credit card companies use to keep consumers in debt.
1. The minimum payment trap keeps consumers in debt and in most cases is not enough to cover the interest and finance charges that accrue each month which is why when you send in a payment your balance either doesn't go down or only goes down by a few dollars.
2. No maximum interest rate for credit cards and is not government regulated. Interest rates are regulated by each state.
3. High late fees are charged either when payments are sent after the due date or sent on the due date although the payment was received on time.
4. Credit card monitoring and credit card insurance. There is no need to purchase credit card insurance because there are so many stipulations when signing up for the insurance that it is to your advantage live below your means to pay down debt.
5. Some credit card term change as the wind blows and makes it difficult for consumers to keep up with the changes.
6. The credit card agreement or disclosure is created using fine print to make it difficult for most consumers to read and those who try to read it get frustrated because of the fine print. However, this document is very important and should be read because it tells you all of the restrictions and guidelines for using the credit card.
7. The payment address or due date may change as a way to confuse consumers so their payment arrives late and they get charged a late fee.
The CARD Act of 2009 will eliminate many of these creditor tricks but the credit card companies will still find ways to work around the law to make money. It is best that you read everything you receive from your credit card company, ask questions and know your rights as a consumer. You can find information on the ftc.gov/credit site.
1. The minimum payment trap keeps consumers in debt and in most cases is not enough to cover the interest and finance charges that accrue each month which is why when you send in a payment your balance either doesn't go down or only goes down by a few dollars.
2. No maximum interest rate for credit cards and is not government regulated. Interest rates are regulated by each state.
3. High late fees are charged either when payments are sent after the due date or sent on the due date although the payment was received on time.
4. Credit card monitoring and credit card insurance. There is no need to purchase credit card insurance because there are so many stipulations when signing up for the insurance that it is to your advantage live below your means to pay down debt.
5. Some credit card term change as the wind blows and makes it difficult for consumers to keep up with the changes.
6. The credit card agreement or disclosure is created using fine print to make it difficult for most consumers to read and those who try to read it get frustrated because of the fine print. However, this document is very important and should be read because it tells you all of the restrictions and guidelines for using the credit card.
7. The payment address or due date may change as a way to confuse consumers so their payment arrives late and they get charged a late fee.
The CARD Act of 2009 will eliminate many of these creditor tricks but the credit card companies will still find ways to work around the law to make money. It is best that you read everything you receive from your credit card company, ask questions and know your rights as a consumer. You can find information on the ftc.gov/credit site.
Tuesday, October 27, 2009
Want a 79.9% Credit Card Interest Rate
There is no federal limit on credit card interest rates so consumers can be charged any rate. Credit card interest rates are usually between 6-36%. Unfortunately, the CARD Act of 2009 that goes into effect in February 2010 will not address this issue that has been plaguing consumers for years. According to NBC San Diego, the First Premier Bank also known as Premier Bank is offering some consumers a pre-approved credit card with a 79.9% interest rate.
The card also requires additional fees such as an account setup fee, program fee, monthly servicing fee and additional card fee which total an additional $199 a month without making any purchases. The credit card offers a limit of $250. The fees are charged on the first month's bill leaving only a $51 remaining balance.
Credit card interest rates are regulated by each state and as we can see interest rates can be any rate a credit card company desires.
Previously the highest interest rates I knew of were 32-36% by a former client of mine. I thought that was insane but 79.9% beats that by a landslide.
This is a real example of why consumers need to repair their credit, pay down their debt and increase their credit score so they won't ever receive these types of pre-approved offers in the mail.
The card also requires additional fees such as an account setup fee, program fee, monthly servicing fee and additional card fee which total an additional $199 a month without making any purchases. The credit card offers a limit of $250. The fees are charged on the first month's bill leaving only a $51 remaining balance.
Credit card interest rates are regulated by each state and as we can see interest rates can be any rate a credit card company desires.
Previously the highest interest rates I knew of were 32-36% by a former client of mine. I thought that was insane but 79.9% beats that by a landslide.
This is a real example of why consumers need to repair their credit, pay down their debt and increase their credit score so they won't ever receive these types of pre-approved offers in the mail.
Tuesday, June 16, 2009
What the CARD ACT Means For Consumers
The Credit Card Accountability, Responsibility, and Disclosure Act (CARD) has been floating around Congress for several years. In 2005 it was called S499 but died, in 2007 it was called HR1461, in 2008 it was called S3252 and it was finally approved on May 22, 2009 by President Obama as S414.
The Act provides the most significant changes to the credit card industry since 1969. President Obama stated the act will "restrict practices he says contributed to consumers' financial problems during the recession. We're not going to be giving people a free pass and we expect consumers to live within their means and pay what they owe. But we also expect financial institutions to act with the same sense of responsibility that the American people aspire to in their own lives."
The Act is a huge win for consumers and college students who have been victims of the unfair practices of credit card companies. A few highlights of the Act are:
1. Banning unfair rate increases
2. Prevents fee traps
3. Requires easy explanation of disclosures
4. Statements will tell consumers how long it will take to pay off a balance by making only the
minimum monthly payment
5. Eliminate credit card rate hikes
6. Provide credit card agreements online
7. Consumers will be mailed statements 21 days before the due date
8. Payment dates will no longer be shifted
9. Consumer approval required for over-the-limit transactions
10. Restrictions on interest rates and credit cards offered to college students under age 21 without
verifying employment or getting parent's permission
Unfortunately the Act does not put a cap on credit card interest rates so interest rates can still increase but consumers will have to be notified before the rate increase becomes effective.
This Act will provide a more level playing field allowing consumers to shop around for the best deal and hopefully offer a more competitive market instead of the market being dominated by a few top banks and credit card companies.
Make sure you read everything that comes in the envelope with your statement each month and if you don't understand something contact the credit card company right away. If you feel you are being a victim of unfair practices notify the company and file a complaint with the Federal Trade Commission or your state Consumer Affairs Office.
The credit card companies are waiting for you to mess up or throw away something that you should have read, don't let them win.
The Act provides the most significant changes to the credit card industry since 1969. President Obama stated the act will "restrict practices he says contributed to consumers' financial problems during the recession. We're not going to be giving people a free pass and we expect consumers to live within their means and pay what they owe. But we also expect financial institutions to act with the same sense of responsibility that the American people aspire to in their own lives."
The Act is a huge win for consumers and college students who have been victims of the unfair practices of credit card companies. A few highlights of the Act are:
1. Banning unfair rate increases
2. Prevents fee traps
3. Requires easy explanation of disclosures
4. Statements will tell consumers how long it will take to pay off a balance by making only the
minimum monthly payment
5. Eliminate credit card rate hikes
6. Provide credit card agreements online
7. Consumers will be mailed statements 21 days before the due date
8. Payment dates will no longer be shifted
9. Consumer approval required for over-the-limit transactions
10. Restrictions on interest rates and credit cards offered to college students under age 21 without
verifying employment or getting parent's permission
Unfortunately the Act does not put a cap on credit card interest rates so interest rates can still increase but consumers will have to be notified before the rate increase becomes effective.
This Act will provide a more level playing field allowing consumers to shop around for the best deal and hopefully offer a more competitive market instead of the market being dominated by a few top banks and credit card companies.
Make sure you read everything that comes in the envelope with your statement each month and if you don't understand something contact the credit card company right away. If you feel you are being a victim of unfair practices notify the company and file a complaint with the Federal Trade Commission or your state Consumer Affairs Office.
The credit card companies are waiting for you to mess up or throw away something that you should have read, don't let them win.
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