NEW YORK, Dec. 18, 2008
What Credit Card Changes Will Mean To You
Expert Explains Ins And Outs Of Rules Approved By Fed For 2010, On The Early Show
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Play CBS Video Video Credit Card Crackdown Federal regulators are expected to make sweeping changes to credit card fees and rates in decades. Maggie Rodriguez spoke with finance expert Jordan Goodman about the changes.
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On The Early Show Thursday, Goodman explained the updated rules to co-anchor Maggie Rodriguez.
He's also pointing consumers to Web sites that could help them improve their credit card situations now. The changes OK'd by the Fed don't take effect until 2010.
New Fed Credit Card Rules
"They're not gonna raise the interest rate if you've been less than 30 days late. In the past, if you were three days late (for instance), they would hit you. That's not gonna happen anymore. So that's a really, really good thing." Payments won't show up on credit reports as late anymore until the 30-day mark is hit.
"They're not gonna increase interest rates if your payment is missed on another card. ... If you miss on your phone bill or something like that, the credit card companies see it and raise all your interest rates to across the board. That's what's called the 'universal default clause.' That one's gonna be gone, too."
"No (more) retroactive interest. This is what's called 'double-cycle billing.' You've paid your bill for the last month, but you're still paying interest, even though you've paid it off in the past. It's outrageous. So, they're gonna stop double-cycle billing. That's a really very, very good thing."
"Those things have got all sorts of legalese and (are) very difficult (to read). (Banks are) supposedly gonna make it much easier to read, so you understand the interest rates, you understand the late fees and all that, so that, hopefully, should make things a little bit better."
There will be more bold-face print, and still be a bunch of legalese, but more plain language. Companies will have to be more forthcoming on their policies.
Banks won't quietly accept the changes though, Goodman warned. "The banks are gonna really battle on this one," he said. "They're going to lose about $12 billion in income from these kind of things. So, they're gonna try to make it up in other ways.
"They probably will -- the zero percent offers you see these days, or the balance transfers -- those might be much more limited or not available at all. They'll raise annual fees, they'll do all kinds of other things to squeeze money out of us, one way or the other."
Goodman, who's also editor of MoneyAnswers.com, suggested Web sites that could help you with your credit card picture until the just-approved changes go into effect in 2010:
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- The downside of these credit card changes is that the BANKS will NOT let go of their beloved PROFITS the shareholders still need FAT pockets- therefore, they WILL institute NEW fees / convert your cards to variable rates and god only knows what else.
The good news: there is another option - CREDIT UNIONS!
Take a look at a local credit union in your area and you WILL be pleasantly surprised. Credit Union are non-profit, with a VOLUNTEER un-paid Board of directors, the profits they make go back into the membership through better rates, service and TRUSTED credit card options!
Make the switch TODAY! ;) - Reply to this comment
- I can see there will be a lot of people whining about the changes don''t go into effect until July 2010. But, at least they finally did something. They started this in 2007. It is a shame it doesn''t go into effect in a few months. Everyone needs to contact their congressmen and senators so they will pass the even better legislation that passed the house last year and not the senate. This will also limit the interest rates and such which is also needed badly.
Advanta Bank has been jacking the rates from 7.99% to as high as 35-37.5% on hundreds of verified small business owners in the past several months. All of these folks had high FICO scores, excellent credit, no late payments, etc. None received the Opt Out notice Advanta claims they sent. Utterly amazing. If anyone wants to join a group of us that are working with attorneys on a class action lawsuit against Advanta, please contact me at dec458@msn.com. - Reply to this comment
- What is the average Joe supposed to do in the mean time. I have a card that I have had for nearly 10 yrs. I have paid it off several times. The times I did have a balance on it I never paid late and always paid over the minimum due. Six months ago I notice my payment went up and looked at the apr and they had jacked it up to 26%!!! for NO REASON. I have called the company repeatedly asking them to lower the rate and they refuse everytime. I guess I will just keep harassing them until they do.
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- I have a credit card with no late payments and I pay more than due. I made my payment too late in the day at one point (because the due date was changed and I did not pay attention to that) and my interest was increased ridicously. I called the company and was told that they would not lower my rate and they can charge whatever they want to charge. I will NEVER use that card again! It should be illegal for the bank card companies to charge all that interest in addition to the other stupid fees they try to get you with. This needs to go into affect ASAP.
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- Sad it is going to take so long. But--in the long run it will be helpful. Now, can the FEDS go after the BANKING industry and their 2001 ways to screw up your money and charge YOU for it while at the same time ruining your credit and standing with others? And please $35 and up per overdraft with the method they choose to use on when the charges come into the bank. I''ve seen people hit with over $300 in charges when the bank knows a direct deposit is coming in on a certain day. They admit they know it. They still charge people wrongly and tell the customer they have a "right" to do it. Again--this is the industry that received "bail out" money from the government, our government, our money. They did NOT deserve it.
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- Whoopee. Changes won''t take effect until 2010. Yet those "improvements" would be most welcome right now. As long as big corporations run this country, destroy our finances while CEO''s make off with monster pay & retirement packages, we the working poor will continue to get screwed.
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