Sweeping new credit card rules are set to take effect nationwide on Monday. They’re meant to offer fairer terms for everyone who pays with plastic, and could potentially save consumers billions of dollars.
Under the new rules, consumers will have added protection from what critics call the “tricks and traps” of credit cards.
“It used to be – let’s say you slip up and you’re a day late on a payment. The credit card companies would triple your interest rate and apply it to your entire, existing balance. That, they can’t do anymore,” Tamara Draut, vice president of policy and programs at Demos, says.
Credit card issuers will not be able to rais your interest rate for 12 months, with one exception. If you are 60 days past due, they will be required to apply payments to the balance with the highest interest rate.
Monthly bills must now show how long it would take you to pay off a balance with only minimum payments. Also, statements will arrive at least 21 days before your payment is due, up from 14 days, to help avoid late fees.
“Here’s the bad news: there’s no limit on how much interest they can charge you, so the sky is still the limit,” Draut says.
Credit card companies can still lower your credit limit at any time, and for any reason, and debit cards are untouched by the new reforms.
“Debit card use is up, as people try to be more careful with their finances, but the banks are catching them from the blind side,” Mike Calhoun, president and COO of the Center for Responsible Lending, says. “They’re putting more fees now on the debit cards.”
Those fees average $35 any time you overdraw your bank account, costing consumers a total of $13 billion each year.
“People need to be responsible, need to pay for the services they get, but they need to pay under fair rules,” Calhoun says.
Consumer advocates are pushing for an independent watchdog agency to regulate the credit and debit card industries. Banks are vehemently opposed to the idea.
Experts urge all consumers to read every statement for upcoming changes and call the bank with questions so you don’t get caught in a credit crunch.
For more on the exact rules of the CARD act, as well as links to finding “not for profit” credit counselors in your area, please click here.
While this is certainly a good first step in the right direction, there are still still many “Tricks and traps” that are committed by these credit card companies that need to be addressed.
They need to be addressed as soon as possible. The amount of thievary, deception, swindlery, and shrewd craftiness these credit card companies commit against their consumers is just HORRENDOUS!!! It is utterly BEYOND BELIEF!!!!!
Well, the idea of a credit card is that you’re borrowing money from the bank, and then paying them back each month. Our neshama comes down to this world, and is “on loan” from Hashem for the duration of our lifetime. Our “payment” to Hashem is what we accomplish during our time in this world. The ultimate mission we were sent down here to accomplish is to make this world into a Dirah B’tachtonim – which relates to the current parshios, speaking about the Mishkan. Use your imagination, I’m sure someone can continue from here, add some thoughts…. nice idea… Read more »
I would love to hear a dvar Torah of what we can learn from this for our avodas Hashem – how it relates to this week’s parsha or to Purim.