News or other things you need to know about Student Credit Cards
Companies issuing credit cards to students, and everyone else, have some new rules to abide by beginning the third week in the month of February 2010 and more that take effect as of August 2010. The new credit regulations are intended to keep the consumer informed and make sure they understand what they are signing up for and what the credit card will ultimately cost them.
New Credit Card Regulations
Student Credit Cards are especially affected by the new regulations that say companies cannot offer students-on campus-free gifts just for applying for the credit card.
But, what about those students that live off campus, can they still be enticed to sign up for a credit card by the offer of free gifts? The answer is yes, but there are rules and regulations that will govern some of these offers.
One of the new rules governing student credit cards states that the companies cannot allow under 21 year olds to sign up for a credit card unless the student can show means of repaying the debt himself, or they can get an adult to co-sign for him. The co-signor has to agree to take responsibility for the debt and prove that they can pay for it.
Changes In Monthly Statements
The monthly statement will also have some healthy changes. For one thing, the company now has to tell you how long it will take you to pay off your account if you continue to simply pay the minimum balance. That will be a shocking revelation for some as it generally takes a lot longer than you think. They must also inform you what monthly payment you need to make to pay the balance off within three years.
Another regulation that changes the monthly statement is that the company cannot change the billing date to a shorter cycle after the date has been set. The statement also has to be delivered to the card holder 21 days before the due date. This is to give the holder enough time to make a payment by the due date.
Nor can the company charge a fee any longer for payments made online, by telephone, or by mail-unless the payment is made on the day before or on the due date itself. The card holder has to make the payment within a reasonable time for the company to process the payment.
What They Can’t Do
Credit Card Companies have, for a long time, been able to charge late fees in such a manner that the card holder would actually be paying fees and late charges on amounts that had already been paid. This practice was referred to as double billing or two-cycle billing. They can no longer utilize this billing practice.
They can no longer raise the interest rates without notice, or retro-actively. The company issuing the card now has to give the card holder 45 days notice before raising the interest rates. And even better, their famous promotional interest rates have to be left in effect at least six months and unless the card holder has been told upfront that the rate changes in six months, the interest rates cannot be changed for a full year.
Summary
There are some good changes to Student Credit Cards with this new law, and some changes that affect all credit cards. You still need to read the fine print on your credit card statement as that’s the only way you will know exactly what interest and fees your company is charging you.
Companies will still be charging different interest rates. You need to understand what your cards fees, interest rates and terms are as they vary widely. Statistics show that over 75% of card holders have no clue what the fine print on their statements says, or what the interest rate is on a particular card. This percentage is expected to be higher in the student population.
You can manage your credit cards by reading your statement and knowing what it is that you are paying. If you are looking into getting a credit card make sure you do a comparison on the cards that are available.
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