So the federal regulators have passed new credit card rules that ban credit cards issuers from using unfair practices when dealing with customers on interest rates, payments, and fees. The new rules contain 5 elements:
- Issuers can’t change interest rates at will. They must give card holders at least 45 days advance notice after the account opens in one year.
- Card members will have at least 21 days to pay their bills without being considered late.
- Payment will be allocated either to the highest interest balance or proportionally to all balances.
- Card issuers can’t use balance from previous billing cycles to calculate financial charges.
- Fees for subprime cards can’t exceed 25% of the available credit limit at account opening.
However, the new rules won’t be effective until July of 2009, which is almost 19 months away from now. Are issuers really need this long to implement the changes? I don’t know. Maybe it just gives them the time to do what they want to do before the new rules kick in.
Unfortunate as it is, you don’t have to wait till July 2009 to get a new card because there are a few cards comply with the new rules right now. BillShrink.com has posted a list of credit card that comply with parts of the new rules (no card currently complies with five items). For example,
- Citibank has 15 cards that give customers 45-day advance notice before rate changes, complying with Item 1, including PremierPass Card, Driver’s Edge Card, and Dividend Platinum Select Card.
- Discover has 5 cards comply with Item 2, including More Card, Mills Card, and Open Road Card.
According to BillShrink, so far no card complies with Item 3. An example of Item 3 is when you take a 0% APR balance transfer offer of $10,000 and use your card to make a purchase of, say, $50 at the same time. Currently what credit card issuers are doing is all your payments are automtically allocated to pay the 0% APY balance transfer while letting the $50 balance from purchase to collect interests for them, at 10% or 20% APR.
While these changes are good in pretecting customers against credit card companies, there is one practice you take to protect yourself right away instead of waiting for the new rules: Pay your credit card bills in full every month. No credit card issuer can hurt you if you pay bills in full.
