I have a love/hate relationship with credit cards. I have three of them – but soon I will have only two. My decision to cancel the third came as a result of the Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009. This act hasn’t gotten a lot of press; however, there are some points I think need to be highlighted.
- Expect rates to rise. Section 171 of the Act which has since been struck out, scared the credit card companies. Essentially this section says if a credit card company can’t change a fixed rate card interest rate until your card expires. My AX has gone from 7.99% fixed to a variable rate that equals 15.99%. AX will be getting my cancellation notice shortly.
- Lower limits. Credit limits will be lower as the new act is forcing credit card companies to “live within their means.” If you have any type of risk in your credit profile – you’re going to get less than ideal terms.
- No over the limit fees. The new Act gives the consumer the right to opt-out of over the limit fees to avoid going further into debt for ANY reason. Since some companies have been known to lower credit limits without telling their customers in advance – then notifying them after they went over the limit, I am behind this change 100%.
- No fees for payments. In the digital age paying by phone, fax or computer would be cheaper. The Act has to spell out that companies should not charge for different methods of payment. Another plus for the Act.
- Introductory offers will decline. Teaser rates that give 1.99% for the life of the loan look good, but – once that period is up now there are two balances. One at the introductory rate and one at a higher rate. Payments are applied the lower rate – forcing card holders to carry the high interest longer. Well no more, the Act requires companies to apply principle payments to highest interest rate first.
The good news is this act should force credit reform. The bad news is that those held in the pinch won’t be seeing the advantages – at least not right away.
If you want to increase you need help to understand credit, or to repair your credit I have three wonderful e-books you can download. Just click here the link…
Next time, we’ll cover things you can do to reduce your reliance on credit cards or at least their impact on your life.
Cheryl Richter is a Christian that happens to be a CPA. She has over 15 years of experience in the Audit profession. She has written for the Kansas City Star, Faith section.