Be Good To Your Money Bulletin http://ezezine.com
The credit card reform bill won't take effect until Feb. 22, 2010,
however, one component of the bill will be effective 8/20/2009. This
portion of the bill deals with the rate increases. Credit card
companies are now required to give you a 45 day notice BEFORE the rate
increase. Following are additional components of the bill. The actual
bill was over 900 pages, but only about 5 pages dealt with credit card
1. No interest rate increases for the first 12 months of your credit
Of course, there are exceptions to the rule. First, your rate could
increase in the first year if the creditor disclosed a rate increase
when you opened the account. Second, if you don't make the minimum
payment within 30 days of the due date you'll be subject to a penalty
2. No interest rate increases on pre-existing balances.
When there is an interest rate increase, the credit card issuer can't
retroactively apply the increased rate to existing balances. Only
purchases made after the increase will be subject to the new interest
3. No more double billing cycle finance charges.
The double billing cycle method of calculating finance charges allows
credit card issuers to charge interest on balances you've already paid.
4. Limited fees for subprime credit cards.
Subprime credit cards can no longer charge up the cardholder's credit
limit with fees. Subprime credit cards have a fee for EVERYTHING. Now,
fees are limited to 50% of the credit limit, but only 25% of those can
be charged when the account is opened. The remaining fees must be
spread over at least five billing cycles. Simply put, it is better if
you don't have one of these cards.
5. Billing statements must be sent 21 days before payment due date.
6. Payments received by 5:00 pm on the due date are on time.
The Federal Reserve recognizes that banks must have a cut-off time for
accepting payments and sets that time to 5:00 pm. The didn't specify a
time zone, so, sending your payment early is still a good practice.
This practice includes paying your bill online.
7. Payments received the next business day after a weekend or holiday
are on time.
If your due date falls on a weekend or holiday and your credit card
issuer doesn't process payments on that day, your payment is still
considered on time if it's received by the next business day. It
doesn't state if the 5 PM is effective for online payers. So, I suggest
you pay it on the holiday, if necessary.
8. Payments above the minimum are applied to highest interest rate
The minimum payment would go toward your low-rate balance, while the
remainder of your payment must be applied to the balance with the
highest interest rate. This reduces your interest cost over the life of
the credit card versus the alternative of applying the complete payment
to the low rate balance. Banks are hoping that you start taking more
cash advances, because this will seem like a safety net for consumers.
Don't be fooled!
9. Billing statements must include year-to-date total of interest and
Now, you'll be able to see just how much interest charges and fees you
pay on your credit card. When the rules take effect in 2010, your
billing statement will have to list the current month's interest
charges and fees along with the total amount you paid during the year.
This alone will probably scare a lot people away from credit card use.
While the credit card reform bill does not stop the rate increases, you
can-by eliminating your use of credit cards. I will update you on the
responses from the credit card companies. Yes, they will fire back.
L L Q Publishing Company
631 N. Stephanie Street
Henderson, NV 89014