On May 22, President Barack Obama signed a new credit card law which is considered to be the toughest credit card law ever created. However, according to Gail Cunningham, spokeswoman for the National Foundation for Consumer Credit (NFCC), "changes aren't going to take effect anytime soon." It is believed that the new law which will limit the number interest hikes to a few circumstances will kick off on August 20.
Still according to Cunningham, credit card providers will have to make internal changes with regards to their technical and business models to accommodate the changes mandated by the new law. He adds that many providers are on their way to change the existing terms in the services they offer. With bad press, some of them will have to stop changing while some will continue to do so until they are forced to stop.
On the other hand, the consumers would have to hold on to their seats as their credit card providers make the best out of the remaining time left before the new law takes action. Credit card experts advise consumers to continue practicing the basics of handling credit:
1. Be updated on the monthly statements.
2. Pay off as much credit card debts as possible.
3. Reduce spending to avoid the accumulation of credit card debt.
They also remind consumers to control themselves from using their credit cards to meet their basic living needs. Other than that, they also suggest "savvy consumers" to apply for additional lines of credit if necessary.
Many providers have decreased their clients' credit limits to a point that it's almost touching their balances. This disables consumers to access additional credit without paying for the costs of overcharging. Because of this, some people decided to close their credit cards for good or until the new law is able to "protect" them. Cunningham suggests that people should start keeping one or two credit cards and to use it a little each month just to keep them active, and then pay the bills in full when it comes.
As credit card providers can be unpredictable while the new law isn't in effect yet, credit card holders must learn to read carefully all the mail and correspondence from their creditors. This is so that they could be able to make adjustments in case their interest rates get increased from time to time or if other changes occur in the terms. It is also highly suggested that they ask their creditors about the different changes. The consumer has the right to opt out of the interest rate increases.
Cunningham shares additional tips for the consumer like paying on time, not missing any payments and paying at least the minimum or more. There could also be instances when the bills get delayed in reaching the hands of the consumers and so it is always wise to have your payments ready so that you can pay your bills as soon as you get the bills. She reminds consumers that late payments do not just mean added expenses but also decrease in your credit score.