Credit card rules go into effect Monday
POSTED: Monday, February 15, 2010 - 6:10pm
UPDATED: Tuesday, March 23, 2010 - 11:43am
TYLER-Strict credit card regulations will be reigned in this Monday. The government hopes to give relief for those with mounting credit card fees and skyrocketing interest rates.
Since the CARD Act, as it's called passed Congress, there's been reports credit card companies have been pulling a fast one on many of you, while they still can. But that should all end this Monday.
Beginning February 22nd all credit card users will have more protection against card companies. But Financial Planner and President of Bridge Wealth Management,Thomas Smith, told us don't get too excited.
"Your going to find an environment where they will now charge an annual fee where they might have not done in the past," Mr. Smith said.
Under the new law, credit card companies will no longer be able to arbitrarily raise your interest rate. The only way they'll be able to raise your rate on an existing balance is if you're 60 days or more late on your payment.
When it comes to future purchases, the company can still raise your rate whenever they please and by however much they please, but they'll have to give you at least a 45 day warning before they do.
Companies will also have to tell you how long it will take to pay off your debt if you make just the minimum payment.
"That will be a big wow moment for many people," he said.
Also under the new law, your statement must come 21 days before it's due and your payment will be due on the same day every month from now on.
When it comes to over-the-limit fees, you can't be charged unless you "opt-in" and give the company permission to complete over-the-limit transactions. Otherwise your charge will be denied.
"For the person that has the mountain of credit card debt now, my best advice to them is to opt-out of the changes they want to make and then pay it out over five years," Smith said.
Though these rules will help protect the credit card user, Mr. Smith says it will be more costly in the long run for the average credit card user. Also he says credit cards will be largely unaccessible to low income users and you'll most likely see rewards cards start to disappear.