Obama’s Credit Plan

Depending on who you ask, the new Obama Credit Card Reform bill of rights is both good and bad for consumers! In this post, i will list 10 of the GOOD things about the reform bill! In a future post this week… the bad!

10 Benefits of the Credit Card Reform Act

1. Timely Limits on Rate Increases!
   Creditors can no longer surprise you with rate increases on an existing balance until you reach the 60 days late point on your account.
2. Rate Promotions MUST Be Honored for at Least 1 Year!
   If you sign up for a card based on an introductory rate, the card issuer MUST keep that rate intact for at least 12 months, assuming you stay current on payments.
3. Minimum 45 Day Advance Notice of APR Changes!
   Card issuers MUST provide at least 45 days advance notice, of any changes to your credit card plan rates! This does not apply to credit limit changes. If your lender chooses to reduce your credit limit, they are not required to tell you at all!
4. Credit Card Statements MUST Be Mailed Sooner!
   Card issuers must mail out your statements no less than 21 days before the credit card payment due date! In addition, any payments received by 5PM on the due date, must be considered on time! If the due date falls on a weekend or holiday, the card issuer must consider the payment on time if it arrives on the next business day!
5. 30 Day Notice of Account Closures!
   Card issues must now provide a 30-day notice if your account is going to be closed.
6. No More Over-limit Charges without Your Approval!
   In the past, you could charge all day long, exceeding your balance, and see the results in high overlimit fees at the end of the month. No more…  The card user MUST approve all over limit charges before the transaction will be approved!
7. Elimination of Payment Fees
   Up until now, if you made a phone call to make your payment on time, the card issuer was able to add a fee onto the bill to cover the phone payment. They are still able to add a fee for expediting the payment, but cannot charge for payments made over the phone, wire transfers, etc.
8. Fair Payment Allocation on Balance!
   If you have varying rates on your account, like one rate for cash advances and another for balance transfers, the card companies are now required to apply your payment to the highest interest rate portion of your balance FIRST! In the past, they would typically apply payments to the lowest rate balance, using the practice to earn more interest on the unsecured debt!
9. Students Can No Longer Strap Debt on Parent or Guardians!
   One of the most common predatory lending practices involved issuing cards to College Students, then going after their parent or guardian for the unpaid debt. Now, unless a Student can prove the ability to repay the debt on their own, they are required to obtain a co-signer for the card.
10. Clear and Simple to Understand Terms!
    Card issuers must provide clear and easy to understand terms, including total cost, total interest, and the total debt, if a card holder chooses to make minimum monthly payments!