Credit Card: It’s About to Get Ugly for You

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Wed, May 20 - 12:31 pm EDT | 5 years ago by
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It’s nice that the Senate has passed new credit card rules aimed at protecting consumers. Indeed, new rules on interest rates, over the limit practices notification of new card terms 3506856172_de25af2321are all to be applauded. Going forward, these rules will better level the playing field and give us better information so that we can improve the way we use our credit cards. However, from the time these credit card reforms are passed (they haven’t been passed by the House, but are expected to be) until the new rules go into effect in 9 months, things are probably going to get ugly for us.

Will credit card issuers rush to take what they can get?

The recession has seen a number of changes to credit card accounts. Credit lines have been cut, fees and interest rates have been rising, and rewards have been slashed (and even discontinued). So it is nice that credit card companies will now have to notify you 45 days in advance if they plan to increase rates or change rewards programs. It gives you time to do what you need to do in order to cash in rewards. Additionally, the fact that credit card companies won’t be able to retroactively hike rates — unless you are 60 days delinquent — is a nice touch. But none of this takes effect for 9 months. Until then, we are naked before the storm.

Because credit card companies have never been overly nice about balances and interest rates, it is quite likely that you could see your interest rates rise. Your rewards values may be cut. I would be very surprised if credit card issuers don’t try to get whatever they can out of you before the new rules take effect. So be on the look out. And be aware that they don’t have to give you any notice. Consumer protections aren’t in place yet.

Do you think that credit card companies will go on a rampage over the next 9 months?

image source: larrybobsf via Flickr

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  • Jim

    I think this bill is going to result in an overall contraction of consumer credit. The credit card companies are going to withdraw credit for their most risky card holders, and the responsible, once again, are going to have the privilege of subsidizing the irresponsible, and get hit with higher fees and interest changes; many of them are going to voluntarily give up their credit cards and move to debit cards or cash. I am seriously contemplating closing out all my credit card accounts.

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  • Lisa McElhiney

    Yesterday (6-25-2009) I got a notice saying my “minimum” monthly payment was going from 2% to 5%. That means my payment of $345.00 will start to be $810.00 in August. I will not be able to afford that. Mind you, I always pay my bills, don’t get late payment charges and the last time I checked, my credit score was like 797. Yes! I’m having financial troubles and am just barely holding on. This will send me over the edge – especially if my other credit cards follow this one. I’m scared and I don’t know what to do – or where to turn to for help and advice. What really gets me, is that I’ve always been such a good customer that I get these really good “rate break” offers, like … 2.99%APR until balance is paid off – as is the deal on this (Chase) credit card … HELP!

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  • Robert Yates

    Already been gouged. Don’t carry a balance, good credit history, and I got a rate hike from 9.99 to 19.9 percent. $6600 credit line.
    I can;t opt out, because they’ll close my account. It’s my oldest one by far, and I’m not willing to take a hit on my credit rating. So I’ll shred the card.

  • Miranda Marquit

    It really does some like in a lot of cases the responsible foot the bill. If you don’t carry a balance, the interest rate hikes won’t be too bad, but the contraction in rewards is going to be a real bummer.

  • Miranda Marquit

    If your credit is as good as you say, you should be able to find some sort of consolidation loan that might help you lower your payments. You might also try balance transfers to other credit cards. You can also call your creditors and ask to negotiate a payment plan, if you are in a great deal of trouble. P2P lending may also help you. What you should not do, however, is use a home equity loan to pay off your cards. This will turn your unsecured debt into debt secured by your home. In the end, though, you might consider consulting a fee-based financial planner who can help you map out a plan. It is impossible for someone like me to truly advise your in your personal finances.