Thursday, September 02, 2010 - 2:50:41 PM

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New Law to Protect Consumers from Predatory Practices - 2/17/2010

Beginning Monday credit card companies will have to change the way they do business.

"If somebody is late on a payment, they can automatically raise your interest rate. They can no longer do that unless you are sixty days late," said Val Sherwood, Branch MAnager at Cosumer Credit Counseling Service of the Central Southern Tier.

However even if you do default, after 6 consecutive payments on time, the interest rate must be returned to the original.
 
These new rules are part of the Credit Card Accountability, Responsibility and Disclosure or CARD act passed by Congress last year. 

The goal is to protect consumers, especially during the down economy, from predatory practices of credit card companies, that often leave many in debt.

"They might be using credit cards to buy groceries where they didn't before or gasoline,"  said Sherwood.

As for young people ages 18 to 24, a group that often fall into debt while in college or starting out in a job, getting a credit card will be a bit harder.

"Not unless they have a job where earnings can support the line of credit they are given, they have a qualified co-signer, or they take the qualified finacial literacy course," said Sherwood.

The legislation also eliminates fine print on your bills. Instead clear wording and readable type will have to be used on all applications, statements and notices. But beware lenders may still find some ways to get their fees.

"I think you're going to see a lot more credit card companies charging an annual fee just for you to use the card," said Sherwood.

So while the CARD Act may help some...the rest is up to you..
Sherwood suggest you constantly monitor your accounts and always read all the information about any credit card you're using or considering.

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