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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