11-09-2009 02:52 PM
11-10-2009 01:37 PM
After Feb, 22, 2010, this will be the new normal, according to an article on msnmoney. (Six VERY GOOD REASONS to wait before opening any more new accounts.)
The new normal
Credit cards will be more transparent and easier to understand for everyday Americans.
Millions of credit card users will avoid retroactive interest rate increases on existing card balances and have more time to pay their monthly bills, greater advance notice of changes in credit card terms and fewer penalty fees, late charges and interest payments. The law also fundamentally changes the way credit card issuers market, bill and advertise credit cards.
Here are the highlights of the law:
1. Limited interest rate hikes:
Interest rate hikes on existing balances will be allowed only under limited conditions, such as when a promotional rate ends, there is a variable rate or if the cardholder makes a late payment. Interest rates on new transactions can increase only after the first year. Significant changes in termson accounts cannot occur without 45 days' advance notice of the change.
Universal default, the practice of raising interest rates on customers based on their payment records with other unrelated credit issuers (such as utility companies and other creditors), will end.
2. More time to pay monthly bills:
CCC will have to give card account holders "a reasonable amount of time" to make payments on monthly bills. That means payments will be due at least 21 days after they are mailed or delivered. Consumers have complained about due dates that change without notice or are moved up, giving them less time to pay their bills and increasing the likelihood of late fees.
Credit card issuers will no longer be able to set early morning or other arbitrary deadlines for payments. Cutoff times set before 5 p.m. on the payment due dates will be illegal under the new law. Payments due at those times or on weekends, holidays or when the card issuer is closed for business will not be subject to late fees.
3. Highest interest balances paid first:
When consumers have accounts that carry different interest rates for different types of purchases (i.e., cash advances, regular purchases, balance transfers or ATM withdrawals), payments in excess of the minimum amount due must go to balances with higher interest rates first.
Current industry practice is to apply all amounts over the minimum monthly payments to the lowest-interest balances first -- thus extending the time it takes to pay off higher-interest rate balances.
4. Limits on over-limit fees:
Consumers must "opt in" to over-limit fees. Those who opt out will have their transactions rejected if they exceed their credit limits, thus avoiding over-limit fees. Fees charged for going over the limit must be reasonable.
5. No more double-cycle billing and lower subprime fees:
Finance charges on outstanding credit card balances will be computed based on purchases made in the current cycle rather than going back to the previous billing cycle to calculate interest charges. So-called two-cycle or double-cycle billing hurts consumers who pay off their balances, because they are hit with finance charges from the previous cycle even though they have paid the bill in full.
People who get subprime credit cards and are charged account-opening fees that eat up their available balances will get some relief under the new law. These upfront fees cannot exceed 25% of the available credit limit in the first year of the card.
6. Minimum payments:
Credit card issuers must disclose to cardholders the consequences of making only minimum payments each month, namely how long it will take to pay off the entire balance if users only make the minimum monthly payment. Issuers must also provide information on how much users must pay each month if they want to pay off their balances within 12, 24 or 36 months, including the amount of interest.
11-10-2009 08:23 PM
11-11-2009 05:40 AM
11-11-2009 06:32 AM
12-03-2009 07:29 AM
12-03-2009 10:05 AM
12-03-2009 11:50 AM
Forums posts are not provided or commissioned by FICO. Forums posts have not been reviewed, approved or otherwise endorsed by FICO. It is not FICO's responsibility to ensure all posts and/or questions are answered.† Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
* For complete information, see the terms and conditions on the credit card issuer’s website. Once you click apply for this card, you will be directed to the issuer’s website where you may review the terms and conditions of the card before applying. While myFICO always strives to present the most accurate information, we show a summary to help you choose a product, not the full legal terms - and before applying you should understand the full terms of products as stated by the issuer itself.
IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more
FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.