Friday, May 22, 2009, AM | Leave Comment
The anaconda squeeze in the credit swamp of the consumer misery has been relaxed and loosened up. Thanks U.S. Senate.
For months now, the card companies have been threatening to cut rewards programs sharply to make up for revenue lost because of the new restrictions.
Card companies want to make money, and big spenders help them do it, even if those cardholders do not go into debt.
The anaconda squeeze has always been on the folks who were never able to pay off their debt.
At first glance, the sweeping credit card legislation that passed the Senate on Tuesday May 19, 2009 looks like a huge victory for consumers and it can be considered a success on the part of the consumers.
- There are new restrictions on when card companies can increase the interest rate on balances you have already run up.
The bill says that banks generally must wait until you are 60 days late in making the minimum payment before applying a penalty interest rate to your existing debt.
- Card companies will have to give 45 days’ notice before raising their interest rates.
There is also a notice requirement for any significant change to a card’s terms, which may keep companies from surprising customers who have been saving their loyalty points for years with huge alterations in rewards programs.
- Banks must send out your bill no later than 21 days before the due date.
They cannot send it with, say, 14 days to go, hoping that you won’t get a check to the bank in time to avoid a late fee.
- If the card company gets your payment by 5 p.m. on the due date, it’s on time, according to the new rules.
No more of this early morning deadline nonsense, which led to late fees for payments that arrived with the afternoon mail.
Also, no more late fees if the due date is a Sunday or holiday and your payment doesn’t arrive until a day later.
- Banks will need your permission [that’s a first] before allowing you the “privilege” of spending more than your credit limit and paying a fat $39 fee for that privilege.
The card companies should be ashamed that they needed a law to make this “opt in” requirement a reality.
- If you are a student, it will become harder to get a credit card.
No one under 21 can have a card unless a parent, legal guardian or spouse is the primary cardholder.
Students with their own income can submit proof and ask for an exception to the co-signer requirement.
- The bill also bans expiration dates on gift cards and certificates any sooner than five years after the card’s original issue date.
And the retailer or card issuer will have to print the terms of any expiration date in capital letters in at least 10-point type. Call it the fine print rule.
In a Nutshell
People who spend a ton generate fees galore from merchants, and that money helps the card company stay in business.
So you may soon see card companies giving away more goodies or lowering annual fees for people who hit certain spending thresholds each year.
American Express already does this on a number of cards.
Also, keep in mind that you may have more control over what the card companies do to you than you may think.Facebook.com/doable.finance