On February 22, 2010 the new rules of the Credit Card Act of 2009 went into effect. Most of the new regulations are a benefit for users as no longer will the credit card companies be able to increase interest rates on existing balances, modify payment due dates and other doubtful practices that were common in the past. However, consumers need to be especially wary now about additional charges that could concern them because profits are down for the credit card issuers partially due to the latest regulations and also due to the lasting recession that is causing folks to depend more on cash and less on credit.
However, the credit card companies are still in the business to make a profit so there are some considerations that a user needs to be informed of in the near future. A wise consumer needs to be wary of added charges that they may end up paying.
Annual fees are being implemented on many existing credit card accounts. Formerly, annual fees were reserved for high-end reward cards and the majority of consumer credit cards did not have an annual fee. Annual fees are detrimental to the user because they drastically add to the cost of using credit cards, regardless of how much or how often you charge. If your credit card has been hit with an annual fee, you have the opportunity to submit an application for a new card without a fee and canceling the old account, but, a user who takes that option will go through a temporary hit to their credit score.
Be on the lookout for hidden notifications. Under the new rules, the credit card issuers are required to send you notifications of any modifications to your account at least 45 days in advance. However, the notifications could be bundled within your monthly statement or even mailed in an unnoticeable envelope or an envelope that looks like a solicitation. Right now it is crucial to read all communication from your credit card companies very warily.
Credit card issuers are also beginning to charge merchants more for the privilege of allowing their patrons to utilize credit cards. These fees are called interchange fees and when the cost of these fees increases, merchants are often obliged to raise costs in order to protect their own businesses. Higher interchange fees can lead to increased prices for customers.
Under the new regulations college students will not be able to get a credit card unless they can verify the ability to pay or have a co-signor. However, the credit card companies are limiting their risk by reserving the option to keep the co-signor for long after the student turns 21. Co-signors need to be fully conscious of the duration and extent of their responsibility before they sign.
Interest rates can no longer be increased on existing balances however, many credit card companies increased rates prior to the implementation of the credit card act and counterbalanced the increase with consumers by giving interest rate rebates for paying on time or for using the credit card a specified amount every month. A smart user will avoid these artificial savings and pay off their account each month.
The new rules are useful to users because they are giving protection from many of the credit card problems of the past, however, the credit card companies are in the business to make a profit and they will continue to come up with new tactics that will cost the consumer more because they need to protect their profits.
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