From disclosure of rate changes to more notice before payments are due, consumers are getting a better deal.
“These new rules begin to level out the playing field in favor of the consumer. In the coming months it will level out even more,” said Pedro Morillas Consumer Advocate for the California Public Interest Research Group (CALPIRG).
The new consumer protections will come in three steps starting with step one today. The next set of protections will go into effect February 22nd 2010, and the final phase will start July 1st 2010. Below are some of the changes consumers should know about.
Provisions of reforms happening today:
- Credit card companies now have to give 45 days notice before significantly changing the terms of your contract.
o There are exceptions consumers should be aware of:
§ If you have a variable rate credit card in some changes in interest rates don’t have to be disclosed.
§ If the card is changing from a promotional rate to its actual rate the change does not have to be re-disclosed
- If the credit card company does decide to change the interest rate you have the option to cancel the card and pay off the remaining balance at the current rate.
- Finally, banks have to mail your bill at least 21 days before it is due.
Highlights of what is coming down the pike:
- If a consumer has multiple accounts with multiple interest rates the bank must put any payment above the minimum towards the account with the highest interest rate (Industry standard is currently to pay off the lower interest rate debt first).
- Consumers will soon be required to opt into any over the limit fees. If they choose to opt out, the card will simply stop working when you hit the limit.
- If you miss a payment banks will no longer be able to raise the interest rate on the balance you owed before missing the payment.
- Banks will also not be able to increase your interest rate because you miss a payment on different card.
These are just a few of the bigger changes that will help protect consumers from deceptive credit card practices. “Credit card companies will no longer be able to rely on a business model made up of tricks and gimmicks,” added Morillas.
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