With the economic turndown, some consumers are suffering twice because their credit card companies are tightening their grip over their account holders. New laws, however, aim to protect you from these drastic changes, astronomical fees, and other unexpected and unfair practices. Here are a few of the most notable new Credit Card Reform 2010 changes:
Limited Rate Hikes
In previous generations, credit card companies could pretty much change your rate at any given time, sometimes even without fair notice. The new laws allow rate changes under very specific conditions. One such condition would be if you opened your account under an introductory rate and your promotional period is ending. Another provision might be if you agree to a variable rate. In some cases they might be allowed to change the rate if you miss your payment, because you violated your contract. Although they have the right to make these specific changes, they must still give you a minimum notice of 45 days.
Limited Universal Default
For many years, the practice of universal default was a common one, and resulted in some major profits for credit card companies. That’s because the definition of universal default is when a credit card provider raises your rates based on your payment behavior of other non-related issues. This means that if you had a remarkably high utility bill and had to make specific payment arrangements, or had a late payment for whatever reason, your credit card issuer could raise your card interest rate. New Credit Card reform 2010 prevents this from suddenly happening to you, as card issues must now give you a 45 day warning of the pending change.
Limited Credit to Younger Card Holders
This ruling actually prevents the issuing of credit to anyone under 21 without a parental or benefactor cosigner, or can prove that their income justifies their application. While this might seem like an undesired provision, as it sets rules on credit card companies that are habitually predatory in their lending. It bans them from being within 1000 feet of a college campus, like a restraining order, if they are using other affiliate incentives as bait. However, credit card issuers can still solicit on a college campus, but only for their own business.
Unexpected over-the-limit fees are now obsolete. In order for a credit card company to charge you an over limit fee, you have to allow it, which you would have done when you signed the contract. If a company does charge an over the limit fee, it must be reasonable; probably something in moderate relation to the minimum payment.
Limited Subprime Credit
If you get a subprime card with an opening fee, you could feel less pressure from your account activity. That’s because this new credit cards reform 2010 provision prevents companies from charging you more than 25% of your available limit in the first year. Unfortunately, since these cards are high risk, credit companies are looking into other ways to secure your responsible management, like high interest rates.
Limit Your High-Interest Balance
Many credit cards carry different interest rates for each of the many types of transactions you could use it for it. For instance, you might have a great card for balance transfers, but it has a killer interest rate for cash advances. Before this new law, credit card companies could keep your high interest balances open and use your monthly installments to pay down your low-interest activity. Now, if you make a payment larger than your minimum, the differential is applied to your highest-interest balances first.
Remove Their Limit of Disclosure
Previously, credit card companies didn’t have to tell you everything outright. Of course, it would be illegal to willingly withhold information from you, but they make it hard for you to get access to it. Now, though, they must tell you certain things that could hurt you in the long run. For instance, they have to inform of your potential payment schedule if you were to pay only the minimum balance.