Credit CARD Act in effect Thursday

Two important credit card changes go into effect Thursday.

Whether you’re grappling with broken credit or fighting to maintain your good standing, it’s important to pay close attention to the Credit Card Accountability, Responsibility and Disclosure Act of 2009 — commonly referred to as the Credit CARD Act.

Two of the reforms kick in Thursday, with bigger changes coming early next year.

“This is what I’m referring to as the sneak preview to the main event,” said John Ulzheimer, nationally recognized credit expert and president of consumer education for Credit.com.

Here’s what you should know:

From 15 to 45: Does it seem as if your interest rate changed right before your eyes? It may have appeared that way because credit card issuers were required to only give you 15 days advance notice; now they have to alert card holders 45 days ahead of time.

“The upside is consumers who actually read their notices have an additional month to plead their case,” Ulzheimer said.

Consumers have more time to explore options like transferring their balance to a low-interest credit card or opening a new credit card. They can also negotiate with their credit card company, which can change rates for reasons that have little to do with the individual. For instance, aggregate rate changes are made at times due to decreased property value in your zip code, even if you have good credit, Ulzheimer said.

“Try to change their minds,” he said. “But don’t depend on that as the only alternative. If you have good credit, vote with your wallet and take your money somewhere else.”

14 to 21: Card holders will now have 21 days to make their payment, as opposed to 14, from the date the credit card statement is mailed. For frequent travelers and people who have sporadic late payments, this gives them an additional seven-day cushion.

“The big winners are people who use e-statements, because you really get the full advantage of the 21 days,” Ulzheimer said.

More significant changes come down the pike Feb. 22. The highlights are:

* People under age 21 will need a co-signor or a job in order to get a credit card. This is designed to slow the number of young, college-aged students racking up credit card debt.

* Credit card issuers will no longer be able to change your credit status at anytime, for any reason. It’s called the Elimination of Universal Default. So, if you miss a payment with one creditor, another cannot automatically increase your rate as a result. “You have to do something wrong with your creditor,” Ulzheimer said. “You have to be 60 days past due with that issuer.” This will eliminate the heavy penalties often levied on the casual late payer, and penalizes those who are habitually late or have no intention to pay.

* No longer will credit card companies be allowed to let card holders exceed their limit without having the card holders permission to do so. Credit card companies make millions off the $35-$39 over-limit fees. If you do not opt in, your card will simply be declined, protecting your credit score and protecting you from over-limit fees.

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27 comments Add your comment

dgroy

August 19th, 2009
4:32 pm

OK, this is relevant……keep it up.

Rana Cash

August 19th, 2009
4:58 pm

You have to mix it up, don’t you think? Here, you’re as likely to find a coupon for free ice cream and burgers, as you are tips on how to stick to a budget, choose a bank, fight foreclosure or fix your credit. Thanks for reading!

clyde

August 19th, 2009
5:37 pm

Never carrying a balance on your credit card is the best way I know to bypass all this hogwash.I don’t know what my credit card’s interest rate is,nor do I care.

Anna

August 19th, 2009
5:45 pm

Question:
I am a 21 yr old college student who gets my school money from my parents deposited into my debit account, so it looks like I’m a big spender but I’m not. Apparently, I racked up some HUGE “overdraft protection” limit because of this and am negative by $600-700 right now because I overlooked a large charge then racked up the $34 over limit fees on coffees and lunches and movie rentals for $1!!!!!!!! I should have checked my balances, I know but I had no idea I had a credit limit like this on a debit card! I am so thankful that a law is being instituted to force approval on these “gracious” over limit charges. My question is do I have any chance to refute this overdraft or should I just somehow choke up the money? I’ve never overdrafted in the several years I’ve had this particular account, so I would consider myself a good customer!

chainshaw

August 19th, 2009
5:47 pm

Clyde – so glad that you are perfect, for the other millions who have been getting screwed by the credit card companies and their bloodlust, this is a good start.

Now, how many banks will try to get a few more licks in, before the changes in February?

rx-dawg

August 19th, 2009
5:55 pm

This is for credit cards Anna, not debit cards. It will not affect overdraft charges on a checking account.

Joe

August 19th, 2009
5:57 pm

Anna, these new rules will not protect what happened to you. There is a huge difference between credit cards and debit cards, which are simply extensions of your checking account.

You are going to have to pay the overdrafts, and I highly suggest getting a checkbook register and recording every transaction you make.

clyde

August 19th, 2009
6:16 pm

I also own many leather-bound books, and my apartment smells of rich mahogany.

hello world

August 19th, 2009
6:26 pm

clyde…you’re a douche

jconservative

August 19th, 2009
6:35 pm

clyde August 19th, 2009 5:37 pm
Never carrying a balance on your credit card is the best way I know to bypass all this hogwash.I don’t know what my credit card’s interest rate is,nor do I care.

LIKEWISE! A credit card is just another form of cash. Get the bill & mail a check that day.

Clyde is Right

August 19th, 2009
6:43 pm

Folks, Don’t buy things if you don’t have the money to pay for them please. Clyde, thanks for your comments and I am sorry that people resent your good discipline. You were raised correctly as a responsible person that understands the value of a dollar and has learned to respect it. It’s folks like hello world and chainsaw that contributed to this economy due to their disrespect for themselves and others.

who cares?

August 19th, 2009
7:02 pm

Actually clyde is right…if clyde really wanted to contribute he might say things in a different way. Not post comments to boast about his awesome and responsible life through a blog. Do you really think that helped? Does anyone care about Clyde’s belongings in his house and how it mights smell? Absolutely not!
A response to help others would have been nice is the way I see it. Some people manage their money better that others, that’s life. Me personally I don’t carry a CC…who cares though?

Mike Hunt

August 19th, 2009
7:08 pm

Credit is just the “MAN” trying to keep a brutha down. Bottom line, don’t spend what you don’t have. I keep a zero balance credit card for travel and emergencies only. It gets paid off before 30 days each time. The credit card company tried to increase my interest for 9% to 28% last year. I called them up and told them I was leaving and they recanted. Always, Always read your statments.

Don’t worry about that BS about having credit in order to have a high FICO score. Manage your cash right, and you can buy anything you want.

chris

August 19th, 2009
7:12 pm

The under 21 requiring a co-signer or job is very beneficial. I personally drove myself and see other drive thereself into heavy debt as a young 18 year old in college over credit cards. Fortunately I was one of the lucky ones who landed a great career in the military and was able to pay off that debt before it did too much damage.

daniel

August 19th, 2009
7:25 pm

clyde for mayor. Move over clark her comes clyde!

Samantah

August 19th, 2009
7:42 pm

I am a long time card holder of AMEX. They sent me a letter last week advising that my interest rate on balances carried would increase from 9% to 15%. No reason except that they can. I have NEVER been late in 20 years. When I called, they were not willing to do anything about it… They were getting their increases in before the law changed. Greedy…. Greed is what got us into this mess. I guess the financial institutions have NOT changed their way of thinkg or their ways…They are still greedy people.

zzzzzzz

August 19th, 2009
7:51 pm

y’all Clyde lives in an apartment. If I had his money, I’d own a house, wouldn’t y’all?

Atlantarama

August 19th, 2009
7:56 pm

I also agree with Clyde. Don’t charge more than you can pay off each month. Carrying a balance on a credit card is one of the worst ways to waste money because of the interest payments.

Mia

August 19th, 2009
8:04 pm

My son is now 42 years old, and had such a large debt as a result of horrible credit card companies sending him credit cards which he maxed out when he was still in high school!!! And the ones who called about his “late payments” were monsters.

I am so thankful that underage kids have to have co-signers, but I hope they have to PROVE their ages, so how do they do that with the credit card companies? I mean, after all, when dogs get credit card offerss, well…..

Ms. Kentucky

August 19th, 2009
8:07 pm

My advice to everyone is this…avoid credit cards as much as much as you possibly can. I have an excellent credit score, but that doesn’t stop the credit card company which I have from raising my interest rate too…just as they did with Samantah. As another poster stated, pay the balance off each month.

DawgNole

August 19th, 2009
8:22 pm

Clyde may not be perfect, and he may be a douche, but he’s dead right with his comments about paying off that credit card balance (down to the Big Zero) each and every month–as are those who agreed with him. It matters not one bit how much interest the greedy bank is charging you if you pay off that balance EVERY month. Discipline yourself to do this; it will be one of the wisest investments you ever make.

look in the mirror

August 19th, 2009
9:42 pm

i’ll have to side with clyde on this one. he may not have said it in the most tactful of ways but he’s right – the easiest way to avoid all of this is to just not carry a balance.

@ samantah – i’m not for a second about to say that credit card companies are angels – far from it. it is, however, pretty narrow minded to think that it’s purely the greed of those evil corporations that got us into this situation. what about the greed of all the people that spent well beyond their means and racked up enormous amounts of credit card debt? don’t they have a hand in this as well? the credit card companies certainly aren’t helping with their less-than-ethical tactics, but who among us has been forced by a credit card company to rack up charges?

[...] Credit card act in effect today [...]

Stan

August 20th, 2009
9:33 am

Do not worship at the alter of the all mighty FICO! I have been deeply in debt before and clawed my way out of it. I had a CC (with a zero balance) send notice a few weeks ago about cutting my available credit, so I called them and had them cut all the way to zero. I now NEVER have to worry about making a payment to them again.

Ever notice that the biggest buildings downtown are the bank buildings. Stop giving them money. It is too hard to come by to give it to them in “easy monthly payments”!!

BTW Clyde is right

Aaron J

August 23rd, 2009
7:32 pm

Samantah, the credit card companies are reacting to new laws that increase the risk of their operations. Low rates were provided because creditors knew they could increase them quickly if a borrower defaulted on his agreement, or if the economy went south due to poor borrowing habits.

The economy indeed went south, and people reacted pretty much the same way. People are racking up debt because they have no cash and use their credit cards. High risk means high cost. If creditors are going to be limited in the changes they can make, its only natural to increase the rates. If you were a creditor, wouldn’t you be doing the same thing right now? Yeah, grass isn’t so green on the other side after all, is it?

And Ms. Cash, it might do well to comment on the fact that many banks and creditors are already in compliance with the two changes you mention in this article. Chase, for example, gave me almost two months’ notice when changing my APR and they give me 25 days after mailing my bill before payment is due. While the law has changed, it has little to no impact on many consumers, mostly because the market demanded a certain etiquette from creditors. The market was working pretty darn good, all things considered.

[...] new regulations may help students avoid coming out of school with thousands of dollars in credit card debt, it [...]

[...] The Credit CARD Act, which rolled out in part in August 2009, goes into a full effect Feb. 22. While it is meant to protect consumers from money-grabbing practices of card issuers, the path isn’t exactly all-clear for shoppers. [...]