There are some massive credit reforms underway to ensure that credit card issuers don’t use loopholes in the credit card regulations to exploit customers further. These rules ensure that customers get a fair deal from card issuers and are not taken for a ride instead. One of the most important changes is the debt that costs the card holder the most, is always paid off first. This switch to positive order, from the negative order, that card issuers used until now, comes as a great news; especially for card holders with multiple types of debt, e.g. in the case of a balance transfer card, on which one rate was charged, and the purchases on another was different.
Another rule that has been introduced is to ensure that even if a card holder pays the minimum monthly payment the debt is reduced. With these changes, the minimum amount would be high enough to cover the interest, the fees, the additional charges and 1% of the outstanding credit card debt.
Another change introduced is customers will get a warning when their credit limit is being increased; as a higher credit limit might tempt card holders to spend more.
Similarly credit card customers would be informed at least 2 to 3 times about proposed increase in interest rates on the credit card. Card holders will have about 60 days to reject this proposal after which they can pay off the existing debt in instalments with the old interest rate and switch to another credit card. Essentially these rules will protect credit card customers from being exploited by card issuers who hike the limits and interests without the customers’ knowledge most of the times.
Card holders will also be given more flexibility when it comes to paying of the debts on credit cards. That means card holders can set up regular payments which could be the minimum amount or the completing outstanding balance and the customers can choose so based on their financial situation. Also in order to educate the customers, the new rules mandate the card issuer to inform those customers, who just pay minimum monthly payments, about the possible financial issues that could stem from it.