New credit card laws have come into effect from February 22, 2010. These laws will provide protections to the customers (credit card holders) by limiting the increase in interest rates, setting rule to disclose all the details in simple language, minimizing unfair billing, and even limiting the ability of the college goers under 21 to get new credit cards. To counter this, the credit card companies have already hiked their fees much before the laws could come into effect. They have increased the interest rates, added new fees, and are also drastically decreasing the credit lines.
Though the Credit Card Reform was made in the consumer’s interest, this also requires the consumer to be more efficient in handling his credit cards.
How to use credit cards
1. Know the rules – First time users, and even those using cards for a long time should be completely aware of the new rules. If any of the credit card companies violates these rules, you should immediately file complaint with the Fair Debt Collections Practices Act, and your State Attorney General.
2. Read the fine prints – Before getting any new credit cards, you should always read the fine prints carefully so that you miss no facts. Once you sign on the dotted line, you won’t be able to complain that you were not aware of this fact or that. You should read all the paperworks and all the points before signing.
3. Know about all credit card offers – Before getting any new credit cards, know about all other credit card offers, so that you get the best deal.
4. Know the credit card limit – The creditors are drastically lowering the credit card limits. So you should always know your credit limit. There is no rule on this. You should know that if credit limit gets lowered, the balance on your card will increase, and the credit utilization will increase too. This can adversely affect your credit score. So, you should always keep a check on your credit limit. Whenever the credit limit gets lowered, you will have to pay down the balance to maintain your credit score.
5. Keep proof of payments – It is very important to keep proof of your payments, and have all the agreements in writing, so that you can dispute any discrepancies that may rise later. If you have paid, check your credit report for the updated account status. Else, if the account status doesn’t get updated, your account will be reported as late. This can let the creditor raise the interest rate. Though they are supposed to serve you with a 45 day notice, there is no such rule which limits how high the interest can be increased. Thus, if you have no proof of your payment you won’t be able to dispute this discrepancy.
6. Maintain a good credit score – Maintaining a good credit score is very important in this new scenario. With the new credit card law into effect, it will be very difficult to obtain new cards with low credit score.