After months of allowing the credit card companies to find ways around the Credit Relief Act of 2009, it is now official. The Treasury has taken a long time to iron out the plan, but they insist the consumer will finally get relief from the credit card companies. Let’s take a look at some of the major changes and see how we are going to benefit.
The credit card companies will no longer be able to retroactively hike the interest rates: These companies have used the past 9 months to change their interest rates from “Fixed” to “Variable.” The interest will continue to fluctuate as the variable index fluctuates. The end result is a slight improvement for the consumer, and a slight improvement for the credit card company since market changes will be absorbed in the “variable rate.”
Billing dates will occur the same day each month: No more midday cutoffs or due dates on weekends or holidays. This is a win for the consumer. Previously the companies moved the payment dates around the calendar by a few days. Allowing the companies to charge late fees for customers who have missed the payment due date.
Double billing cycle has been eliminated: Companies will no longer be able to use the previous months balance in the daily finance charge calculation. If you had a company that used this method, you should see a reduction in finance charges as you pay off the debt.
45 day notice for any changes to the account are now required: An opt-out clause must also be included. Beware that after the first year the account is open, the card company can change the interest rate for any reason. The card company can also lower the credit limit and/or close the account without your input. At least the consumer must be notified of these changes. I call that a so-so win, the card companies still hold onto a lot of power in this case.
Each statement will include the date at which the account will be paid off by paying the minimum payment: This is my favorite part of the bill. Now people might really look at how much debt they are in. The payoff date will be included in every statement. People will finally be able to notice that by paying the minimum payment on a $3,000 balance can take them up to 10 years to pay off. If I have one wish, it’s that people will be shocked. I’m sure the average American has NO clue that it will take the better part of their life to become debt free by choosing to pay minimum payments.
Each statement will include a phone number for a credit counseling agency: this will help the consumer from having to locate one. Judging by all the counseling agencies out there, I think one listed on the statement will make it much simpler for people to get help.
I’m happy the government was able to pass this bill. I also hope that people will begin to understand that living paycheck to paycheck is not a plan for success. That said, the credit card companies will continue to do well. I believe we will see a large increase in fees. The annual credit card fee and a fee for an idle account will come racing in first. Get ready because these guys know how to make money, and they will exploit anyway possible to do it.