Last month, President Obama signed the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CCARD) also known as the Credit Cardholder’s Bill of Rights that’s been called “sweeping legislation that reforms the credit card industry” and a homerun for consumers. Is it? Let’s see…

Here’s some good news for consumers:

• Credit card companies can’t raise your rates on existing balances unless you’re 60 days behind.
• If the rate does go up, you can get the old rate back if you pay the minimums on time for 6 months.
• They can’t raise rates for at least a year after you open an account.
• If you close your account, the interest rate is frozen.
• Teaser rates must last at least 6 months.
• If you have multiple interest rates, anything more than the minimum goes to the balance with the highest interest rates.
• Cardholders must be given the option of having a fixed credit limit that cannot be exceeded, and card companies cannot charge overlimit fees on cardholders with fixed limits.
• Cardholders may elect to have transactions that would cause them to go overlimit declined.
• Overlimit charges can only be charged when a purchase, rather than a fee or interest charge, causes the credit limit to be exceeded.
• Overlimit charges can only be applied once during a billing cycle.
• No interest can be charged on fees (such as late fees or overlimit fees)
• Your bills must be sent out 21 days before the payment due date (current requirement is 14 days)
• No one under 21 can get a credit card without a co-signer or proof that they are able to repay the credit (a job)
• You can pay your bill by mail, phone, electronic transfer or online without additional cost unless you need to pay at the last minute.
• Consumers must get 45 days notice of any change in the terms.
• Gift cards can’t expire for 5 years and they can’t charge fees against the balance for not using it.
• No more universal default (one company could increase rates if you had a late payment to another creditor even if you had a good on-time payment record with the first company)
• They have to tell you how long it will take to pay off the balance if you only make minimum payments and the total amount of interest you’ll pay.

Here’s the bad news…

• Changes don’t go into effect for 9 long months.
• Expect credit card companies to jump up your rates between now and then even without a late payment.
• Credit card companies say that reward programs will be canceled, low-interest teaser rates won’t be available and overall credit may be harder to get. They may also re-institute annual fees and try to find other ways to increase their bottom line.

What should you do now?

• Pay your debt on time. This has always been important but is even more important now. Don’t give them a reason to hike your interest rates.
• Create a plan to pay your debt off. This is the hardest area for most people to do because they just don’t know how to pay their debt off in the most efficient and cheapest way. Check out my Pay Debt Quickly kit which WILL create a month-by-month plan for you to follow – it’s easy once you have a plan!
• Don’t close old accounts and keep all your cards active by putting a couple of small purchases on them every month. Pay off, of course.
• Watch your statements every month because some of the credit card companies may actually start implementing these changes even before the deadline.
• Watch your mailbox for instructions from your creditors regarding choices you’ll need to make to your account.
• Use your points or other rewards now because the plans are sure to get less generous or even eliminated.

It’s about time credit card holders are finally getting a break!

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Are Credit Cardholders Finally Getting A Break?

Question: Cindy, I have over the past few years been rolling over funds from one 0% credit card to the next. I now have one for $8K expiring in a few months and have not seen any offers come in for low interest rate credit cards. What do you recommend? My credit score is very good, around 750 last time I checked and I am not in a position to pay it off. BTW, you helped me restore my credit score, remember? ~ Lucy

Answer: Hi Lucy, I do remember and 750 is a terrific credit score. Unfortunately, it is going to be tougher and tougher to find those 0% credit cards. You can blame the sub-prime mess for it, too.

In many cases, the banks are going using their credit card division profits to prop up their other operations. That means less good deals for consumers.

Take a look at Card Ratings.com run by my friend Curtis Arnold and get the best card you can find even if it’s not at 0%, although Card Ratings.com is still showing a number of 0% cards out there. Hopefully those good deals will come back especially for those with great credit ratings like you!

Warmly, Cindy

P.S. Curtis has written a new book How You Can Profit from Credit Cards: Using Credit to Improve Your Financial Life and Bottom Line.

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Are 0% Cards Still Available?

The other day I got a call from “Mastercard and Visa” offering to lower my interest rates. “Yippee,” I thought.

But, I was immediately on guard because I know that Mastercard and Visa are separate companies and I didn’t think they’d be working together. Not that I know this for sure, but that’s what came up for me.

The guy told me that a lot of people are cancelling their credit cards because of high interest rates and the banks would rather lower the interest rates and keep the customers. He asked me if I had any cards with balances over $5000 and interest rates higher than 10%.

I laughed and said, “I don’t know.”

He said, “You don’t know if you have balances over $5,000?”

I said, “I don’t know if I have interest rates over 10%.”

Then I asked him if I would have to give him my credit card numbers.

Click.

I guess not.

Just a reminder to be aware of anyone who calls you looking for personal information. Legitimate companies, banks and the government DO NOT do that! Getting lower interest rates sounds like such a great thing that it’s easy to be taken advantage of.

It is OK to call your creditors and ask for lower rates. If you’re making the call to a verifiable phone number (such as the one on your credit card statement), go ahead and provide the information requested to identify you. They’ll probably ask a number of questions to verify that it really is you who’s calling.

Warmly, Cindy

P.S. Please pass this warning on to your friends and family.

P.S. Scam artists are also calling about the Economic Stimulus Money from the government.
NO ONE will call from the government about this check!

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Lower your Interest Rates? SCAM WARNING

Question: I am contemplating using a convenience check from my credit card company instead of taking out a personal loan from my credit union. The convenience checks carry a 3.99% interest rate for the life of the loan. However, a personal loan from my credit union would carry a 10.25% interest rate for the life of the loan which can be no longer than 5 years.

I am thinking about borrowing between $10,000 to $15,000. I have about a $400 balance on my credit card and would pay that balance off completely if I used the convenience check and resolve not to use the credit card again until the “convenience check” loan was paid.

I don´t have any debt obligations at the present time and was wondering which route would be the best route to go. Thanks in advance to any advice you could provide. ~ John

Answer: Hi John, excellent question. I can’t tell you exactly to do without knowing more info, but I can ask some questions that might get you thinking more broadly and lead to the answer that is best for your situation.

First, what will you be using the $10,000 – $15,000 for? How do you plan to pay it back?

If you pay it back using the minimum payments (15,000 loan at 4%), it will take you 209 months to be rid of your debt. In that time, you will pay $2,275.87 in interest. (play with it yourself at BankRate.com). This is a minimum payment of 2.5% of the balance or $375 per month.

If you take 5 years to pay it off (like the personal loan from the credit union) (found at BankRate.com), it will cost you $276.18 every month.

Interesting with the 2nd calculator: if you pay $375 per month, you’ll pay it off in 43 months.

Another thing to check is the fine print. Can they raise your rates if you are late on any other bill? This is a new “twist” many credit card issuers are adding (see previous article on Universal Default).

Just be sure what you are able to afford in terms of payback and the use of the money. Set aside reserves for the life’s usual “emergencies” like home/auto repair, medical expenses, job layoff or reduction, etc. Please don’t use the money to create additional lifestyle expenses like purchasing a boat or airplane or fancy car. These “toys” are far more expensive to keep up than the initial payment!

Hope this helps. Let me know if you need more info.

Warmly, Cindy Morus

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Credit Card Convenience Checks

Question: Can I stop all those credit card offers I receive in the mail? ~ Ron

Answer: Yes. It’s really easy to do – just phone 1-888-567-8688 and follow the prompts and provide the requested information including Social Security number, date of birth, etc.

Do this for every adult member of your household, including college students. Your “opt-out” status will be sent to each of the four credit bureaus (Equifax, Experian, TransUnion and Innovis). In four to six weeks, you’re mailbox will be a lot emptier!

You can also go online to Opt Out Pre-Screen if you prefer.

While you’re at it, take a few minutes to stop unwanted catalogs by calling each of them. You can also reduce your junk mail by contacting the Direct Marketing Association Mail Preference Service.

Save a tree!

Warmly, Cindy

P.S. It is OK to give them your Social Security Number because you are the one who is making the call. Never give out your private information to someone who calls you.

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Can I Stop all the Credit Card Offers?