“I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men.” (Woodrow Wilson-28th United States President)

The abuses by credit card companies are FINALLY being scrutinized.  It’s about time the U.S. government stepped in to protect the people of this country.  This new Act doesn’t fix all the problems, but it does take a good bite out of the pie known as consumer abuse by credit card companies.

Here are some things you should know about the protections that will be put in place by the new Credit Card Reform Act:

- No increase in interest rates in the 1st year a new account is opened unless:

• you are 60 days late
• you have a promotional period (promo period must last 6 months)
• you have a variable interest rate card

- If they want to increase your rate after the 12 month period:

• they must notify you 45 days in advance, in writing
• they must give you the option to decline the new rate and payoff the balance on the original terms

- The Act restricts the creditor ability to increase the rate on existing balances unless:

• you are 60 days late
• you have a promotional period
• you have a variable interest rate card

- *This is big for consumers* When was the last time your mortgage rate was increased because you were late on your car payment? Never! is the answer, and now credit cards have to play by the same rules as every other lender. The new legislation prevents card companies from raising your interest rate when you miss a payment on a different debt, known as the ”universal default clause.”

- Billing statements must now show consumers how long it would take to pay off your current debt if you only paid the minimum amount due each month. This will shock many of us, but even though it is a hard pill to swallow, the medicine will help us keep our financial health better in the future.  Also, every statement must now show consumers how much they would have to pay to zero out the balance in 36 months.

- This one seems like a no-brainer, but I guess that is asking too much from creditors. If you pay above the minimum balance, the payment must be credited towards the higher interest rate balance first. Currently, on most cards, you are paying off the lowest rate balance first. For example, cash advances are at a higher rate, under the new laws, cash advances must be credited first.

- If the consumer is 60 days late, the creditor may increase the rate, BUT they must reduce the rate to the original amount after the consumer makes 6 minimum payments in a row.

- Due dates will be on the same day every month instead of varying dates each month as it is currently.

-  Anyone under 21 must have a co-signer. This will protect the country’s youth from indebtedness before they fully understand the ramifications.

If you find yourself in credit card debt and would like to find out how you can legally reduce the amount you owe, click here to talk to one of our law firms advisors now, or fill out the contact form here and we will contact you. Debt Relief Law Group is a consumer advocacy law firm helping clients out of debt every day, call us at 877-533-2863 for more information.

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