TECHNOLOGY TIPS - THE NEW CREDIT CARD ACT EXPLAINED
Unless you've been out of the country this past week, you have probably heard or read about the Credit Card Accountability, Responsibility, and Disclosure Act, aka the New Credit Card Act.
Being the geek that I am, I've actually read the fact sheet shared by the government so let me try to make this a little easier to read. Here is a quick list of what's covered:
- Bans Unfair Rate Increases - gone are the days when your rate can be increased arbitrarily. The first year of an introductory rate must remain stable for at least six months and the rates disclosed in easy to understand language.
- Prevents Unfair Fee Traps - end of the late fee "traps" including a cutoff in the middle of the day or late fees for due dates on the weekends. If you overpay your minimum payment, then the remaining money must be applied to the highest interest rate items first. Credit card companies must obtain permission to approve transactions that would place you over the limit.
- Plain Sight /Plain Language Disclosures - it's got to be easy to read and understand without creating challenges to consumers. You'll be shown the consequences of your buying decisions which includes showing total cost (price plus interest) to pay off your existing balance in 36 months. You'll also be shown the length of time it would take to pay off your balance if only paying the minimum due.
- Accountability - this is for both the credit card companies and those who regulate them. Now issuers will be required to make contracts available on the Internet in a usable format. Regulators are also accountable to ensure credit card companies are abiding the rules.
- Protections for Students and Young People - sorry kids, if you are under 21, you're going to need a co-signer. Only those aged 18-21 who can prove an ability to pay will be considered (and not guaranteed) for eligibility.
Each of these areas were put in place to help us consumers and went into effect February 22, 2010. One caveat of this new Act, look for new fees (or use of loopholes) similar to what we experienced with the banking industry.
CATHY MALLERS & DEAN'S TEAM CHICAGO
