The Low Down on the Credit Crack Down

While there is some consumer relief about the recent ruling on the perceived unfair practices of credit card companies, don’t expect to feel the weight lift off until July 1, 2009.

There have been many consumer and policymaker complaints voiced and now it seems the National Credit Union Administration, the Office of Thrift Supervision, and the Federal Reserve have addressed these complaints and have ruled on several popular issues.

For starters, the ruling will allow consumers to have adequate amounts of time to pay their monthly payments. It has become increasingly common for credit card companies to change their timeline of payment, which essentially shortens the payment window and often a late fee will be incurred, unbeknownst to the customer. With the new regulations, lenders such as banks, credit card companies, and credit unions must make certain that monthly credit card statements arrive to customers at least 21 days before the monthly payment is due, giving more ample opportunity for all consumers to make on-time payments.

Credit card companies are also prohibited from using methods that would maximize interest charges in an unfair manner. Consumers who have existing balances will not be subjected to a rise in interest rates. Also, for those who carry two different balances, credit card lenders are banned from crediting all of the payment to the lower interest balance and taking advantage of the interest accrued. For customers of the subprime credit card, there will be a limitation of fees which limit the fees the cause a reduction in the credit limits available to consumers.

Additionally, some other controversial tactics practiced by credit card companies in the past will now be a thing of the past. There have been new policies set forth that will now restrict or outright prevent such unfair practices such as double-cycle billing practices, raising the interest rates on cards with existing balances, and universal default.

Finally, there is new regulation about credit cards that charge an advance fee for opening an account in cases where that fee would constitute most of the customers credit limit. For instance, say you open an account with a credit limit of $100, the company can no longer charge $75 just for establishing the account.

While it may seem like a long time until the new regulations come into play, there is no time like the present to get a better understanding of the terms and conditions of your current credit card lenders. If you have never actually read the disclosure statements you receive in the mail, you should start immediately. Review your existing accounts and if you find they do not fit your needs, start researching and comparing other credit cards that may be a better fit. There is not many bigger financial mistakes than paying out your hard-earned money simply because you o not understand something you have signed up for or because you are not as informed as you should be. Take the time to read up all the way each credit card works, especially when it comes to fees, penalties, and the APR conditions of the card. The new regulations are not yet in place so you still need to be extra cautious when it comes to your accounts.

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This entry was posted on Wednesday, December 24th, 2008 at 12:06 am and is filed under Credit Card News, Tips & Advice. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.