Look Out for the New Credit Card Regulations

The new credit card regulations go into effect on February 22, 2010. What new guidelines should you expect?

In our efforts to keep you informed about what is going on in the credit industry, we want to warn you about what is coming on February 22, 2010. That is the day when new credit card regulations are going to govern the way you use your credit cards and the way you pay your credit card bills each month. Yesterday we talked about co-signers, statement mailings and more. Today we have more regulations that you should know.

Raising Interest Rates
If you have a fixed-rate credit card, you may notice a jump in your bill following February 22. The regulations stipulate that credit card companies cannot raise your rates if you have a fixed-rate credit card. The way the companies are getting around that, however, is by sending you an announcement with your statement that says your fixed-rate card is now a variable-rate card. This means that your credit card's interest rate is now connected to the prime interest rate with 7 or 8 extra percentage points tacked onto it.


New Fees and Penalties
Credit card companies are good at finding loopholes in legislation. And since the new regulations do not prohibit new fees and penalties, there is a chance that you could be responsible for exactly that – new fees and penalties. You may notice your card companies adding annual fees and an extra charge just for receiving a paper statement in the mail rather than getting it online. Some experts are even speculating that companies will charge you a fee if you do not use your card for an extended period of time.

Lower Credit Limits
Unfortunately, there are no restrictions on your credit card company lowering your credit limit with little or no warning. When this happens, your credit score drops because it reduces the amount of available credit you have to your name. In addition, if you are unaware of the lowered credit limit, you might go over your new limit and be responsible for even more fees. You can avoid this by "opting out," or telling your card company to reject any charges that would result in overlimit fees.

Your Formula for Paying It Off
With all of these new regulations, it is important to be careful with the way you use your credit cards. You can still keep them and use them, but you may need to change some of your spending habits and bill-paying habits. One way to help pay your cards off is to double the minimum payments. Of course, this only works if you stop charging on them. Within three years, you can pay off your credit card by following this simple strategy regardless of your interest rates or balance.

Keep February 22 in mind as it approaches fast. We will keep you updated on any developments occurring with this Credit Accountability Responsibility and Disclosure Act (CARD) of 2009.

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