Credit Card Changes in Effect Today

In May, President Obama signed into effect the Credit Card Accountability, Responsibility and Protection Act. The act was passed to protect current and future cardholders against unfair practices, and to standardize the industry. The first of three phases takes place today.

Billing – Prior to today, credit card companies were required to bill within 14 days of a payment due date. Now, cardholders are billed 21 days before the due date. This is good news for cardholders, especially if you travel or use online bill pay. You now have more time to get that payment in.

Rate Changes – Instead of 15 days to notify you of a rate change (which was sometimes retroactive), companies now must give you 45 days notice. I can’t tell you how important this is, based on scenarios I have seen in some families. For those that struggle to make the minimum payment, it is a real tragedy when the rate goes up drastically, because it increases that minimum payment. ┬áMany have been forced into default. Now, the extra time gives consumers the ability to try to negotiate that rate, switch a balance to another card, or to pay off the balance.

Even better, if you disagree with the rate change, you now have the option to freeze your current rate. Your account will be closed to new charges, but you will have five years to pay off the balance.

What this means to you:

As a cardholder you are being given more time to deal with your creditor. However, don’t take this as a free pass to procrastinate. It is just as important to get those payments in on time, and to take action on rate increases. Use your time to your advantage and make decisions with your wallet.

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