We’ve reported on the Credit CARD Act of 2009 and criticized the fact that most consumer-favoring changes don’t take effect until next year.
However, some changes did occur effective Aug. 20, and they’re worth noting. What’s not changing until next February also is worth keeping in mind.
As of last Thursday, credit card companies were required to mail your bill to you within 21 days of the due date; the minimum used to be 14 days.
This change will allow a bit more time to examine the bill, challenge questionable charges, and read the tiny print describing changes the issuing company may make to stay profitable. READ YOUR STATEMENTS CAREFULLY.
Another major change that just took effect was a requirement that companies give 45 days’ notice of interest rate or fee increases. Spikes in fees — even to those customers whose records showed they posed little or no risk of nonpayment — were among the major reasons Congress first looked at credit card rules.
One change now in effect lets cardholders reject an annual percentage rate, or APR, increase, but they’ll need to pay off their balances within five years at the current APR. David Leach of Maine’s Bureau of Consumer Credit Protection says this might be a hardship to those struggling to make minimum monthly payments, should their payments increase to meet the five-year window. For most consumers, though, Leach says the change should be a benefit.
What won’t be changing is the credit card companies’ zeal to protect their bottom lines. They’ll likely be doing some fancy footwork before the rest of the law’s provisions kick in early next year. Look for lots of advertising to try to convince us that what they do between now and then is in our best interest.
Starting in February, the new law states that interest rates and other fees can’t be raised during the first year unless the increase is due to variable indexed interest rates. Want to guess how many companies will be switching to variable rates?
The companies also will be allowed to boost your rate if you’re more than 60 days behind on payments. If you then make at least your minimum payments for the next six months, they have to restore your previous rate.
Before starting a new account, card companies will have to consider the consumer’s ability to make payments. Consumers under age 21 will have to demonstrate ability to pay or they will need a co-signer on the application. Companies also will no longer be allowed to give gifts as enticements to college students.
The best advice we can offer is to use credit cards as they were intended, as an alternative to cash. Look less to the airline miles or points enticements and more to your personal bottom line.
David Leach of the Bureau of Consumer Credit Protection put it this way: “Move away from the high-APR, high-fee cards, try to pay your balances off in full each month, and resolve to limit or eliminate impulse purchases with plastic that you may later regret.”
Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s membership-funded, nonprofit consumer organization. Individual and business memberships are available at modest rates. For assistance with consumer-related issues, including consumer fraud and identity theft, or for information, write: Consumer Forum, P.O. Box 486, Brewer 04412, or e-mail firstname.lastname@example.org.