Many Provisions of Credit Card Act Go Into Effect Today

Today, many provisions of the Credit Card Accountability, Responsibility and Disclosure Act go into effect. The act will change the way banks regulate interest rates, send statements, and more. While good for consumers, banks are already looking for other ways to make up for projected lost revenue.

Today, many provisions of the Credit Card Accountability, Responsibility and Disclosure Act go into effect. The act will change the way banks regulate interest rates, send statements, and more. While good for consumers, banks are already looking for other ways to make up for projected lost revenue.

Specific pro-consumer changes include:

Notification Requirements: Card issuers must give consumers 45 days notice before making changes to their account terms or rates. Your credit card bill must be mailed at the same time every month and must be sent 21 days before the bill is due.

The Federal Reserve provides more details on notification requirements.

Grace Period on Interest Rate Increases: Credit card issuers cannot raise the rate on your account in the first year unless you are 60 days delinquint or have a variable rate card. They can also raise it if you signed up with a introductory rate offer.

Elimination of Common Charges: Many common charges will be eliminated. For example, if you spend over the limit with your card, the transaction will now be rejected as opposed to being accepted and then causing your whole account to receive a higher penalty rate. Companies can only impose interest charges on balances in the current billing cycle. In addition, annual fees cannot total more than 25% of the initial credit limit.

While these are all good, there are several unintended consequences of the act.

  • Issuers have decided to raise the rates on cards in general, since they cannot raise them in the first 12 months. According to the LowCards.com Complete Credit Card Index ( http://www.lowcards.com/CreditCardIndex.aspx ), the advertised Annual Percentage Rates for credit cards averaged 13.46% last week. Six months ago, the average was 12.11%. One year ago, the average was 11.51%.
  • Other fees are going up. Many cards are adding or increasing annual fees and other charges. Look for balance transfer fees and other charges not regulated by the act to go up.
  • A shift from fixed rate cards to variable credit cards. Once again, because rate increases on fixed rate cards are locked, many issuers are switching to variable rate cards. Still, if banks can raise the rates on a fixed rate card, it's really not fixed rate.
  • Increases in the minimum payment. The act requires that all payments go to the highest APR first. In response, issuers are raising the minimum payment up to 5% of the balance.
  • A decrease in rewards. Many expect that banks will cut back on rewards and other related perks.

Still, I think that the new act is the right way to go. In the end, I bet most consumers would prefer to pay off high debt first, receive their bill regularly every month, and have a fixed rate account that is somewhat fixed rate, then get an extra air mile when buying the groceries.

 

 

Editorial Disclosure: Opinions expressed here are those of the author, and have not been reviewed, approved or otherwise endorsed by any bank advertiser, card issuer, airline or hotel.

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What are Some Good Credit Cards for People with Bad Credit?

Rebuilding your credit can be difficult. But there are some ways you can increase your credit score these days. Credit cards for people with bad credit are one way to accomplish this goal.

Having bad credit can be a huge dilemma. It is difficult to get out of a bad credit slump because it is nearly impossible to find creditors to take another chance on you. As a result, you do not have many opportunities to rebuild your credit. However, there are some credit cards out there for people with bad credit. They have various qualifications and guidelines that you have to follow, but they can be a way to build your credit back up and show you are responsible with your finances. Here are a few popular credit cards for people with bad credit.

The Platinum Zero Secured Visa Credit Card from Applied Bank
This is a relatively new opportunity for people with bad credit. There are no application fees, no introductory rates and the company reports to the three main credit bureaus on a regular basis. This helps you rebuild your credit with each payment you make on time. And since there are fewer fees, you do not have to pay as much to obtain a Platinum Zero Secured Visa Credit Card from Applied Bank like you do with some other companies.

The Current Card by Discover
This unique credit card is designed with teenagers in mind. In essence, it is a debit card that offers parents a method for controlling spending. Parents can set spending limits for their teen each day, week or month depending on their habits and the parent’s discretion. The debit card also allows the parent to restrict usage in certain places, such as hotels, tobacco stores and liquor stores. The Current Card by Discover offers free deposits from other credit cards a bank accounts as well as free direct deposit by either the parent or the teen. There is also fraud protection, free text message and email alerts so parents can stay updated on where the card is being used and there is no minimum balance, credit checks or loading fees.

The First Option Visa Card
This is a REAL Visa credit card and not a debit card. With this card, you can get up to a $5,000 line of secured credit and you can also be approved for it regardless of your income or credit score. Approval is guaranteed and the annual fee is only $59. It’s a great card to help you start rebuilding your credit right away!

The Green Dot Gold Prepaid MasterCard
Prepaid cards are an ideal way to boost your credit history because they prevent you from going over your spending limit. If you activate your Green Dot card online, there is no fee and you do not have to worry about a credit check either. You can pay your bills with it online and do so much more. You can also forget about overdraft and penalties because it won’t let you spend more than what is in the account. You can’t beat that!

These are just a few of the popular credit cards available for people with bad credit. We will list more of these in future blog posts to help you start rebuilding your credit the smart and easy way.

Editorial Disclosure: Opinions expressed here are those of the author, and have not been reviewed, approved or otherwise endorsed by any bank advertiser, card issuer, airline or hotel.

Advertising Disclosure: This site may be compensated for hosting offers.


Facts about Credit Card Debt in the United States

The statistics that go along with credit card and consumer debt are staggering. But do you know how bad things really are?

Consumer debt is running rampant in our society. People are choosing to charge stuff on their credit cards all the time even when they cannot afford to pay it off. Credit cards are maxed out and millions of Americans are up to their eyeballs in debt. If you are interested in just how bad it is, here are some facts about credit cards, credit debt and more.
• According to Experian, one of the three major credit bureaus, each American has an average of more than $16,600 in debt, excluding mortgage debt.


• If you add up the total consumer debt in the United States, it would be more than $2.55 trillion dollars. Those figures are from 2007 and it has probably only gotten worse since then.


• More than eight percent of American households owe more than $9,000 on their credit cards.


• Only about 40 percent of American credit card holders have a balance of less than $1,000.


• About 15 percent of American credit card holders have balances that total more than $10,000.


• The typical American consumer has about $19,000 worth of credit available to them when combining the available credit on their credit cards. More than 50 percent or cardholders are using less than a third of their total available limit.


• 28 percent of credit card holders surveyed said they are having a difficult time paying off their balances.


• More than 75 percent of undergraduates in college have at least one credit card. Of those, the average college student has more than $2,000 in debt and they will accrue more than $20,000 more debt in student loans during their undergraduate years.


• The average young adult household in the United States pays about 25 percent of their income toward debt. That is an increase of about four percent from 1992.


• Between 1992 and 2001, the average credit card debt among young adults went up by 55 percent.


• In the United States alone, there are more than one billion credit cards in circulation.


• Nearly one quarter of all the bankruptcies filed in recent years are done by consumers under the age of 25.


• The majority of Americans are not saving enough money to fund their retirement years.


• Lenders now collect more than $7 billion a year in late fees and other penalties. That’s up from only $1.7 billion in 1996.

Some of these numbers are probably pretty shocking to you. If they are not, they probably should be. Americans are spending more and more money that they do not have to buy stuff that they do not need. How do you fit into these statistics? Would you say you are above or below the average American consumer when it comes to credit card debt?

Editorial Disclosure: Opinions expressed here are those of the author, and have not been reviewed, approved or otherwise endorsed by any bank advertiser, card issuer, airline or hotel.

Advertising Disclosure: This site may be compensated for hosting offers.