San Diego Law Today

The newly enacted credit card reform bill was designed to help consumers better manage their credit card debt, with provisions for less volatile interest rates, more communication and fixed payment policies.

In theory, the changes should help San Diego consumers with credit card debt manage their bills better, but it’s not a bed of roses. Sure, credit card companies have to play by more rules now, but they are still going to find ways to make their money.

Here is how the new way of handling credit card debt will affect you.

• Interest Rates:
  Credit card companies can no longer jack up your interest rate on the existing balance, and they must notify you of an increase in the rate on new purchases 45 days before the rate increase. But they will more than make up for this by increasing the interest rate on new purchases and eliminating fixed-rate credit cards. That way they can vary the interest rate on a balance.

• Fees:
  Companies can no longer charge fees when you go over your limit or when you pay your bill over the phone. But rest assured that they’ll probably find new and more costly fees for services that are currently free.

• Statements:
  The new credit card statements are supposed to be more informative, with information on how long it will take you to pay off the balance, etc. This is likely to be more confusing to most consumers, making it harder to understand the cost of credit.

• Due Dates:
  Your statement must arrive 21 days before the due date, and your due date will be the same every month. If the day falls on a weekend or holiday, it is due the next normal business day.

• Minimum Payments:
  Credit Card Companies are now required to apply any amounts over the minimum payment to the balance with the highest interest rate. If you are just making minimum payments, you never reduce the balance by very much.

• What Stays the Same:
  Credit card companies can still lower your available balance and cancel your card for any reason and without notice.
• And the best advice about your credit card doesn’t change either:
  • Never use your credit cards to finance other debt, such as pay taxes or insurance, and, if you do use your credit cards, try to pay them off each month.
  • Do your best not to use your credit cards for normal living expenses, such as food, gas, etc.
  • If you’re starting to get into trouble with your credit card payments, do not hesitate… consult a bankruptcy professional right away before the situation becomes worse. You can put your house, car and other possessions into danger if you find yourself too far behind on payments.

Tags: Bankruptcy myths, credit cards