As of February 22, 2010 credit card reform has become a reality. Before you start celebrating by using your favorite piece of plastic for shopping spree, wait.
Not only do you need to take the time to learn about the changes, you should know how the major card issuers plan on filling the financial void created by the reform revisions in order to provide yourself with a level of credit protection.
What is the CARD Act? How Will My Bill Change?
The CARD Act revisions were put into place as a way to protect consumers and help guarantee their fair treatment from card issuers. Aside from ensuring consumers receive their credit card bills 21 days before payments are due, all statements must feature new information specifically targeting consumer protection. By July 2010, credit card companies will be obligated to clearly list the good, bad and ugly regarding your debt. The new bill will include:
- Simplicity In Design: The new bill design will clearly organize interest rates and fees by grouping them together as well as clearly showing the due date, minimum payment due and total balance amount.
- Minimum Payment Warning: Verbiage stating “If you make only the minimum payment each period, you will pay more in interest, and it will take you longer to pay off your balance” will be clearly displayed on your bill.
- Minimum Payment Box: Math illustrating the above point will also be included. The numbers will clearly demonstrate the actual costs associated with making only the minimum payments as opposed to paying off the debt in a more timely fashion.
- Late Payment Warning: Card issuers will need to spell out the consequences associated with making late payments. This warning will not only indicate penalty fees associated with tardiness, but also must state what your penalty APR can be raised to.
- 800 Number For Credit Counseling: Each bill will feature a toll free number that will connect consumers to free credit counselors. The hope is before your credit card bills bury you, you can easily find the help you need to manage your debt.
How are Credit Card Issuers Getting Around the Act?
Even though your bill will be easier to understand, you should know there is still plenty of evil lurking about. Consumers not only need to protect themselves from credit fraud but from the card issuers themselves. To counterbalance the potential financial loss of credit card reform, issuers have worked aggressively on fine-tuning hidden and deceptive fees. Some practices that card companies will utilize to mitigate their losses include:
- Closing accounts at will
- Raising interest to legally uncapped maximum amounts
- Credit limits can be lowered with virtually no notice
- Minimum monthly payments amounts can be raised with no notice
- Existing fees for such transactions as cash advances and late fees, may be raised
- New fees (I.E. inactivity penalties or choosing to receive paper statements) can be imposed as part of your credit card agreement
Although the new CARD program should help consumers a bit, relying on the laws to fully protect consumers is a bit of a gamble. Educating yourself on the credit card reform changes is a must as well as carefully reviewing every piece of mail sent from your card provider. Legally, they must notify you of any additional adjustments they make to your account terms.