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The New Credit Card Rules Are Coming

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Finally, a little relief for consumers...the credit card companies all have to play by a strict set of rules.  But don't celebrate too much just yet, although the rules are clearly an improvement, they are by no means a clear win for consumers.

Some of the new rules for credit cards:

The Credit CARD Act of 2009 curtails many of the most abusive practices.

• no retroactive rate hikes;

• statements must be mailed 21 days before payment due date;

• payment dates can't suddenly be shifted;

• statements must say how long it will take to pay off balances and the total interest costs if paying just the monthly minimum;

• 45 days notice required for changes in terms and conditions.

What does this mean to you?  First, and most important, card companies can no longer increase the interest rate on existing balances.  No longer will they be able to suddenly start charging you 25% interest on a $2000 vacation charge that you originally charged at an interest rate of 7%.  Another important change, no more mystery due dates.  Card companies cannot change your due date hoping you will miss a payment, and then incur huge late fees.  No more one month the bill is due on the 20th and next month it's due on the 15th, they must assign a billing cycle and stick to it.  However, there is one big glaring omission from this act, no caps on interest rates or late fees.  That's right, if you are late the bank could charge you $39 or $390, it's up to them...so pay on time, or better yet pay it off.

The recession is still in full swing, and consumers need all the help we can get. This Credit Card Act is just one step in the right direction of reigning in some of the banking abuses that helped get us all into this mess.

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