Credit Cards Using Any Excuse to Lower Limits, Raise Rates

 

YPs this is a good article I found discussing some alarming practices by some, if not most credit card companies because of the CARD Act that is expected to go into effect in February.  This is a good read, very informative and eye opening for those of you with credit cards.  My advice, if feasible pay off your credit card balances (or pay the balances down as much as you can) and keep one or two for emergencies but get rid of the others.  Credit card companies kind of make their own rules and have no loyalty regardless of how long you have been a good or bad customer so use them and do not allow them to use you.  I hope you guys find this article to be helpful and informative.

On May 22, 2009 President Obama signed into effect the Credit Card Accountability, Responsibility, and Disclosure Act (CARD Act). As the CARD Act goes into effect in bits and pieces over the next 6 month, credit card companies are doing everything they can to make sure that when the final door shuts on their current practices, they will have added every fee, raised every rate, and lowered every credit limit that they possible could. They say it is to protect their investors from the record number of credit card defaults that they have seen over the past few years, most especially this past year. While that may be true, their wholesale changes to consumer credit agreements has put many more people in jeopardy of default than would have otherwise happened.

It is important to have a healthy flow of credit for our economy to operate properly but for too long, credit card companies have taken unfair advantage of consumers. Nearly 80 percent of US families have a credit card and almost half of them run a balance from month to month. This law permits consumers to shop for credit without penalty from their current lenders as well as making sure that both applications and credit statements are in clear, easy to read language.

Changes to the laws also include an increased number of days for consumers to pay their bill before any late charge is assessed. This time has been shrinking over the recent past. This time has now been set by law to be 21 days. Another shrinking time frame was the lead time given to consumers to tell them of changes in their credit terms. This notification must now occur at least 45 days before the change goes into effect. During that time, if the consumer can find another credit card company with better rates they can open that account for new charges.

One of the most important changes that has been made applies to the limit on interest rate hikes. Consumers will now have to be 60 days late and then their rate cannot be raised to the limit; it must be tied to the current prime interest rate. Even better, if the consumer pays on time for the next 6 months, the creditor has to return the interest rate back to the same lower rate it was before the late payments.

Credit card rates are going up, up, up in preparation for the official start of these new regulations. Cards accounts are being ‘reassessed’ in what is termed a regular practice, but no one in recent history can remember the changes happening on such a wholesale basis. If you have good credit you are not immune to these changes. If you have bad credit you are in worse shape than you might otherwise have been and things don’t look any brighter for the near future. The law goes fully into effect in February 2010. Let’s hope everyone can hold on until then.

Linda Adams is an innovative and seasoned facilitator/educator with more than 20 years experience designing and implementing programs for audiences of all ages. She is dedicated to helping others realize how important their credit is to every facet of their lives. Visit her website http://www.cleancreditqueen.com  for more educational articles and go to http://www.cleancreditqueen.com/navbar1/products.html for a list of products to help you take charge of your credit situation.

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Tagged as: CARD Act, Credit Cards, Credit Strategies