Credit card holders all over US are facing serious problems due to hidden charges, high fees and high rate of interest for no apparent reasons. The situation is so terrible that people often consider credit card debt consolidation as the best solution if not bankruptcy. However, some good news is awaiting the consumers with the new credit card act that took effect on 22nd February 2010.
Let’s take a look at the key changes that can help you as a consumer:
- The banks must give at least 45 days of notice in advance, in case there is a change in the rate of interest. Also, the promotional rates would remain applicable for at least six months, unless disclosed at the time of credit card application. The rate of interest cannot increase in the first year.
- The interest rates on existing balances would remain unchanged, except under certain circumstances:
a) If, the consumer remains delinquent on his minimum payments within 60days of the due date. However, the increase will terminate within six months if the minimum payments are received.
b) In case of a variable rate of interest, the company can change the rate of interest according to the terms of agreement.
- The “double billing cycle” is prohibited in order to protect the consumers from unfair interest on balances.
- If a consumer is paying more than the minimum amount due that excess amount goes to the balance with the highest interest rates. Thus, the consumer is saved from the manipulating tactics of the credit card companies.
- The due date for the credit card bills should remain the same in each month.
- All payments received by 5:00 pm on the due date are considered as timely payments.
- The lenders cannot charge any over limit fees other than by the authorization of the consumer. The over limit fees may only be charged once in a billing cycle.
- If the over limit fees on an account is equal to 25% or more of the available credit balance, the lenders will not be able to deduct any fees from the available credit limit.
- Consumers below the age of 21 should have a co-signer while applying for a credit card. In case, the consumer has independent means of livelihood, he must demonstrate his abilities to repay the debts.
- All gift cards and certificates now have a life span of 5 years. No dormancy fees can be charged on them, unless they remain dormant for a year or more.
- The lender must disclose the time period it will take a consumer to repay his debts, if he is only paying the minimum amount. The lender must also disclose the total amount the consumer needs to pay every month, in order to pay off the entire balance in 36 months.
- In case a consumer wants to opt out of the credit card account, he will not be charged any penalty fee.
These were some very interesting changes that took place with the new credit card act. Overall, this will be beneficial to the consumers. However, this also means an end to no fee and low interest rate credit cards. So to get the best rates and maximum benefits from your credit cards, make sure that your credit scores are on the higher end.
Just to add, did you know that around 75% of card holders do not read the terms and conditions of the credit cards that they hold or apply for? The Better Business Bureau suggests all cardholders to read and familiarize themselves with the fine prints on the credit cards. They also recommend cardholders to review the new provisions set by the Credit card Act 2009. Use your credit cards rationally so that you do not need to consolidate debts ever.
This article was submitted by Sharon Smith of the Oak View Law Group at http://www.ovlg.com/
