Posted: Feb 22, 2010 9:24 PM by Jeannette Hynes
Updated: Feb 22, 2010 9:24 PM
Say good-bye to random interest rate hikes. Say hello to processing fees, annual fees, and fees we haven't even heard of yet.
The new U.S. credit card act goes into effect Monday, protecting millions of consumers from what some call predatory practices by credit card companies.
With those laws comes a painful truth for people who carry a balance on their credit cards month to month. Now, credit card companies will print on your statement how long it will take to pay off your bill with just the minimum payments.
The truth hurts. For example: if you have $10,000 in debt with an 18% interest rate, it will take you 48 years to pay off that debt and you'll end up paying $37,000. Ouch!
A few other provisions:
1. It will be harder for people younger than 21 years old to get a credit card. They'll need to prove they have independent income or get a co-signer.
2. Consumers will get 45 days' notice before key contract changes take effect, like higher interest rates.
3. Consumers will have more time to pay their bills. Credit card companies must send statements 21 days before a payment is due, rather than 14 days.
While the law protects consumers, credit card companies will likely find other ways to charge consumers for borrowing money to make up for lost income. Expect new fees and the reappearance of annual fees.
Also, this new law does not cap interest rates. While companies will have to notify you 45 days in advance on the change, the sky's the limit for how high interest rates can go.
The Better Business Bureau of the Pikes Peak Region recommends every credit card holder know and understand interest rates, terms, and conditions, so if changes happen, they understand them. Also, the BBB reminds people to check those monthly statements for any fraudulent activity.
Click here to read about all of the credit card changes.