Further Warnings For Credit Card Users (Lee Wells)
Mar 9, 2010
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, change payment due dates and other dubious practices that were normal in the past. However, customers need to be even more cautious now about extra fees that could affect 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 folks to depend more on cash and less on credit.
However, the credit card companies are still in the business to make a profit so there are some criteria that a consumer needs to be aware of in the near future. A smart consumer needs to be aware of further fees that they may end up paying.
Many existing credit card accounts are now being hit with an annual fee. Previously, most annual fees were kept for the high-end reward cards so most cards did not have this fee. Annual fees add considerable costs to the price of credit in spite of of how often or how much a consumer charges on their card. Users have the choice of applying for a new card with no annual fee and canceling their old card but if they do that their credit score will take a hit.
Under the new regulations, the credit card issuers must notify the consumer of any changes to the credit card at least 45 days in advance. Users need to be alert of how important it is to read all correspondence from the credit card companies as the notifications could be bundled in with the monthly statement or mailed in an envelope that resembles a solicitation or is unnoticeable and easy to ignore. Read all data from your credit card financial institutions very warily.
Credit card companies are also beginning to charge merchants more for the opportunity of permitting their patrons to use credit cards. These fees are called interchange fees and when the cost of these fees increases, merchants are often obliged to increase costs in order to protect their own businesses. Higher interchange fees can lead to excessive prices for consumers.
The new regulations will not allow college students to get a credit card without a co-signor or the evidence of their ability to pay. The credit card businesses are limiting their risk by reserving the option to maintain the co-signor on the account until long after the college student has turned 21 and should be accountable on their own. Therefore, co-signors need to suspicious of the extent and duration of their own legal responsibility when they co-sign for another.
It can be more pricey than ever to carry a balance on your credit cards. While issuers can no longer raise rates on existing balances, many raised the rates prior to the regulations taking effect and then offered interest rate rebates that gave a discount for paying on time or making a certain amount of new charges every month. Smart customers will refuse to be taken in by these false savings and instead they will pay their bill off every month.
The new rules are helpful to users because they are providing protection from many of the credit card difficulties of the past, however, the credit card companies are in the business to make a profit and they will continue to come up with new tactics that will cost the consumer more because they need to guard their profits.
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