by Michael J Brazier,
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UNITED STATES, Jun 30 — The provisions in the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 should save consumers at least $10 billion a year, sources say. With the good though usually comes the bad. Watch these new rules and how they will affect you specifically. This is currently the ONLY way people are getting out of debt within 5 years without hurting their credit
T
he provisions in the credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 should save consumers at least $10 billion a year, sources say. With the good though usually comes the bad. Watch these new rules and how they will affect you specifically. Learn the if-then scenarios that will keep big banks busting from the seams with your interest payments. Remember, big banks are looking out for their interest and profits, not your best interest and options.
Consumers have expressed concern that it has become harder to understand how their credit card is really going to work as some companies seemed to hike up rates and fees without notice to the consumer. Some even imposed surprise fees on bills paid just hours late. New rules are intended to change this. Terms and conditions must stay in place for at least one year, including promotional plans.
Problem here: terms must be applied for a year – UNLESS of course you default on your payment – which is the main reason most consumers lose their original terms in the first place. This doesn’t sound very promising.
Second issue: new rules won’t change the fact that the terms will still come in a 2-font no spacing tri-fold that contains legal verbiage from header to footer, front and back. Who’s going to read that? Not me and not most consumers when they’re getting ready to open a new line of credit.
When rates are raised herein, the hiked fee can only be applied to new charges for cardholders in good standing. STOP. Good standing – read between the lines. If you’re in good standing why would they raise your rates in the first place? This means that creditors may still raise rates for no reason whatsoever to people in good standing and those who are delinquent will be hit with the maximum allowable interest increases and fees.
Consumers may be provided a pre-heed when nearing their credit limit in an effort to avoid going over and being charged a fee. Problem is some creditors may apply a service fee to provide such a service to their cardholder. Some creditors may even add this feature automatically to your bill with little or no notice. Most wont, initially…it will probably come as a change advisement via mail that purposely looks like junk so you discard before reading.
Payback disclosures. This you’ve probably already seen on your own credit statement. Creditors must provide an easy to understand breakdown of your payback plan making the minimum monthly payments. The statement should include how long to pay off the outstanding balance at the current rate and how much the final payout will amount to. This isn’t really an amenity, more like a visual reality reminder of just how deep in debt you really are- or could be.
Some creditors are now also providing an in house credit counseling plan and list a phone number to call on your statement. These consolidation plans though are internal and do not provide the same benefits one would receive through a non profit credit counseling organization. To further, the plan would only work for their accounts – not all your credit cards.
There are a few more of these new rules but I think the point is sharp and clear. New rules and regulations will always be in play to ‘protect the consumer’ and encourage spending. With each rule comes new loopholes for banks to jump through and counter the change to secure the bank’s main interest, earning interest.
You don’t have to go at this alone and most people don’t these days. Turning to a nonprofit credit counseling organization has been a growing trend for people who truly want to be debt free. A consolidation plan counters ALL the rules and eliminates ALL fees while reducing the interest rate to ONE FIXED rate in the single digits. This is currently the ONLY way people are getting out of debt within 5 years without hurting their credit. A consolidation plan, not a settlement plan, can eliminate debt and improve credit at the same time.
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