The new credit card laws were made primarily to make credit card terms clear and fair so that customers understood what they were getting themselves into, giving them the opportunity to opt in or out of certain conditions. However, despite common misunderstanding, the new credit card laws may affect card holders more negatively than they may do positively: because banks are forced to cut back on lending and accept less customers, they have to make up for it in other ways by imposing charges and restrictions to those whom they do accept as patrons. The good news is that many of these changes have to be disclosed to the customer ahead of time – so just make sure that you have your eyes and ears out for listening! Below are five not-so-great ways in which the new credit card laws can affect you:
1. Interest Rate Increases: Although the new credit card law prohibits interest rate hikes for 12 months for new accounts, existing card holders may have their interest rates raised with some over 20%, even for for those who have been on time with payments. The good news is that if this does happen, the bank has to notify you ahead of time, 45 days to be exact. So watch out for the mail to see if this is going to happen!
2. Credit Card Fee Increases: Banks are now charging new fees such as over-limit, inactivity (if you don’t use your account) or low-balance fees. Keep in mind that banks have to disclose these fees to you to give you a chance to agree, opt out, or close your card. Again, fees have to be disclosed ahead of time – make sure you’re in the loop!
“Five Ways the New Credit Card Laws Can Affect You”
3. Over the Limit Fees: Banks now have to get your permission to let you go over your card limit or charge you the corresponding fees.
4. Under Age 21 Restrictions: If you are under 21, you have to prove that you have your own stream of income needed to pay your credit card bills, otherwise, you will need a cosigner. If you are thinking of cosigning for someone, you may want to assess the situation and keep an eye on the account because this could affect your credit directly.
5. Credit Card Rewards Changes: Banks are giving less perks and requiring more out of you to get them. For example, to get certain perks, you may have to spend more on your credit card or have your interest rates raised. If you’re into perks, shop compare different card perks and focus on the ones that give you the most goodies.
“Card Act – Major Provisions…..”
These changes can be tough for many, however, the good news is that they have to be clearly disclosed to you before they can take effect. So stay informed and take control!