Credit CARD Act

kenstogie · 03-10-2010, 12:52 PM

"knowledge is power"

Synopsis...
Got credit card debt? If so, good news: the card issuer can no longer hike your interest rate without warning or raise rates on an existing balance. They have to send your bill at least 21 days before it’s due (up from 14 days).

A crackdown on deadbeats
card issuer, a deadbeat is just the opposite: a customer who always pays on time and therefore never pays any interest.

Interest is the single biggest chunk of credit card profits. The card issuers have always done their best to turn deadbeats into debtors. Got a pesky customer who always pays on time? Make sure their bill arrives a few days before it’s due, then, when they pay late, slap a 30 percent penalty APR on their entire balance.

The CARD Act makes it harder to pull this maneuver off: they have to send you the bill earlier, and you have to be 60 days late before they can jack your APR. But you can still blow it the old-fashioned way: occasionally pay less than the balance due.

Here, have some rewards
That’s not to say that reward cards are going away. In order to explain why credit card issuers love reward cards, I have to use a term that will make many of you close your browser in disgust. It’s not dirty, it’s boring: interchange fees. Although, when you think about it, it does sound kind of dirty.

When you swipe your card for a $100 purchase at Urban Outfitters, the store doesn’t receive the full amount. A few pennies go to Visa (or MasterCard or Amex). A much larger chunk, 1 to 3 percent, goes to the bank that issued the credit card. This is the interchange fee.

The interchange fee isn’t the same on all transactions. It depends on a lot of factors, one of which is whether you’re using a reward card: reward cards carry higher interchange fees.

So, thanks to the CARD Act, you’ll be receiving more junk mail advertising reward cards (especially if you have a high FICO score). They’re a great deal for the banks: higher interchange fees; reward cardholders charge more than the average person, to maximize the reward; and a significant percent of the rewards go unredeemed. Got some useless air miles sitting around? Join the zero-mile-high club.

Oh, they’ll surely be hiking interchange fees, too. And since merchants aren’t allowed to charge customers extra for using a credit card, everyone will pay more–even cash customers.

Fees, fees, fees
“People are going to see many more fees,” says Kathleen Day. Here are a few favorites:

Annual fees. The classic, and more popular than ever–especially for cardholders with low FICO scores.
Inactivity fees. Some banks charge you an annual fee for not using your card or not using it enough. Damned if you do, et cetera.
International exchange fees. As the New York Times reports, card companies charge up to 3 percent every time you make an international purchase–even if the purchase is in US dollars.
Payday…for the banks
Subprime mortgages are over. Credit card profits are down, thanks to debt-wary consumers and new laws. Even overdraft fees, a bank’s bread and butter, will be curtailed later this year. What’s a poor bank to do?

How about payday lending? As BusinessWeek reports:
Banks including Cincinnati-based Fifth Third Bancorp, San Francisco-based Wells Fargo & Co., the fourth-largest U.S. bank, and U.S. Bancorp, based in Minneapolis, are already making such loans, usually from $100 to $500, at annual rates of 120 percent if repaid in 30 days. They’re known as “checking advance products.” That puts them in competition with so-called payday loan stores.

Lovely.

Opt out
In short, the CARD Act is good news, but credit card issuers still want to stick their hands far enough into your pockets to untie your shoes. What to do?

“Reward companies that provide a good service at a good price, and don’t do business with the ones who don’t,” says Farrell. “I hope credit unions and community development banks, which offer credit card products that are pretty simple and straightforward, take market share away” from the big banks. My credit union offers a simple, no-fee credit card at a competitive rate, but I don’t actually carry it. I did, however, sign up for their overdraft line of credit. If I ever were to need emergency cash–up to $1000–I can dip into the line of credit at a fixed 8.9 percent APR using my debit card. There’s no additional overdraft charge. (I’ve never used it.) The watchword with credit cards is the same as it ever was: check your statement for surprises and your back for knives.

LINKS

What the Credit Card Act Means to You
http://www.mint.com/blog/trends/what...means-for-you/

A guide to the Credit CARD Act of 2009
http://www.creditcards.com/credit-ca...ctive-1282.php

Wikipedia's take
http://en.wikipedia.org/wiki/Credit_CARD_Act_of_2009

The actual Law (for you legal types)
http://www.creditcards.com/credit-ca...t-card-act.pdf

av8tor152d · 03-10-2010, 01:29 PM

Great info, thanks for the compile

AD720 · 03-10-2010, 01:32 PM

Quote:

Originally Posted by kenstogie

"knowledge is power"

“Reward companies that provide a good service at a good price, and don’t do business with the ones who don’t,” says Farrell. “I hope credit unions and community development banks, which offer credit card products that are pretty simple and straightforward, take market share away” from the big banks. My credit union offers a simple, no-fee credit card at a competitive rate, but I don’t actually carry it. I did, however, sign up for their overdraft line of credit. If I ever were to need emergency cash–up to $1000–I can dip into the line of credit at a fixed 8.9 percent APR using my debit card. There’s no additional overdraft charge. (I’ve never used it.) The watchword with credit cards is the same as it ever was: check your statement for surprises and your back for knives.

Bingo. I'm currently shopping around for a better interest rate and my credit union is first on the list. We are also planning on moving our savings to a small, community bank. I can't WAIT to dump BOA and Chase.

Volt · 03-10-2010, 01:50 PM

Quote:

Originally Posted by AD720

Bingo. I'm currently shopping around for a better interest rate and my credit union is first on the list. We are also planning on moving our savings to a small, community bank. I can't WAIT to dump BOA and Chase.

Yea, what he said.

Starz26 · 03-10-2010, 02:52 PM

My favorite was the 20 min discussion I had with Capital One for being fraudulent....

They called me and said that due to the new credit card act one of the benefits of my card the ability to approve charges over the credit limit was going away. This would hamper my ability to make larger emergency purchases. If I chose to opt-in I could keep this feature and they would only charge me $30.00 down from $35.00

The problem is that they did not mention the default APR that would be applied for going over the limit, sometimes as high as 30% apr. When I called them on this oversight they basically said, after about 5 mins of arguing, that "people should know the terms of their agreement"

They make it sound like the only fee is the $30.00 and that they are doing you a favor. I wonder how many fell for it....

What crooks....

Starz26 · 03-10-2010, 02:54 PM

Once I pay down my CC's I will be dumping all of those banks that screwed with my limits, fixed apr's, etc and shopping for better rates. The good thing is it forced me to make a plan, pay them down, etc.....

Razorhog · 03-10-2010, 03:04 PM

Awesome info! But I'm still glad I only have one credit card with a $500 limit.

neoflex · 03-10-2010, 03:35 PM

My bill pay through my bank took longer than usual paying my cc bill last month, so I got a nice letter saying that my interest rate will be raised 3%. So I called asking if they could waive the interest hike because I am always on time and my bill pay took over a week to transfer the funds last month when it usually takes much less time than that to transfer. They said because of the new law they couldn't just reduce my rate. I called BS but not in those words, and said yes, they needed to now notify me of increases which is why I am now speaking to her but unless I missed something on the new law I don't see why you can reduce my rate back to what it was previous. I asked whats the problem, I pay my balance in full every month so you decided to not waive my increase in hopes that I do carry a balance or become late again and you get to finally make some money off of me? She decided to waive the late fee but refused to do anything about the interest rate. I guess being a loyal customer for over 7 years means nothing so I will investigate the many other offers I get weekly in the mail offering much lower interest rates and take my business elsewhere. The best part of the phone call is after I called BS on them not being able to lower my rate she said that because of the economy I should be happy to get the late fee refunded. I guess that's what I get for being responsible with my debt and paying the balance in full every month. The woman I spoke to before I got to the supervisor said because of my history they wouldn't be able to do anything about my interest rate and I asked, What do you mean by my history, I have only been late one other time in 7 years and that was over three years ago and my balance gets paid in full just about every month so what about my history is negative? That's when she stopped fighting transferring me to a supervisor and put me on hold. You would have thought I called cursing and screaming like a lunatic but I was believe it or not very calm and polite and they still spoke to me like I was a homeless guy asking them to spend the night at their house. Got to love the way they treat long term loyal customers.
So did I miss something in the new law or were they totally full of shiz about not being able to lower my rate back down to what it was previously?

kelmac07 · 03-10-2010, 04:36 PM

Great info.

hotreds · 03-10-2010, 04:42 PM

Hmm- I have about half a dozen cards that I NEVER use. Will hafta make sure I don't get one of those inactivity fees! Or, maybe just get rid of the cards!

kenstogie · 03-10-2010, 06:51 PM

As a general rule I don't use credit as in most cases I think credit card companies are slightly above mobsters.

okieRob · 03-10-2010, 06:56 PM

and I thought this thread was going to be about a certain cigar auction site...

G G · 03-10-2010, 07:20 PM

Thanks for the info, but I don't have a credit card.

Ratters · 03-10-2010, 07:22 PM

I pay my bill off every month. But I'm pissed at the rate hike I got from Chase a few months ago just on principle. I have over an 800 credit score and they jacked my rate to over 18%. They've been jacking everyone in anticipation of this law.

gvarsity · 03-10-2010, 07:25 PM

Great info. Thanks for posting this.

03-10-2010, 07:42 PM

The best places to get a credit card is with the Credit Unions who will give you a better deal. You should never pay more than 10% with a FICO score of 700 or better and the best way to deal with credit card debt is to never owe more than $500 on any card or where it would take more than 3 months to pay it all off. Anything over that and you might as well be paying a loan shark with the 30% most banks are charging. These guys were given almost a year to raise all of the rates before the deadline,,,how stupid was that of the government to give these clowns over a year to rape the public?

03-10-2010, 12:52 PM	#1
kenstogie following the whiterabbit Join Date: Mar 2009 Location: Albany, NY Posts: 1,325 Trading: (3)	Credit CARD Act "knowledge is power" Synopsis... Got credit card debt? If so, good news: the card issuer can no longer hike your interest rate without warning or raise rates on an existing balance. They have to send your bill at least 21 days before it’s due (up from 14 days). A crackdown on deadbeats card issuer, a deadbeat is just the opposite: a customer who always pays on time and therefore never pays any interest. Interest is the single biggest chunk of credit card profits. The card issuers have always done their best to turn deadbeats into debtors. Got a pesky customer who always pays on time? Make sure their bill arrives a few days before it’s due, then, when they pay late, slap a 30 percent penalty APR on their entire balance. The CARD Act makes it harder to pull this maneuver off: they have to send you the bill earlier, and you have to be 60 days late before they can jack your APR. But you can still blow it the old-fashioned way: occasionally pay less than the balance due. Here, have some rewards That’s not to say that reward cards are going away. In order to explain why credit card issuers love reward cards, I have to use a term that will make many of you close your browser in disgust. It’s not dirty, it’s boring: interchange fees. Although, when you think about it, it does sound kind of dirty. When you swipe your card for a $100 purchase at Urban Outfitters, the store doesn’t receive the full amount. A few pennies go to Visa (or MasterCard or Amex). A much larger chunk, 1 to 3 percent, goes to the bank that issued the credit card. This is the interchange fee. The interchange fee isn’t the same on all transactions. It depends on a lot of factors, one of which is whether you’re using a reward card: reward cards carry higher interchange fees. So, thanks to the CARD Act, you’ll be receiving more junk mail advertising reward cards (especially if you have a high FICO score). They’re a great deal for the banks: higher interchange fees; reward cardholders charge more than the average person, to maximize the reward; and a significant percent of the rewards go unredeemed. Got some useless air miles sitting around? Join the zero-mile-high club. Oh, they’ll surely be hiking interchange fees, too. And since merchants aren’t allowed to charge customers extra for using a credit card, everyone will pay more–even cash customers. Fees, fees, fees “People are going to see many more fees,” says Kathleen Day. Here are a few favorites: Annual fees. The classic, and more popular than ever–especially for cardholders with low FICO scores. Inactivity fees. Some banks charge you an annual fee for not using your card or not using it enough. Damned if you do, et cetera. International exchange fees. As the New York Times reports, card companies charge up to 3 percent every time you make an international purchase–even if the purchase is in US dollars. Payday…for the banks Subprime mortgages are over. Credit card profits are down, thanks to debt-wary consumers and new laws. Even overdraft fees, a bank’s bread and butter, will be curtailed later this year. What’s a poor bank to do? How about payday lending? As BusinessWeek reports: Banks including Cincinnati-based Fifth Third Bancorp, San Francisco-based Wells Fargo & Co., the fourth-largest U.S. bank, and U.S. Bancorp, based in Minneapolis, are already making such loans, usually from $100 to $500, at annual rates of 120 percent if repaid in 30 days. They’re known as “checking advance products.” That puts them in competition with so-called payday loan stores. Lovely. Opt out In short, the CARD Act is good news, but credit card issuers still want to stick their hands far enough into your pockets to untie your shoes. What to do? “Reward companies that provide a good service at a good price, and don’t do business with the ones who don’t,” says Farrell. “I hope credit unions and community development banks, which offer credit card products that are pretty simple and straightforward, take market share away” from the big banks. My credit union offers a simple, no-fee credit card at a competitive rate, but I don’t actually carry it. I did, however, sign up for their overdraft line of credit. If I ever were to need emergency cash–up to $1000–I can dip into the line of credit at a fixed 8.9 percent APR using my debit card. There’s no additional overdraft charge. (I’ve never used it.) The watchword with credit cards is the same as it ever was: check your statement for surprises and your back for knives. LINKS What the Credit Card Act Means to You http://www.mint.com/blog/trends/what...means-for-you/ A guide to the Credit CARD Act of 2009 http://www.creditcards.com/credit-ca...ctive-1282.php Wikipedia's take http://en.wikipedia.org/wiki/Credit_CARD_Act_of_2009 The actual Law (for you legal types) http://www.creditcards.com/credit-ca...t-card-act.pdf __________________ I intend to live forever. So far, so good.

03-10-2010, 01:29 PM	#2
av8tor152d Have My Own Room Join Date: Oct 2008 First Name: Jason Location: Huntsville AL Posts: 1,152 Trading: (21)	Re: Credit CARD Act Great info, thanks for the compile __________________ W.O.L.F. pack member since 2002

03-10-2010, 02:52 PM	#5
Starz26 Adjusting to the Life Join Date: Aug 2009 First Name: Eric Location: Ohio Posts: 486 Trading: (22)	Re: Credit CARD Act My favorite was the 20 min discussion I had with Capital One for being fraudulent.... They called me and said that due to the new credit card act one of the benefits of my card the ability to approve charges over the credit limit was going away. This would hamper my ability to make larger emergency purchases. If I chose to opt-in I could keep this feature and they would only charge me $30.00 down from $35.00 The problem is that they did not mention the default APR that would be applied for going over the limit, sometimes as high as 30% apr. When I called them on this oversight they basically said, after about 5 mins of arguing, that "people should know the terms of their agreement" They make it sound like the only fee is the $30.00 and that they are doing you a favor. I wonder how many fell for it.... What crooks....

03-10-2010, 02:54 PM	#6
Starz26 Adjusting to the Life Join Date: Aug 2009 First Name: Eric Location: Ohio Posts: 486 Trading: (22)	Re: Credit CARD Act Once I pay down my CC's I will be dumping all of those banks that screwed with my limits, fixed apr's, etc and shopping for better rates. The good thing is it forced me to make a plan, pay them down, etc.....

03-10-2010, 03:04 PM	#7
Razorhog Feeling at Home Join Date: Jul 2009 First Name: Beau Location: NE Arkansas Posts: 600 Trading: (4)	Re: Credit CARD Act Awesome info! But I'm still glad I only have one credit card with a $500 limit.

03-10-2010, 03:35 PM	#8
neoflex I'm nuts for the place Join Date: Nov 2008 First Name: John Location: Monroe, NC Posts: 2,765 Trading: (32)	Re: Credit CARD Act My bill pay through my bank took longer than usual paying my cc bill last month, so I got a nice letter saying that my interest rate will be raised 3%. So I called asking if they could waive the interest hike because I am always on time and my bill pay took over a week to transfer the funds last month when it usually takes much less time than that to transfer. They said because of the new law they couldn't just reduce my rate. I called BS but not in those words, and said yes, they needed to now notify me of increases which is why I am now speaking to her but unless I missed something on the new law I don't see why you can reduce my rate back to what it was previous. I asked whats the problem, I pay my balance in full every month so you decided to not waive my increase in hopes that I do carry a balance or become late again and you get to finally make some money off of me? She decided to waive the late fee but refused to do anything about the interest rate. I guess being a loyal customer for over 7 years means nothing so I will investigate the many other offers I get weekly in the mail offering much lower interest rates and take my business elsewhere. The best part of the phone call is after I called BS on them not being able to lower my rate she said that because of the economy I should be happy to get the late fee refunded. I guess that's what I get for being responsible with my debt and paying the balance in full every month. The woman I spoke to before I got to the supervisor said because of my history they wouldn't be able to do anything about my interest rate and I asked, What do you mean by my history, I have only been late one other time in 7 years and that was over three years ago and my balance gets paid in full just about every month so what about my history is negative? That's when she stopped fighting transferring me to a supervisor and put me on hold. You would have thought I called cursing and screaming like a lunatic but I was believe it or not very calm and polite and they still spoke to me like I was a homeless guy asking them to spend the night at their house. Got to love the way they treat long term loyal customers. So did I miss something in the new law or were they totally full of shiz about not being able to lower my rate back down to what it was previously? __________________

03-10-2010, 04:36 PM	#9
kelmac07 Resident Maduro Whore!! Join Date: Apr 2009 First Name: Mac Location: Newport News, VA Posts: 27,322 Trading: (218)	Re: Credit CARD Act Great info. __________________ Dom in the MLB thread "I could probably get you to wear a Yankee hat for a Maduro!"

03-10-2010, 04:42 PM	#10
hotreds Ephesians 2:8 Join Date: Oct 2008 Location: 5 miles past "Resume Speed" Posts: 11,658 Trading: (63)	Re: Credit CARD Act Hmm- I have about half a dozen cards that I NEVER use. Will hafta make sure I don't get one of those inactivity fees! Or, maybe just get rid of the cards! __________________ God loves you so much, that he made you read this, just to let you know.

03-10-2010, 06:51 PM	#11
kenstogie following the whiterabbit Join Date: Mar 2009 Location: Albany, NY Posts: 1,325 Trading: (3)	Re: Credit CARD Act As a general rule I don't use credit as in most cases I think credit card companies are slightly above mobsters. __________________ I intend to live forever. So far, so good.

03-10-2010, 06:56 PM	#12
okieRob Still Watching My Back Join Date: Oct 2008 First Name: I'm not telling Location: The Land in the Middle Posts: 153 Trading: (6)	Re: Credit CARD Act and I thought this thread was going to be about a certain cigar auction site...

03-10-2010, 07:20 PM	#13
G G BR549 Join Date: Oct 2008 First Name: Greg Location: Taylor, FL. Posts: 12,701 Trading: (10)	Re: Credit CARD Act Thanks for the info, but I don't have a credit card.

03-10-2010, 07:22 PM	#14
Ratters Have My Own Room Join Date: Oct 2008 Posts: 1,848 Trading: (2)	Re: Credit CARD Act I pay my bill off every month. But I'm pissed at the rate hike I got from Chase a few months ago just on principle. I have over an 800 credit score and they jacked my rate to over 18%. They've been jacking everyone in anticipation of this law.

03-10-2010, 07:25 PM	#15
gvarsity still crazy Join Date: Oct 2008 Posts: 621 Trading: (15)	Re: Credit CARD Act Great info. Thanks for posting this.

03-10-2010, 07:42 PM	#16
Cigary Guest Posts: n/a	Re: Credit CARD Act The best places to get a credit card is with the Credit Unions who will give you a better deal. You should never pay more than 10% with a FICO score of 700 or better and the best way to deal with credit card debt is to never owe more than $500 on any card or where it would take more than 3 months to pay it all off. Anything over that and you might as well be paying a loan shark with the 30% most banks are charging. These guys were given almost a year to raise all of the rates before the deadline,,,how stupid was that of the government to give these clowns over a year to rape the public?