A Credit Card Act was passed by the US government in order to prevent the credit card issuers from using unfair and deceptive practices to make more money from cardholders. However, the consumers still need to know the major provisions in the law, the way of getting a good credit repair service provider and the loopholes in order to manage credit cards in the best manner.
1. Don’t go for variable rate cards: Credit card companies can’t hike interest rates on the cards during the first year. After the first year, a credit card issuer may hike the interest rates on the credit cards up to any level as there is no defined rate cap. However, issuers are required to give you 45 days’ notice before increasing interest rates on credit cards. They are required to send you notice of these changes. If you don’t want to accept the proposed changes then you should know that you have the right to opt out. You can close the accounts and pay back the balance at the existing APR.
The card issuers can also increase the interest rate when a promotional rate period comes to an end. However, you have to pay back the balance at a higher APR for any purchases made more than 14 days after the notice of changes has been mailed.
Currently the credit card issuers have started promoting variable rate credit cards as there is no cap on the interest rate. Therefore, it is advisable to not take variable rate credit cards. Even if you do, be aware about the fluctuations in the market rate for the issuers may not inform you about it.
2. Avoid late payments: The credit card companies can hike interest rate if you are 60 days past due on your payments. Therefore, don’t make late payments. However, if you make payments on time for 6 months, then you will regain your original interest rate. So, check whether your credit card companies are doing that.
3. Don’t co-sign for your teen: According to the Act, it will be difficult for teens to get credit cards. A parent or guardian is required to co-sign for anyone under 21-years old unless the borrower can prove that he can repay the credit card debt easily. It is advisable to not co-sign for anyone as you will be hooked if your teen son defaults on the loan.
4. Pay your bill online: According to the new Act, the card issuers can’t charge a fee if you pay your bill online or by phone. Therefore, you should pay bills online so that you don’t miss any payments.
5. Make extra payments: Credit card companies have to inform you how much interest has to be paid and how much time it will take to pay down the balance when you make minimum monthly payment on an account. You should hear it carefully and try to make extra payments on the cards so as to quickly payoff credit card debt.
Finally, you may get notices from credit card companies when they want to know whether you’d opt in to over limit transactions. You may also receive notices when the card issuer wants to go for interest rate hike. Therefore, you should also check your mail regularly so that you can determine whether to accept or reject the proposed change
