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New Credit Card Laws
Effective February 22 the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act went into effect. There are some good things for the card user that will happen as a result of this new government action. There will be some things happen that you need to be wary of as well. Keep in mind that credit card companies are entities that stay in business by making a profit. If they have lost profit in one place then they will find other places to replace that profit.
Some of the good things from the new law are:
• Credit card payments will be due at the same time each month, with notification of the bill made at least 21 days in advance of its due date.
• Payments will be applied to the highest interest-rate balances first so that customers can pay off their balances faster and more cheaply.
• Credit card companies will be obligated to use “plain language in plain sight” on all materials related to the account and display on statements how long it will take consumers to pay off their existing balance and interest charges if they paid only the minimum due. (If you have much of a balance, this will be an eye opener for you)
• Nearly all interest rate increases on outstanding balances will be prohibited and card companies must notify the consumer 45 days in advance of an interest rate increase on future purchases.
• Customers will now have to opt-in to an overdraft program instead of being automatically enrolled. This means that if cardholders try to make a purchase that exceeds their limit o overdraws a debit account, their card will simply be declined. Under the old rules, the transaction could go through and the consumer would be fined.
• Credit card companies face greater restrictions on marketing cards to college students. More generally, those under 21 will have to prove that they have a means to pay off their card limits or have a cosigner before they can be granted a card.
Since these new rules will be more costly for the credit card companies some the things you will need to watch out for are:
• Increased fees. Be on the lookout for new fees on your statements. Most new fees will be subtle so always look over your statement for charges that you don’t understand, or didn’t expect.
• Merchant fees will be raised which will, in turn, be passed on to consumers.
• Rates will probably be increased. If you do pay late the credit card company can’t increase your rates if you are 30 days late, but they can increase your rates if you are 60 days late. This is true only for your current balance. They can increase your rates on future purchases with 45 days notice.
Make a decision that you aren’t going to play the debt game
All of these new rules are expected to be a benefit to the consumer of credit card services. However, if you still use debt as part of your lifestyle then you will still be a slave to the credit card companies no matter how much the government will try to “protect you”. Proverb 22:7 reads, “Just as the rich rule over the poor, so the borrower is servant to the lender.” In 1 Corinthians 7:23 Paul writes, “You were bought with a price; do not become slaves of men.” Make a decision to become a slave for Christ and not a slave of the World. If you are unsure how to proceed you can contact a pastor, or an elder, and they will help guide you to the necessary path to begin your journey.
If you have consumer debt, or you are using debt to supplement your income, make the decision to separate yourself from the World and actively pursue a debt free strategy for your life. Financial Freedom cannot be found using the ways of the World, but the Bible gives explicit instructions on how you can be truly financially free and find your joy. NTCC has classes and resources to help you along. The Discover Financial Freedom link on the NTCC website has instructions to help you develop a spending plan and a debt reduction plan. If you have any other questions or need further assistance along your journey to true financial freedom feel free to contact me.
Blessings to you, and your journey to Discover Financial Freedom.
Gary Keesling