March 23rd, 2011
Wednesday Roundup: Debt & Cracking Down on Credit Card Regulations
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Things are looking up for consumers when it comes to credit cards. The Federal Reserve has stepped up to clarify some of the regulations put into place with the CARD Act, USA Today reports. But what do these clarifications mean for you?
Here we outline the three specific amendments, which will go into effect on Oct. 1.
- Card issuers can assess an applicant’s ability to repay debt using individual income or salary, instead of household income.
The term “household income” has been deemed too vague. This new process will help keep banks from issuing cards to consumers who can’t pay off their debt, but it could also unintentionally target stay-at-home moms, who share income with their spouses.
- Fees charged in the first year of the account max out at 25% of the credit line, including any fees charged before an account is opened, such as application fees.
This will keep first-year fees under control, but it might also open the door for credit card issuers to begin charging higher application fees.
- Card issuers are prohibited from raising or revoking promotional interest rates, including the waiver of interest charges.
The only exception to this regulation is when an account becomes more than 60 days delinquent. Could this new clarification mean that credit card issuers become even more cautious when approving applicants?
Bottom line: Just as with any new credit card rules and regulations, be sure to understand what it means for you. These amendments don’t go into effect until the fall, but it’s important to understand them now and prepare accordingly, especially if you’ll be in the market for a new credit card soon.
Credit Card News
- Wave-and-Pay NFC Credit Cards Are Definitely In-Bound. A number of moves by different companies and organizations around the world seem to be confirming a long-held rumor is true: Wireless credit card payments using NFC (Near Field wireless Communications) are coming. And (although we ourselves have wavered a bit) they’re coming soon. Fast Company
- New rules promote smarter use of credit cards. The government’s new watchdog wants consumers to have a complete picture of a card’s costs before they apply — including its exact interest rate and credit line. Currently those terms aren’t determined until after an application is processed. MSNBC
- 6 Ways to Benefit From Your Credit Card. No amount of credit card reform is going to help if you don’t spend the time to make your credit cards benefit you. As with many things, credit cards can be wonderful if you are disciplined, but they can also backfire and create a huge financial hole for you to dig out of. Here are six ideas for how to benefit from your credit card. Wise Bread
- Best Gas Credit Cards: Rewards and Cash Back. Rising gas prices are affecting everyone across the country. Even if you don’t drive very often, high fuel costs are causing price increases for food and other commodities. Even though gas prices are affecting many aspects of our economy, anyone can save money on gas if they shop smartly. One of the best ways to do that is with a gas or cash rewards credit card. Cash Money Life
- How Your Credit Card Can Save You When You Least Expect It. With all the negative press that credit cards have been getting, people have tried their best to stay away from it as much as they can. But getting a credit card is one of the most important things you can do for a good financial health. Own The Dollar
- Fighting an aggressive collection agency. Dear Liz: I had a mobile home that was repossessed in 2003 after I was unable to make the payments. In 2005, I was contacted by a debt collector saying that I owed $20,000. They were very aggressive and threatening, saying that they could sue me. Ask Liz Weston
- Do I Regret Filing for Bankruptcy at Age 23? It’s been over three years since I filed for bankruptcy. Time for some reflections. Debt Kid
- Still Making Payments I Can’t Afford On My Ex-Wife’s Wedding Ring. Reader Douglas’s wife left him, which we’re very sad to hear. He wrote to Consumerist about it because he’s still paying for her ring, which they purchased at Jared when they got married two years ago. The Consumerist
- Special Report: Inside Baseball’s Debt Disaster. As the U.S. economy and financial markets strengthened last fall, investors across the island of Manhattan breathed a welcome sigh of relief. But a short subway ride away in Queens it was a different story. Inside the offices of the New York Mets at Citi Field—the team’s plush new $800 million stadium—things looked grim. Forbes
- I Have No Budget, am Buried in Debt, but I’m Going on Vacation. If there was only one example NOT TO FOLLOW when it came to finance, it would definitely be that of the United States Government. It seems as though it’s getting easier and easier to use our government as the prime example of what not to do. Enemy of Debt