It has been a year since changes were implemented for credit cards.
An additional result, and lesser known action, was the formation of the Consumer Financial Protection Bureau. Its purpose is to inform consumers as well as enforce consumer laws for mortgage and financial industries. It allows for consumer feedback as well as consumer education (MyMoney.gov).
Many people apparently still dont know all the nuances of the changes. Credit card companies must now send you notice 45 days before they can change your interest rate or make significant changes to the terms of your card. This allows the option to cancel the card before the fee increases take effect. What this should also tell you is to open your mail. It might not just be advertising.
Also, interest rates cannot increase for the first year. As always, there are possible exceptions to both of these.
Another good change is that if your credit card company does choose to raise your rates, it can apply only to new charges. With all the various stipulations, its good that disclaimer information must now be included. This is to be clear information as to how long it will take to pay off your card (in a font size large enough to be able to be read). To review the entire list of regulations, visit federalreserve.gov/consumerinfo/wyntk_credit cardrules.htm.
More credit cards are being issued, and credit card debt also increased for the first time in more than two years. There is also some increase in debit card use. Be aware that there is a difference in protection between the two.
Protection is in place to cap liability ($50) for unauthorized credit card charges. For unauthorized use of a debit card, however, you must notify the bank within two business days of the unauthorized transaction; otherwise, your limit could be up to $500 with some significant delays. It is worth getting the policy from your bank.
For effective fraud protection when shopping online or for large purchases, using a credit card instead of debit card or checking account provides protection and prevents someone from emptying your bank account.
During the last few months, reward credit cards have been presenting quite a variety of come hithers. Average interest rates are gradually climbing (1 percent higher than even one month ago). If you are looking to add a credit card so you can get cash back or travel rewards, be sure that the benefit fits your personal purchasing needs. Is it cash back on all purchases (gas, grocery, department store) or is the cash back rate linked to specific spending categories that change quarterly?
If youre shopping for a low interest rate, they now average 14 percent (lowcards.com), from a low of 7.5 to 22 percent, depending on the individual. If you are looking for a balance transfer card, be sure to check whether the cap is unlimited or only for the first 3 or 4 percent.
Different problems, but still buyer beware!
firstname.lastname@example.org or 247-4355 Wendy Rice is family and consumer science agent for the La Plata County Extension Office.