Last week the credit card bill designed to protect credit consumers was signed into law. The new laws tightening lending regulations will put an end to certain predatory credit practices. But because the new laws will take effect not earlier than next February, card holders should keep a watchful eye on their accounts.
Credit card companies and banks are really creative when it comes to covering their losses. And while consumer advocates are happy to see the credit card industry reform passed, lenders try to figure out how to increase their income and reduce their risk before the new rules take effect.
For years, banks and lending companies have used notorious credit practices and made the changes they deemed appropriate. “Any time for any reason” changes became especially dangerous after the sub prime mortgage crisis, as the companies were hit by ever-increasing credit delinquencies and they had to cover their losses.
These days, banks and companies are hustling to make changes to multiple accounts. They may increase interest rates or fees, lower spending limits or shut the accounts altogether. But the problem is that now companies are making the changes even to the accounts of their most valued customers with impeccable credit scores and good payment histories.
The big problem is that the drastic changes often go unnoticed by the holders. The cases are not rare when customers throw away the notices they receive from credit companies. According to the new laws, banks and companies will have to provide 45 notice before increasing interest and, what’s more, they will also be required to notify customers via the Internet.
But before the new laws take effect, companies will keep on informing the holders through the tiny print in monthly credit statements. So, it really pays to keep watch for any credit card changes. If go unnoticed these changes may cost you dear. The question is, how to protect a household budget from unexpected costs?
Information is a great power. Once you’re informed about the changes, you can take the appropriate measures if you’ve been hit by interest rate hikes or spending limit cuts. The key is to carefully read the statements you receive from your issuers.
If you notice some unfavorable changes, you should contact your issuer immediately to question the changes. The chances are your limit will be increased and the interest rates will be lowered. Anyway, you can opt out of higher interest rates. But be sure to do this within a specified period of time. Otherwise, if you fail to notice the changes and keep on using your credit card, you will automatically agree with the changes. By opting out, you agree not to use your old card any more. But the good thing about opting out of an interest rate increaseis that you can pay off your balance on the old interest rate.