Archive for the ‘credit card news’ Category

Pay Attention to this Anti-consumer Loophole in the CARD Act

Sunday, October 10th, 2010

The Credit Card Accountability, Responsibility and Disclosure Act of 2009 is now fully in place. The third stage of reforms went into effect on August 22, 2010.

But mainstream news doesn’t tell the whole story…

The CARD Act should be good news for consumers with credit cards, and in many ways it is, but the news around the reforms has been slightly misleading. To understand all of the provisions, you need the rest of the story.

For instance, you heard that interest rates cannot increase in the first year after opening a new account. That’s true, unless you had a 6 month promotional rate that expired, or unless you have a variable rate tied to the consumer price index, or unless you become 60 days delinquent.

After the first year, your credit card issuer can immediately increase your interest on existing balances for all of the above reasons, and they can increase your interest rate on future purchases as long as they give you 45 days’ notice.

This is probably the most deceptive of the terms so widely touted and applauded.

The truth is, the new, higher interest rate will apply to purchases made only 14 days after they send notice. How they turn 45 days into 14 days is a puzzle whose answer likely lies in some fine print somewhere, but this misconception is a dangerous one for consumers.

It sounds as if the new rate will apply, but they can’t bill you for it until the 46th day.

I’d say that’s pretty sneaky. And, call me suspicious, but I’d say they’ve promoted it falsely knowing full well that it would get consumers deeper in debt – at high interest.

Think about it…

If you believe that your rate will not go up for 45 days, you just might decide to go ahead with that major purchase you’ve been putting off. After all, if it’s something you really need and can’t put off forever – like a new refrigerator because the old one is gasping for breath – you’d naturally assume that it’s wise to get it while your rate is still low.

You’ll be “safe” if you make that purchase immediately, but if you do it on day 15 after they’ve mailed you the notice, you might as well have waited 60 days, because you will pay interest on that purchase at your new high rate.

Notice that the calendar will begin turning on the day they mailed the notice. If it didn’t arrive in your mailbox until a week later, you don’t have much time. So check the date on the correspondence, not the date you received the notice.

Author: Mike Clover

Credit Cardholders Relief Delayed Again

Friday, April 17th, 2009

When Representative Carolyn Maloney of New York introduced the Credit Cardholder’s Bill of Rights to the House of Representatives in January, she hoped for fast action. She had introduced the same bill in 2008 and it had died with no action taken. However, this year, with consumers up in arms over credit card issuers’ behavior, she hoped for better results.

The results are better – the Bill passed through the House subcommittee and was sent on to the full House Committee on financial Services.

However, one of the primary hopes riding on this bill was that once passed it would be immediately signed by the President and would go into effect 90 days later.

That didn’t happen. Perhaps in an effort to pacify the financial services industry, Subcommittee members have agreed that card issuers will have a full year to enact the reforms. That means that this Bill, if passed, will take effect at approximately the same time as Federal Regulations already set to become effective in July 2010.

Those regulations were enacted by the Federal Reserve, Office of Thrift Supervision and the National Credit Union Administrator. The purpose in presenting the Credit Cardholders’ Bill of Rights was to give the weight of law to the regulations. In a statement made earlier this year, Representative Maloney pointed out that regulations are relatively easy to alter, while Federal laws are not.

While this discussion was going on in the House of Representatives, the Senate Banking Committee passed the Credit CARD Act, which is another attempt to reign in unfair lending practices. This is now set to go to the full Senate for a vote. If passed, this Act would go into effect in 9 months, rather than the 12 months set by the House Subcommittee.

The Senate version addresses some of the same issues as the House version, such as eliminating double-cycle billing, requiring issuers to mail bills 3 weeks prior to their due dates, and prevent issuers from charging a late fee if payments were mailed 7 or more days before the due date.
In addition, the Senate’s Credit CARD Act would limit aggressive marketing and irresponsible lending to young people with no means to repay the debt, restrict penalty fees, require that payments be first allocated to the balance with the highest interest rate, and eliminate:
• Retroactive rate increases, and
• Universal default
These last two items have perhaps been the biggest culprits in plunging Americans into default on credit card bills, because they apply to debt which was incurred under other terms. When minimum payments double under these practices, many consumers who were never in default before are simply unable to keep up.

Author:Marte Cliff your resource for free credit reports, credit cards, loans, and ground breaking credit news

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