11 posts tagged “credit card”
Protection from arbitrary rate increases
Credit card companies are now required to provide cardholders with a minimum 45-day notice on any interest rate increase, allowing consumers enough time to consider their options. Additionally, most promotional APRs will be required to last for a minimum of 6 months.
The right to have rates reviewed and reduced
Issuers are required to review APRs of all accounts every 6 months to see if a reduction in APR is warranted.
Fair allocation of payments
While in the past, most credit card companies applied payments towards balances with lower interest rates first, the new legislation will force them to put that payment towards balances with higher interest rates. This will ensure that cardholders who make their payments on time will be in a position to pay the least amount of interest
No universal default
Drawing on credit reports from other issuers, credit card companies used to be able to raise interest rates to the default rate if the cardholder defaulted on another credit card. Now, they can only focus on the cardholder's payment record concerning their particular card.
No double-cycle billing
Double-cycle billing allows for credit card companies to compute finance charges based on more than one billing cycle. Thus cardholders are penalized for carrying a balance in past months even if they paid off their balance in the most recent month. Credit card companies will now be prohibited from using this double-cycle billing practice.
No fees for paying your bill
Many credit card companies currently charge a $5-15 surcharge if a payment is made over the phone instead of online or by mail. This part of the legislation ensures that, when using regular processing service, there will be no such fees. However, issuers will still be able to charge for expedited service via phone or mail.
Protection from due date gimmicks
Payments made by a cardholder by 5 P.M. EST on the due date would be considered on time, and protect consumers from unnecessary late payment fees and possible interest rate increases.
Enough time to pay your bill
Currently, credit card companies give 14 days between statement notification and the payment due date — this time period is often known as the "grace period." Now, issuers will have to give 21 days for cardholders to make on-time payments.
Education on dangers of minimum payments
Currently, issuers do not educate cardholders that how they pay off their balances (i.e. minimum balance vs. full balance) affects their financial standing in the long run. The new laws would require quarterly reports that disclose the time and interest costs to pay off credit card balances, if the consumer only pays the required minimum.
Protection of young cardholders
In the past, young cardholders were drawn into attractive introductory offers only to find that they are unable to pay off their bills. Now those under 21 can only get a credit card in two ways: (1) have a qualified co-signer, or (2) prove they have the ability to repay their credit card. In addition, issuers will no longer be able to offer tangible gifts on college campuses. Finally, issuers offering college-specific cards will have to report their contracts with universities regularly for federal government review.
Clark Howard and Carmen Wong Ulrich have a deep fascination with FICO scores. Too bad they mean less and less to bankers these days. Banks look at your take home pay and your total credit limit. They assume that if you get the loan, you will max out all your credit cards the next day! So you should keep your income to total credit limit as high as possible. Since most of us can't increase our incomes substantially in the short run, the best way to do this is to cancel cards you no longer use!
If you have saved money or made money because of this blog, tip
me.
For $3 you get to download my seminars. They teach you how to save
$130,000
over your lifetime by smarter spending, how to consistently make 7% on
your money, and how to earn $800 a month in your spare time!
|
It is safer to make a debit card purchase using the “credit” option (no PIN used) if the card has a Visa or MasterCard logo on it. That’s because the credit card company’s zero liability protection policy applies to this transaction.
You get better protection, a thief doesn’t get your PIN and you’re not going to get money raided out of your bank account.
And as always, continue to support this infopreneur with whatever you can afford.
Have you ever used your credit card and been asked for ID? Did you know this is against the merchant guidelines that govern Visa and MasterCard? MasterCard even has a simple-to-use form where you can alert them if a merchant required ID.
The policy does not make sense to me, especially since I sign the back of all my cards "photo ID required".
