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Beware: Offers to Skip a Payment
If your credit company invites you to skip a monthly payment without a
penalty, it is not doing you a favor. You will still owe finance charges on
your unpaid balance. And interest could be adding up on any purchases you make
after the due date you skipped.
Beware: Teaser Rates
Some cards are advertised with very low introductory interest rates called
teasers. The rate is good for a short period of time. If you know you can pay
what you owe while the low rate is in effect, it could be a good deal. But if
the teaser time runs out and you still owe money, you could end up paying a
higher rate than you might have without the special introductory rate. Just one
late payment could also cancel the teaser rate.
Beware: Credit Insurance
When you take out a loan for a big purchase, a salesperson may try to
sell you credit insurance. Your credit card company may also encourage you
to purchase credit insurance. The coverage may be promoted as a way for you to
protect yourself if your property is damaged or lost. Other credit insurance
offers promises to make loan payments if you are laid off, become disabled or
die. It is almost always better to buy regular property, life or disability
insurance instead of credit insurance.
| Credit Card Accountability Responsibility and Disclosure Act
The Credit CARD Act has a sweeping effect on consumers in the areas of annual percentage rates, fees, and disclosure. The law:
- Limits card issuers’ ability to increase the APR on transferred balances during the first year that the account is opened.
- Restricts card issuers from applying new (higher) interest rates to the existing card balances.
- Requires companies to inform consumers of rate increases or other significant changes at least 45 days in advance.
- States that teaser rates must stay in effect for at least 6 months.
- Requires issuers to mail monthly statements at least 21 days before payment is due.
- Makes new disclosure statements clear and more timely.
- Mandates that monthly credit card statements must prominently display the due date and potential late fees, as well as the interest you have paid during the current year, the monthly payment required to pay off the existing balance, and warn consumers about the costs of making only the minimum payments.
- Requires credit card issuers to post their standard card agreements on the Internet.
- Sets a consistent due date for card payments each month. If the due date falls on a holiday or weekend, the deadline is considered the next business day.
- Restricts the penalties that card issuers can charge for going over the credit limit
- Prohibits cards issuers from issuing cards to consumers under 21 unless they have a co-signer or can demonstrate that they have independent means to repay the card debt.
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