Credit Card Rules Squeeze Credit Card Companies
Credit Card changes can lead to credit score improvement as credit card companies must give longer lead times for payments and notification of interest rate changes. With this in mind, consumers who get into short term trouble might be able to take action to save their credit report and credit scores because they will have a little longer time to act.
All of this is becoming possible because of the incredible bi-partisanship shown on May 19, 2009 in the US Senate when the Senate voted 90-5 in favor of a massive sweeping credit card reform bill. With the bill passing the Senate it is expected to move through the house fairly quickly and get to the pen of President Obama perhaps as quick as the Memorial Day holiday. This bill as it gets passed by Congress and signed into law by Obama will will likely change the way almost every credit card company operates.
What Credit Card Changes Can You Expect?
With the House still needing to vote on the bill, it is not exactly clear what will be the final version of the credit card reform bill we get. We do expect these changes to not take effect until sometime in early 2010. We will keep you posted as soon as we find out more. But here is what we know so far:
- Banks may have to wait until you are 60 days late making the minimum monthly payment until they can impose penalty interest rates to your outstanding balance. With a longer time period consumers have some time to take action on getting their balance paid down or caught up before higher payments set in. This could alleviate significant drops in credit scores if the consumer is able to take corrective measures.
- You will have a 45 day window of being notified about interest rate changes and when the credit card company actually changes your rate for whatever reason. This will give you time to perhaps get a new card, or paydown your balance to avoid significant changes in your monthly minimum payment.
- Your credit card company must send your bill 21 days before your minimum monthly payment is due. This is designed to give consumers a little more time to make their payment which should reduce the overall amount of money consumers are paying in late fees.
- Credit card companies can no longer set the cut off time for payments received in the morning. They must allow for the mail and close of business. Additionally, if your due date falls on a Sunday or holiday, then payment received the next day is not considered late. This change should also reduce the overall amount of late fees consumers pay their credit card companies.
- In the case where you have different interest rates for different types of credit use on your credit card account like a purchase balance and cash advance balance and you make an over payment from your minimum payment, the excess money must be paid on the highest interest balance.
- Credit card companies can no longer allow you to spend over your limit and then charge you a “over the limit fee” without your consent. Many credit card companies just have the standard policy where they allow over the limit charges automatically and automatically charge the fee without you knowing about it until your bill comes in the mail.
- Persons under the age of 21 must have parent, legal guardian, or spouse who is older than 21 be the primary card holder on the account. Sorry to the college students and those credit card companies who sell credit cards on campus. No more tshirts. The exception may be where the student has their own income in which case they may be able to get a card on their own if approved by the credit card company.
There are also some changes coming for the gift cards that we all love. But we not cover them in this post as they have nothing to do with your credit scores.
These seem to go in our favor, our being consumers. If this passes the House perhaps some good will come of it. Let’s hope the credit card companies do not eliminate the frequent flyer miles for those of us who pay our cards on time and off every month. We’ll keep you posted with any more news on this.