by Matt B

July 2010 could be the beginning of a new age for credit cards. Then again, it could be just more of the same cereal in a different bowl. My bet would be the latter. Regardless of my personal opinion of the guidelines for this reform, this federal act will definitely be noticed by those who actually pay attention to their statements.

There are many new rules that will become effective in July 2010 that will benefit consumers:

-Consumers will be shielded from arbitrary increases in interest rates.
What this means:
Credit card companies will no longer be permitted to raise your interest rates on current balances. In addition, they will not be able to raise rates due to late or missing payment. They will only be able to raise interest rates on new cards or future purchases or advances.

-Late payment will have more leniency.
What this means:
A payment will no longer be considered late unless the borrower is given ample time to make the payment. You should be allowed about 3 weeks to make the payment before it is considered late.

Deceptive credit offers will be banned.
What this means:
Although I’m not completely sure about the wording on this regulation, but the wording “up to” and “as low as” offers have always seemed deceiving to me.

-Payments will be fairly applied to different balances.

What this means:
Let’s say you have a balance of $1000 on purchases at 5% interest and $1000 on cash advances at 15%. With the new rules, either all of your payment must be applied to the higher interest portion of your balance, or it must be split 50/50 on both balnaces.

For full details on the Credit Card reform that begins in July 2010, click HERE.

I feel strongly that these “sweeping” credit card reforms are long overdue, and perhaps too little, too late. July 2010 is quite a way off into the distance, and rules like these should have been enacted last century. This reform does not cure all that is wrong with profit leeching credit card companies, but it is a start.

There could be a steep downside to this federal regulation. The FED is already recognizing that costs will increase for most card users. It may also reduce credit availability, especially for people with lower credit ratings. Peter Pham, CEO of Bill Shrink, a consumer web site for cell phone and credit card savings states “Credit card companies will have to change the way they have been doing business and unfortunately, probably raise fees to make up for the lost revenue.”

Only time will tell what effect will be seen from these acts. I can tell you to pay off all of your cards until my face is blue, but that is easier said than done. Since credit card debt in the US is 4 times what it was in 1990, lots of help will be needed for decades to come to even begin to correct the scathing problems that have paralyzed our country for far too long.

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