Possible CC Company New Law Loop Hole?!?

[Anonymous]

I've been racking my brain thinking of way that Citibank and Chase are going to try and screw me over, in spite of the new laws that are coming up in February.  I have mixed high and low rate balances, which means that the new "pay high rate balances first" law will benefit me greatly.  And I thought of something that freaked me out.

1)  Will the new laws apply to CLOSED accounts?

2)  Will Citibank and Chase even comply?

Q. 1) is especially important considering that Citi is trying to pull this 29.99% crap, and I already closed one account, and am about to close another.  But then, in a panic, I thought this might be a possible way around the new laws for them.  Do I have to worry?

Q. 2) seems far fetched, but I was reading a newspaper article that said something like 60% of credit card companies will not be ready to comply by February.  Wtf??

Also, if there are other ways any other devious tricks Citi and Chase are trying to pull that I should watch out for?  I almost have more respect for crack dealers at this point.

Thanks!

[Anonymous]

Regarding that section of the new law - only the amount of your payment in excess of your minimum payment will be applied to your higher-APR balance when you have a mixed-APR balance. If your minimum payment is $80 and you send in a payment for $100, only $20 will be applied to the higher-APR balance.

Since a significant number of people only pay the minimum or close to it, this means the benefit of this part of the new law is extremely diluted. 

Also, there is no restriction (yet) that controls minimum payment increases, unless you have opted out of a change in terms (such as a ratejack) and are carrying a balance. For most accounts, the minimum payment percentage can be increased at any time, which would obviously make it more difficult to pay down a higher-APR balance on a mixed-APR account.

If you opt-out of a change in terms and are carrying a balance, the minimum payment percentage cannot be increased more than double what it was prior to the opt-out ...

Message Edited by Revike on 11-24-2009 06:40 AM

[Uborrow-Upay]

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@Anonymous wrote:

Regarding that section of the new law - only the amount of your payment in excess of your minimum payment will be applied to your higher-APR balance when you have a mixed-APR balance. If your minimum payment is $80 and you send in a payment for $100, only $20 will be applied to the higher-APR balance.

Since a significant number of people only pay the minimum or close to it, this means the benefit of this part of the new law is extremely diluted. 

Also, there is no restriction (yet) that controls minimum payment increases, unless you have opted out of a change in terms (such as a ratejack) and are carrying a balance. For most accounts, the minimum payment percentage can be increased at any time, which would obviously make it more difficult to pay down a higher-APR balance on a mixed-APR account.

If you opt-out of a change in terms and are carrying a balance, the minimum payment percentage cannot be increased more than double what it was prior to the opt-out ...

Message Edited by Revike on 11-24-2009 06:40 AM

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The reform laws are really sticking it to the banks, aren't they?   Anybody want to guess what the next big wave of complaint threads is going to be about come February?

Amazing how members of Congress (many of them lawyers) can leave open so many "loopholes".  Probably just didn't have their morning coffee yet when they passed this stuff... 

[Anonymous]

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@Anonymous wrote:

Regarding that section of the new law - only the amount of your payment in excess of your minimum payment will be applied to your higher-APR balance when you have a mixed-APR balance. If your minimum payment is $80 and you send in a payment for $100, only $20 will be applied to the higher-APR balance.

Message Edited by Revike on 11-24-2009 06:40 AM

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**bleep**, I didn't know that, but ok... That's fine.  I'm paying far above min payment on my highest rate balances anyway. 

So, will the new law apply to CLOSED accounts?  Or not?  Because if they can't raise my minimum payment after opting out, the new laws will still help me quite a bit.  (I'm expecting to pay 6x or more the min payment on my highest rate citi card)

I just really need to know if it will apply to closed accounts.  It's really important.

If not, I will probably end up defaulting.  I mean do these SOBs want their money or not?  I have reasonably good scores, never missed a payment, and pay $2500 of my income to CCs every month, and they still want to F with me.  Seriously...  It's like they want to force people to give up paying.  How is that in their interest???

[Anonymous]

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@Uborrow-Upay wrote:

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@Anonymous wrote:

Regarding that section of the new law - only the amount of your payment in excess of your minimum payment will be applied to your higher-APR balance when you have a mixed-APR balance. If your minimum payment is $80 and you send in a payment for $100, only $20 will be applied to the higher-APR balance.

Since a significant number of people only pay the minimum or close to it, this means the benefit of this part of the new law is extremely diluted. 

Also, there is no restriction (yet) that controls minimum payment increases, unless you have opted out of a change in terms (such as a ratejack) and are carrying a balance. For most accounts, the minimum payment percentage can be increased at any time, which would obviously make it more difficult to pay down a higher-APR balance on a mixed-APR account.

If you opt-out of a change in terms and are carrying a balance, the minimum payment percentage cannot be increased more than double what it was prior to the opt-out ...

Message Edited by Revike on 11-24-2009 06:40 AM

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The reform laws are really sticking it to the banks, aren't they?   Anybody want to guess what the next big wave of complaint threads is going to be about come February?

Amazing how members of Congress (many of them lawyers) can leave open so many "loopholes".  Probably just didn't have their morning coffee yet when they passed this stuff... 

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Much industry-specific legislation seems to be written by - or with the help of - the targeted industry itself. I expect the loopholes were included as part of a compromise, so lobbyists would back off their opposition to other sections of the law.

The way the law is written, it appears the "in excess of the minimum payment" clause applies to payments for both open and closed accounts. If OP continues to pay significantly above minimum anyway (like 5% monthly), it's fairly unlikely the bank would bump the minpay on the closed account. They would rather collect their money in a reasonable amount of time (2-5 years) than force a default.

I'd need to re-read the law to be sure, but I think if they wanted to, the bank could increase the minpay on an opt-out/closed account to anything now, but after February, only to a maximum of twice what it is now ...