Recent Credit Card Regulations Come With New Warnings
On February 22, 2010 the new regulations of the Credit Card Act of 2009 went into effect. Most of the new regulations are an advantage for patrons as no longer will the credit card companies be able to raise interest rates on existing balances, alter payment due dates and other questionable practices that were widespread in the past. However, customers need to be particularly alert now about additional charges that could have an effect on them because profits are down for the credit card companies partially due to the new rules and also due to the enduring recession that is causing individuals to depend more on cash and less on credit.
Right now the credit card companies are implementing some new creative measures to keep their profits. Gullible consumers need to be aware of new, supplementary fees that may be tacked onto their credit card bill.
Annual fees are being implemented on many existing credit card accounts. Formerly, annual fees were reserved for high-end reward cards and the majority of consumer credit cards did not have an annual fee. Annual fees are derogatory to the user because they drastically add to the cost of utilizing credit cards, in spite of of how much or how often you charge. If your credit card has been hit with an annual fee, you have the choice to submit an application for a new card without a fee and canceling the old account, then again, a consumer who takes that option will undergo a short-range hit to their credit score.
Under the new Credit Card Act regulations, banks and credit card issuers must notify consumers of any changes in their account at least 45 days in advance. It is very important to cautiously read all communication from credit card issuers because these notifications may be bundled in with the monthly statement or sent in an envelope that looks unnoticeable or like a solicitation. Read all correspondence from your credit card company before you discard it.
Credit card businesses are also starting to charge merchants more for the opportunity of allowing their customers to utilize credit cards. These fees are referred to as interchange fees and when the cost of these fees increases, merchants are often forced to increase costs in order to protect their own businesses. Higher interchange fees can lead to increased prices for customers.
Under the new regulations college students will not be able to get a credit card unless they can prove the ability to pay or have a co-signor. However, the credit card companies are limiting their risk by reserving the option to keep the co-signor for long after the student turns 21. Co-signors need to be fully alert of the duration and extent of their responsibility before they sign.
Interest rates can no longer be increased on existing balances however, many credit card companies raised rates previous to the implementation of the credit card act and counterbalanced the increase with consumers by offering interest rate rebates for paying on time or for utilizing the credit card a certain amount every month. A smart user will circumvent these false savings and pay off their account each month.
The new rules will protect consumers from many of the pitfalls and traps of the past, however, users need to understand that the credit card companies will not give up profits easily and they must be cautious of new strategies by the credit card companies to get more of their money.
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