Tuesday, February 23, 2010, AM | 1 Comment
The new credit card law, passed by Congress last year, is dubbed Credit Card Accountability Responsibility and Disclosure Act of 2009 and went into effect yesterday, February 22. Because of certain clauses, it has been reported in the media, the credit companies may lose billions of dollars a year in late fees and interest charges [Poor babies. My heart weeps for them.]
On this blog, I have always compared them with anacondas swimming in the credit swamp of the consumer misery which they actually are. If not their financial faces, their actions show us their true intentions.
Their squeeze has been so strong that they have suffocated quite a large number of good and decent folks financially.
I have stated three major provisions of the law below that can affect the customers. There are others that you can find and read in the Senate banking summary report: “Credit Card Accountability Responsibility and Disclosure Act of 2009“:
Card companies have legal obligations to
- Inform customers how long it would take to pay off the balance if they only make the minimum monthly payment.
- Let customers exceed their credit limit if and only if they agree ahead of time to pay a penalty fee.
- Increase interest rate on new purchases and not existing balances if and only if a cardholder misses payments for more than 60 days.
Banning these and other profitable tactics is expected to cost the card industry at least $12 billion a year in lost revenue, according to law firm Morrison & Foerster.
In order to make up and recoup these losses, the anacondas may have other tricks up their sleeves in the form of new sources for extra income.
The customers should expect a fresh squeeze of
- Higher interest and annual fees – Some banks such as Citigroup will refund the annual $60 fee if you spend $2,400 on the card in a 12-month period
- Higher balance-transfer charges.
- Lowered credit limits for customers with bad credit.
- Growing charges for overseas transactions.
- Use the card or lose it because there may be a price to pay for inactivity.
In a Nutshell
You can reduce some if not all of the new potential financial squeeze on your wallet and beat the credit card companies at their own game if you pay in full every month before the due date or at least half to minimize monthly interest charges.