Bank finance articles and tips

The Credit CARD Act of 2009 that went into effect on February 22, 2010 provides the consumer more protection from the credit card companies.

Here are a few of the things that the credit card company now has to tell you and when:

+ They must give you at least 45 days notice before increasing your rate or other fees. They can't increase your rate for the first 12 months after you open an account (this has some exceptions to it so be sure to read the notices provided to you). Also, they can't raise the interest rate on an existing balance unless you are more than 60 days late with a payment.

+ They must not disclose on your bill how long it will take you to pay off your balance. It must be clearly stated on your monthly statement the time that it will take to pay off that balance if you only make the minimum payment and what you would need to make for a payment to pay off the current balance in three (3) years.

BEWARE!!! As a result of the potential losses, some companies may face due to the new regulations, many of them have found other ways to generate income. Be sure to watch for:

+ Changes in terms can only occur after the company has given you 45 days advance notice so play close attention to EVERY notice that you receive.

+ An increase in the fees that the credit card company charges you. Many companies are now charging annual fees, inactivity, statement and overseas transaction fees to cardholders. There are even some companies that are charging you a fee if your card gets declined!!

+ The over the limit fees. Companies now have the right to choose to add overdraft protection to your account. If the decided to grant the over draft protection, they can charge you an over the limit fee for EACH transaction extends you over your limit as well as an over the limit fee if you have not paid the balance down below the limit prior to the ending of the statement period.

Remember as well that most of the credit card companies have disclosed the "limited universal default" in their disclosures. What this means is that a credit card company can raise your rate based on your payment history with other lenders. Under this new regulation, the credit card companies can only use this universal default on future balances and they must provide you as the card holder at least 45 days advanced notice of the change.

KNOW YOUR RIGHTS--- As the card holder, you have the right to close the account to future advances and pay the balance off. In most cases, you have at least five (5) years to pay off the balance.

Here a few tips to help protect yourself:

+ Pay your bill on time. The credit card companies are now required to mail or deliver your bill to you at least 21 days prior to your due date (this is increased from 4 days previously).

+ Make more than the minimum payment. The credit card company now has to disclose how long it will take to pay the current balance off if you make only the minimum payment. Look at the savings that you incur if you make more than the minimum payment each month.

+ Stay below your credit limit. Don't ever allow yourself to get in the position of having to use that over the limit protection by keeping your balance lower than the credit limit.

+ Shop around for the best rates. Companies are all in competition and sometimes you as the consumer can "reap the benefits" of their competitiveness. Find the card with the best rate and the least amount of fees.

+ When at all possible.....don't use your credit card. The best financial advice that anyone can give you is to not use your credit card. Make your spending habits fall into your budgeted funds and use credit cards for emergencies. This can save you hundreds and even thousands of dollars in interest expense. Following a budget can put more money into your pocket and less into the credit card companies profit margin.

Joanna Murphy is Certified in Bankruptcy and is a Certified Financial Counselor by the Credit Union National Association. Her company, New England Credit Consultants is the ONLY licensed and bonded credit repair agency in the State of Maine. For more information about NECC and to read other articles about Financial Fitness, please visit http://www.necreditconsultants.com.

By Joanna Murphy