Top Three Questions and Answers About Credit Cards
The first credit cards were proprietary cards issued by department stores and gasoline or oil companies in the early 1900s. There have been many changes since those days. Choosing a credit card can be a complicated process and there are so many choices of card and issuer.
The most frequent questions these days have to do with the changes to the laws governing credit cards. These changes are being phased in with everything in affect by August 2010.
How will the changes to the credit card laws affect me?
Many of the changes have to do with restricting the amount of interest that can be charged. It also means the terms and statements will be easier to understand. The changes are also supposed to keep companies from arbitrarily changing the interest rates and then charging consumers the new rate, retroactively.
Or the card issuer makes changes and then sends a notice that most people can’t understand. The companies that issue your credit cards will now have to inform you before the rates are changed, in clear and obvious language what those changes consist of.
Some of the credit industry’s biggest card issuers and credit analysts foresee that these changes will mean that many cards will go back to charging an annual fee for the card. Since the interest rates that can be charged are now restricted, there will be larger upfront fees.
These same analysts believe that awards programs will start to go away and that the credit card bills will become payable immediately instead of having a grace period of thirty days on new charges before they start charging interest.
Because of the new regulations, credit card companies can no longer mail the bill and have it due three days later. The issuer has to give you twenty-one days from the date the bill is mailed or received before it is due. They have to give you advance notice of changes, and that notice has to come 45 days in advance of a change, if they are going to change the credit card’s terms.
You now have the right to “opt out” of certain changes. This will give credit card holders the chance to say no to the change, cancel the card and pay the bill off under the old terms. You have to make minimum payments on time, and you have to pay off your balance in three years, but you don’t have to accept the changes in term. The 45 days’ advance notice of changes is supposed to give you time to look for a new card to replace the one you’ve got.
There are also certain features that you need to “opt in” for. An example of this type of feature is over-limit fees. The card holder has to “opt in” in order to be able to go over their limit and pay a fee to do so. If you don’t “opt in,” to use this feature, then if you go over your limit, the transaction will be denied.
Is it true that my college student won’t be able to get a credit card anymore?
For the most part, yes it is true. If your student is under 21 years old, they will only be able to get a credit card account if they have adult co-signers on the account that can prove they can and will assume the responsibility for the debt.
Another change for students is that the credit card companies can no longer market on campus if they offer promo items. Like free pizza or gifts if the student fills out a credit card application.
If I am late on my other bills, will that raise my credit card interest?
The answer is yes. The term for this is Universal Default. Credit card companies can look at your credit report, see that you have late payments with someone like your utility company, and then raise your interest rate based on this information even if you’d never made a late payment to the credit card company. The difference under the new credit regulations that take full effect in August 2010 is that now they have to give you 45 days notice of the fact that they are changing your rate and why. Before they could just do it, and in fact some changed the rate retroactively.
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