Credit card companies had to start complying with new regulatory rules designed to help and protect consumers as of February 22, 2010. You’ve probably received a bevy of notices and agreement changes from them leading up to this date. Since most of these are in legalese, let’s take a look at what the real changes are now that they are implemented.
The basic idea behind the new regulations is really two fold. The first is to make things much clearer for you, the debtor. The second is to protect you from predatory practices or at least those that were perceived as being outrageous.
The first big change is the payoff date. You are going to see notices on the front of your credit card that will tell you how long it will take to pay off the debt if you make the monthly payment. This can be a shocking number for many people. I can tell you that I was certain shocked to see it would take 11 years to pay off one of my cards!
The statement will also contain what is known as the three year provision. This simply shows you what you must pay each month to get rid of the debt in three years. It is actually rather amazing how paying just a bit more will do the trick, so pay close attention to this number.
What if a company is going to increase your interest rate or fees? Well, now it has to give you a 45 day warning in writing that clearly explains the changes. The company is also barred from raising your rates for the first year you have the card, a method to limit the bait and switch that often occurred with teaser rates. If the company changes the rates after the first year, the new rate will apply only to new charges, not the old ones.
This covers the basic key changes to the rules, but there are others. If you have questions, you can find answers and an outline of all the changes on the Federal Reserve website.