Credit Card Consolidation - Watch Out For Traps(Article)
Posted by Jenny Sampson on February 22nd, 2010
Today, February 22nd 2010, will mark the first day that new regulations go into effect. The regulation has been called the "CARD". The main targets are predatory lending by the credit card company. Examples of this are "double-cycle billing" and random rate increases that make no logical sense.
The new law will require credit card companies to increase their transparency and make credit card statements much easier to understand. This, however, does not mean that US consumers should let their guards down.
What to Expect from the CARD:
1. Higher Fees
New fees and higher signup charges should be expected from now on. The credit card companies are a for-profit business and will have to make up for the lost revenue in different ways. An example of this is when Discover Financial Services (DFS) began charging a 2% fee on anything bought outside the United States. In order to know for sure, consumers should pay close attention to the "Terms & Conditions" associated with any card and perhaps have a spouse or trusted family member reread the paperwork.
2. Higher Barriers to Obtaining a Credit Card
Since the fees will be more clear and consumers will be less likely to fall for a higher interest rate and/or fee, credit card companies will be much more cautious about who they extend credit to. According to the IRA Bank Monitor, the amount of credit extended to consumers has plunged by almost 7% in a six month period in 2009. Also, credit card companies will have larger restrictions placed on how the can market to student, which has been a major source of high interest income.
3. Less Perks and Reward Points
The days of a dollar spent equals one airline mile may now be gone. Credit card companies will begin cutting perks like these very soon. Other companies, such as American Express (AXP) have notified their cardholders that any late fees will cause their account to no longer accrue points.
4. Higher Interest Rates
Credit card companies will only be able to raise interest rates on consumers if they give at least 45 days notice. This has been seen as a major victory for consumers. One of the ways that credit card companies are attempting to circumvent this is by switching to a variable interest rates that change based on the prime rate that many banks use for mortgage lending. Since these rates are extremely low, then consumers should expect them to rise in the future.
If you are having difficulty with credit card debt and would be interested in Credit Card Consolidation, please fill out the simple form to the right.
Related Links:
CNNMoney.com: Credit Card Relief is Here, but Watch Out for New Traps
Credit Card Consolidation
The new law will require credit card companies to increase their transparency and make credit card statements much easier to understand. This, however, does not mean that US consumers should let their guards down.
What to Expect from the CARD:
1. Higher Fees
New fees and higher signup charges should be expected from now on. The credit card companies are a for-profit business and will have to make up for the lost revenue in different ways. An example of this is when Discover Financial Services (DFS) began charging a 2% fee on anything bought outside the United States. In order to know for sure, consumers should pay close attention to the "Terms & Conditions" associated with any card and perhaps have a spouse or trusted family member reread the paperwork.
2. Higher Barriers to Obtaining a Credit Card
Since the fees will be more clear and consumers will be less likely to fall for a higher interest rate and/or fee, credit card companies will be much more cautious about who they extend credit to. According to the IRA Bank Monitor, the amount of credit extended to consumers has plunged by almost 7% in a six month period in 2009. Also, credit card companies will have larger restrictions placed on how the can market to student, which has been a major source of high interest income.
3. Less Perks and Reward Points
The days of a dollar spent equals one airline mile may now be gone. Credit card companies will begin cutting perks like these very soon. Other companies, such as American Express (AXP) have notified their cardholders that any late fees will cause their account to no longer accrue points.
4. Higher Interest Rates
Credit card companies will only be able to raise interest rates on consumers if they give at least 45 days notice. This has been seen as a major victory for consumers. One of the ways that credit card companies are attempting to circumvent this is by switching to a variable interest rates that change based on the prime rate that many banks use for mortgage lending. Since these rates are extremely low, then consumers should expect them to rise in the future.
If you are having difficulty with credit card debt and would be interested in Credit Card Consolidation, please fill out the simple form to the right.
Related Links:
CNNMoney.com: Credit Card Relief is Here, but Watch Out for New Traps
Credit Card Consolidation
Apply Now! Get a Free Credit Card Consolidation Consultation Today.
Terms of Service | Privacy Policy | Unsubscribe | Report Spam or Abuse | Contact Us | Site Map
