WILD CARDS CREDIT CARDS
With the new laws that became effective in 2010, many credit card companies have raised rates, closed accounts and lowered credit card limits regardless of your credit standing.
If you have a credit card or know of friends and family that have credit cards, you already have experienced the various extreme behaviors of credit card companies.
There is a staggering array of terms and conditions for credit card holders. More than ever it is important to negotiate your interest rate and terms.
MJL Consulting can navigate you through all the changes, helping you achieve the best rates and terms suitable to your situation.
We stay on top of current changes so we can form the best plan of action for your needs.
Here are the changes from February 2010:
- The interest rate charged on an existing balance can not be changed as long as you are up to date on your payments; the card issuer can only raise the rate on existing balances if you are 60 days behind in payments.
- You will get 45 days notice to any changes to your credit card terms. That is much better than the typical two weeks notice you get presently, which will give you limited time to come up with a plan B if you don't want to accept the new terms.
- The initial interest rate on a new card is set in stone for the first 12 months, provided you make your payments on time.
- When you pay more than the minimum balance due on your card, any excess payment will be applied to the balance charging the highest interest rate. For example if you have a cash advance balance charging 23% interest and your regular balance charges 15%, the extra payment will go toward paying down the cash advance balance. Under existing practices, credit card companies love to assign your extra payments to the balance with the lower rate because it makes more money on the higher rate balance.
- If you are hit will a higher rate (say you fell behind in payments) you can regain your lower interest rate after six months of on-time payments.
- Credit cared issuers can not charge you an over the limit fee unless you specifically agree (sign an opt-in agreement) to allow you to make changes over your stated credit limit.
- Bills must be mailed out 21 days before payment is due; that is one week more than the current 14 day rule.
- Anyone under the age of 21 will be required to have a co-signer for a card, or must prove he or she has sufficient income to repay credit.
- Gift cards can not expire in fewer than five years; if the card has a dormancy fee (meaning a charge if the card is unused for a certain period) the fee must be printed on the card.
- Universal default is banned. This is the practice in which a card issuer can change the terms on your credit card based on your record with any other credit card. Under the new law your credit card issuer can change your terms based solely on how you are handling its card.
What is not included in the new legislation is any cap on interest rates. You can still be hit with a rate of 30% or more if you don't follow the new rules.
