Learn How Credit Card Regulations Result In Additional Concerns
March 10, 2010 by Pedro Snyder
Filed under Credit Debt
Because the new rules set forth in the Credit Card Act of 2009 came into effect on February 22, 2010, the credit card companies will now have to kowtow to stiffer rules when it comes to increasing rates, varying payment due dates and other questionable practices from the past. These new regulations along with the long-term recession that has consumers utilizing less credit and more cash, has severely affected the profits of the credit card banks.
Therefore consumers can expect the credit card companies to come up with some creative new charges and approaches designed to protect their profits. Customers need to be continuously aware of new fees that are showing on their credit card bills.
Many existing credit card accounts are now being hit with an annual fee. Formerly, most annual fees were reserved for the high-end reward cards so most cards did not have this fee. Annual fees add sizeable costs to the price of credit regardless of how frequently or how much a consumer charges on their card. Users have the choice of putting in an application for a different card with no annual fee and canceling their old card but if they do that their credit score will take a hit.
Be on the lookout for concealed notifications. Under the new rules, the credit card issuers are required to send you notice of any modifications to your account at least 45 days in advance. However, the notifications could be bundled within your monthly statement or even mailed in an unnoticeable envelope or an envelope that looks like a solicitation. Right now it is imperative to read all correspondence from your credit card companies very thoroughly.
Merchants may also be getting hit with increased fees. The fee that a business pays in order to allow their patrons to use a credit card is referred to as an interchange fee. When these fees are raised it is common practice for the merchants to increase their prices in order to protect their own business interests. Expect costs to go up as the merchants are forced to pay excessive interchange fees.
Under the new regulations college students will not be able to get a credit card unless they can verify the ability to pay or have a co-signor. However, the credit card companies are limiting their risk by reserving the option to keep the co-signor for long after the student turns 21. Co-signors need to be fully aware of the duration and extent of their accountability before they sign.
It can be more costly than ever to carry a balance on your credit cards. While issuers can no longer raise rates on existing balances, many raised the rates prior to the regulations taking effect and then gave interest rate rebates that gave a discount for paying on time or making a certain amount of new charges every month. Wise customers will refuse to be taken in by these bogus savings and instead they will pay their bill off every month.
Many of the credit card companies unjust practices of the past have been eliminated by the credit card act so long as the credit card businesses are seeing declining profits consumers can expect to see new tactics put forth that will charge them more.
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