Find out what to expect from the CARD Act's newest and most extensive credit card regulations. They deal with important issues for consumers such as interet rate hikes and fees. Like what you hear? Help us out by writing a review at iTunes. Questions go to money@qdnow.com. Thank you!
Money Girl
163 What Are the New Credit Card Rules?
Find out what to expect from the CARD Act's newest and most extensive credit card regulations. They deal with important issues for consumers such as interet rate hikes and fees. Like what you hear? Help us out by writing a review at iTunes. Questions go to money@qdnow.com. Thank you!
- Broadcast on:
- 24 Feb 2010
- Audio Format:
- other
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Realtors are members of the National Association of Realtors and bound by Code of Ethics, because that's who we are. Hi everyone, and welcome back to Money Girls Quick and Dirty Tips for a richer life. I'm Laura Adams. In today's episode, I'll tell you five ways the new credit card rules can help protect your finances. You may remember that a new regulation called the Card Act became law back in May of 2009. The name is an abbreviation for the credit card Accountability Responsibility and Disclosure Act. The rules for the legislation didn't go into effect right away, but instead were scheduled to roll out in three separate phases. The first phase was in August of 2009. The second phase goes into effect this week on February 22, and the final phase will be in August of 2010. I covered the first round of rules in a previous podcast, but here's a quick recap of the three most important points that became law last year. Those credit card rules require creditors to give you written notice 45 days in advance of making any substantial changes to the terms of your account, such as hiking your interest rate or increasing your fees. They must inform you in writing that if you don't accept their new terms, such as additional fees, you can close your account and pay it off under the old terms. And they must deliver your account statements electronically or by mail at least 21 days before your payment is due. The second round of credit card reform that goes into effect this week is the most extensive. The regulations deal with many of the issues that are most important to consumers, like unexpected interest rate increases and fees. So if you're ready, here are five ways the new rules can help protect you. Number one, interest rate increases can't happen easily. For fixed rate cards, your interest rate can't be hiked for an existing account balance unless you're at least 60 days late making a payment. For new accounts, the rate can't be increased at all during the first year if you're paying on time. But for variable rate cards, the interest rate can always increase or decrease based on the index it's linked to, such as the prime rate. However, when a creditor offers a promotional interest rate for any type of card, they have to honor it for at least six months. Number two, over limit fees are limited and must be permitted. You'll have to give your consent for a creditor to charge an over limit fee on your account. That's a penalty for accruing a balance that exceeds your credit limit. You may be thinking, "Why would I ever give permission to be charged a credit card fee?" Well, I don't recommend it, but if you do agree to over limit fees, you'll never have to worry about having a charged denied due to insufficient credit. The good news is that you can only be charged one over limit fee per billing cycle. Also, you can't be charged an over limit fee if the reason you go over your limit is due solely to interest charges or fees and not due to your spending. Number three, late fees and payment fees are restricted. You can be charged a late fee if your payment is received by 5 p.m. on the due date but doesn't get posted to your account. Nor can you be charged a late fee when your payment arrives on the business day that follows a due date that happens to be on a weekend or holiday. Now, you can make a payment any way you like by mail, phone, electronic transfer, or online, and creditors can't penalize you for it. However, they can charge you a service fee to expedite a payment. Number four, more account information will be at your fingertips. Predators now have to make your account terms and agreements available online. They've also got to beef up your monthly account statements with disclosures. They have to tell you how long it would take to pay off your balance if you only made the minimum payment each month. The statement also has to show the payment and interest that you need to pay in order to eliminate your full account balance within three years. And five, the highest interest portion of your debt now gets credited first. When you make a payment that exceeds the minimum monthly amount due, it's allocated to your highest interest balance first. For instance, if you made a higher interest transaction such as a cash advance, that balance would be paid down before any balance you have for regular purchases. As great as the credit card reform is for consumers, there are still credit traps to be aware of. Good taste is easy to spot, but hard to pin down. You know it when you see it. And in today's culture, there's no greater signifier of taste than the car you drive. You want something sophisticated, but not stodgy. 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Planning ahead is crucial in life, especially when it comes to what happens when you're gone. Getting life insurance may sound daunting, but policy genius makes the process a breeze. With policy genius, you can find insurance policies that start at just $292 a year for a million dollars of coverage. Some options offer same-day approval and avoid unnecessary medical exams. Policy genius's technology lets you compare quotes from America's top insurers in just a few clicks to find your lowest price. It's the country's leading online insurance marketplace. And if you ever need help or guidance, they have an expert license support team to answer your questions, handle all the paperwork, and advocate for you throughout the process. It's never too late to plan ahead. Go to policygenius.com or click the link in the description to get your free life insurance quotes and see how much you can save. That's policygenius.com. Buying or selling a home is a big deal. Literally. It's one of the largest financial transactions you're likely to make. So work with someone who will work with your best interest in mind. Someone who agrees to operate with transparency, honesty, and fairness every step of the way. Real tours are members of the National Association of Real Tours and are bound by a strict code of ethics that requires they put your interests above their own. Because that's who we are. Make sure your agent is a real tour. Okay, back to credit traps that the Card Act doesn't address. The new regulations don't put any restrictions on how high credit card interest rates can go, nor do they limit how much newly invented credit card fees can be, and they don't restrict how much your credit limit can be reduced. The new regulations also don't apply to business credit card accounts. They only apply to consumer cards. So be sure to read each month's credit card statement very carefully and watch out for increases in rates and fees and decreases in your credit limit. Also, be on the lookout for brand new fees that card issuers may try to slip in to increase their revenue, such as processing fees or inactivity fees. You know that in order to use credit cards wisely, you should never charge more than you can pay off in full each month. But if you have to carry a balance for a special purchase or because you get stuck in an emergency situation, always use a card with the lowest interest rate and fees that you can find. Compare current offers at sites like creditcards.com, cardratings.com, and creditcardguide.com. Keeping your credit score as high as possible will make you eligible for the lowest interest rates out there. If you're not subscribed to the MoneyGirl podcast yet, remember that it's free, easy, and doesn't require an iPod. My favorite place to get podcasts is iTunes. Go to iTunes.com, download their free software, then search for MoneyGirl and hit the subscribe button. It's that easy. If you want more MoneyGirl, be sure to connect with me on Facebook, Twitter, or email. Also, check out my latest audiobook, MoneyGirl 10 Steps to a Debt-Free Life. Find it on Audible.com and in the iTunes Store. I'm glad you're listening. Cha-ching! That's all for now. Heard to see if MoneyGirl, your guide to a richer life. It's one thing falling in love with a house, picturing yourself moving in and calling it home, and quite another navigating the world of price-negotiating, mortgage lenders, and finding the budget that works best for you. An agent who's a realtor can make understanding that world easier. Realtors have the expertise, access to proprietary data, and tools to help you get from imagining living somewhere, to actually doing it. That's the kind of help we can provide, because that's who we are. 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