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New Credit Card Rules – Beware Of Bank Fees Raise

New credit card protection rules from the federal government kicked in recently. But keeping in view the stricter rules, the banks are raising interest rates and fees, with a hope to offset the potential losses of revenues from these reform measures. Experts of personal finance, Bill Hardekopf analyzing the reform legislation commented that the three changes that came into effect are:

1. Credit card issuers are now required to send a notice to the credit card users before 45 days of increasing their rates, and not 15 any more. This will give a chance to the card holder to either pay off the credit card or to do his shopping.

Hardekopf says that the 30 extra days of receiving the notice is advantageous for the consumers. But because the consumers are now given more time before the increase in the rate, they get more time to do their shopping with lower interest rate or transfer their balance to another card. Yet, it has to be noted that the offers for balance transfers are not as liberal as they were in the past and most of the cards now charge 3% fees for a single balance transfer.

Increases in the rates are widespread in the current period, so the consumers need to pay due attention to their entire bill inserts, plain white envelopes in the mail and any email notifications. These are the ways how most of the credit card issuers notify their consumers about their increase in the rates.

Hardekopf also comments that it is surprising that the CARD act needs the bank to send an advance notice to the consumers about increase in the interest rate, but it does not ask the bank to send notice to the consumers if it closes their account or decreases the card’s credit limit.

2. Under the new rule of CARD act, the banks will need to mail the monthly statements to the consumers at least 21 days prior to the date when it is due to be paid. Earlier, this period was 14 days before due date.

Hardekopf says that these 7 extra days should not be considered as a time when you can wait and then pay the bill on the last date. The payments should be made regularly as per your schedule so that the issuers get the payment on time, well in advance of the 7 days provided to you. If this extra time is used for delaying the paying of the bill, the consumers may forget and may incur an expensive late fee.

3. Under this rule, the consumers are given the right to opt out the fee increases and rate hikes. Currently, some issuers are allowing their consumers to opt out, but the new CARD act makes this mandatory.

If a consumer opts out of the rate increase, he will no longer be able to do shopping with the card and he will need to pay off all the remaining balance under existing rates within a period of 5 years. If a consumer chooses to opt out, he will need to inform the issuer timely by sending an opt out letter to the bank rejecting the rate hikes. The mail should be sent registered receipt and the consumer should also keep the letter’s copy for his own record. Then, the balance will need to be paid at original rate. The account that has been closed will also be shown on the credit record of the consumer.