Aug 20, 2009 6:46 pm US/Eastern
Despite New Rules, Beware Crafty Credit Card Cos.
NEW YORK (CBS) ―
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Long awaited relief for credit card customers is finally here...sort of. There are still plenty of ways for the credit card companies to get you.
AP
Long awaited relief for credit card customers is finally here...sort of. There are still plenty of ways for the credit card companies to get you. Today's rules mostly mean card companies have to tell you before you get hammered, and give you a fair chance to pay.
Beginning Thursday, the playing field is getting a bit more level between credit card banks and customers. It's now mandated that customers get 21 days to pay. Banks must give 45 days notice before increasing rates and fees, and if you don't like it, cancel the card, keep the old rate and get five years to pay it off.
"Basically it was open season on consumers," said Adam Levin of Credit.com.
Advocacy groups say these new regulations go a long way towards undoing the devastating effects credit cards have had on consumers' lives.
"It's all about raising the level of financial literacy and awareness in this country," said Levin.
Additional protections coming in February of 2010 include:
- They can't raise rate on existing balance, unless it's a variable rate card, an introductory rate has expired or a consumer is 60 days late
- No over-limit fee unless you opt in and agree to the over-limit fee. They'll decline the charge if you hit your limit
- Can't do double cycle billing (one of the most onerous forms of interest rate calculations)
- End of universal default, when being late on some other bill previously allowed a card to raise your rate to the default rate (frequently 30% or more)
- Must allocate payment to highest interest rate balance first, then the lower
- Student marketing under 21: prove ability to pay, or get parent to cosign. They cannot raise your limit with prior written consent of co-signor
- Can't charge an extra fee for paying automated
- Can't raise interest rate on new account in the first year it's opened (unless 60 days late). Then if good for 6 months, they have to drop it back down
- On statement, they must show you how long it will take you to pay it off if you pay minimum payment
- Due date 5 p.m. of that day
In the past few months rates jumped 25 to 50 percebt at several of the major issuers, and they're expected to keep on raising those rates right up until the February deadline.
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