By now everyone has heard that tough new credit card regulations were signed into law in May. Three provisions will take effect in August, with the others being phased in next February and July.
Credit card issuers aren’t happy about the new regulations, because they will limit profits, so they are making changes to account holders’ terms right now in an effort to get it done ahead of the deadline.
They have, of course, come under extreme criticism for this, so some experts believe they’ll stop. Others say they’ll continue until they’re forced to stop.
Since right now seems to be a “Wild West” atmosphere in the world of credit cards, consumers need to be careful.
First, in order to avoid being surprised by a credit line that has suddenly dropped to less than the balance owed – or a prohibitive interest rate – consumers need to read every piece of mail from every card issuer. After August 22 they’ll be required to give you 45 days’ notice of such changes, but right now it’s only 15 days.
What difference does it make to know ahead of time when you can’t stop them from making the changes?
For one thing, you could alter your spending. If you know that your credit card interest is going to go from 9.9% interest to 29.9% you might decide that you really don’t need that new television or lounge chair. And, if you know that your credit limit is suddenly going to drop to less than your balance owed, a little advance notice might allow you time to gather enough money to pay it down below the level that triggers “over limit” fees – before the next statement is generated.
Experts are advising consumers to reduce spending and pay down balances as fast as possible. At the same time, they’re advising that it would be a good idea to try to obtain another card or two.
Having a credit card is a safety net. When the engine blows up in the car you need in order to get to work each day, or the furnace goes out when the temperature is below zero, you aren’t in a position to say “Let’s wait until we save up for this.” You need to make repairs even if you don’t have the cash.
So go ahead and get another card or two, just in case your current cards disintegrate. Then use it, but sparingly. Credit card issuers don’t like having dormant accounts on their books, so take it out at least every 2 or 3 months and use it for a purchase you would normally make with cash. Then when the statement arrives, pay it right away.
You’ve been seeing this one on TV – it’s said to be the most popular prepaid MasterCard® in America.
When you apply, Green Dot® will waive the $4.95 activation fee. And, when your account receives its first direct deposit of at least $250 from an employer or government agency, you’ll receive a bonus credit of $10. Reloading your card by direct deposit is the preferred method, because this service is free.
You can purchase and load the credit card at any of over 50,000 locations, including Walgreens, CSV and Rite-Aid. These retailers do charge a loading fee of up to $4.95.
Upon purchase, you’ll be issued a temporary card, which will need to be activated via telephone. In compliance with the US PATRIOT Act, we do need to verify certain information about you. Once you’ve verified your identity and registered the temporary card, your permanent prepaid credit card will be issued.
The monthly fee is $5.95, but it will be waived in any month in which you load at least $1,000 or make at least 30 purchases with your debit card. ATM transactions within the network are free – and there are thousands of participating locations nationwide. Withdrawals at non-participating ATM’s will carry a $2.50 fee plus any fee the ATM owner might charge.
Funds held in your Green Dot® Gold Prepaid MasterCard® Account are fully insured by the FDIC. Of course it is accepted everywhere that Visa® and MasterCard® debit cards are accepted.
You have 24 hour access to your account transactions and balances through our website. If there has been activity on your card during the previous month, you may also access an account statement on line. Paper statements will not be sent unless requested.
Although we recommend that every consumer get a copy of his or her free credit report and scores and read it carefully, your acceptance for the Green Dot® card is not contingent upon your credit scores. Unlike a credit card, this is a debit card which uses funds you have provided.
In the event that you attempt a purchase that exceeds the balance held in your account, it may be denied, or it may be processed and you will be expected to pay the overdrawn amount immediately, without further demand.
Next February, when the Credit Cardholder’s Bill of Rights go into effect, consumers will see an end to several money-draining practices. One of them is retroactive interest rate increases.
Experts estimate that this one provision of the law will cost credit card issuers an estimated $10 billion in lost revenues.
Since the current credit crisis began, stories abound about consumers believing they were paying a fixed low rate – such as 4.9% – or even 2.9% – and suddenly opening a statement to find that they were being charged a high rate – sometimes in excess of 20%.
Once the new law goes into effect, banks will be prohibited from raising the rates on your existing balances unless your payment is late by 60 days or more. They will no longer be able to cite “universal default” to raise rates on Card A if you were so much as an hour late on a payment to Card B.
They will, of course, be able to convert an introductory rate to a standard rate under the terms of an agreement you made when you borrowed money at an introductory rate. But there are also restrictions on this. Right now they can offer huge savings with an introductory rate, but set it to expire in 30 or 60 days. Under the new law, introductory rates must remain in effect for at least 6 months.
There’s even better news for consumers who can stay current for 6 months after a rate hike. If a rate is increased because a payment was 60 days late, the credit card issuer will be required to return it to the lower rate after 6 consecutive on-time payments.
Credit card issuers can – and likely will – raise rates on future purchases. The good news is that they will have to inform you 45 days in advance of the increase. This gives you fair warning to make major purchases before the increase – and even to cease using the card after the increase. The Current Truth in Lending law calls for a 15 day notice, but most consumers I’ve spoken with have been caught unawares.
Remember that credit card issuers will be using the next months to ramp up their profits, so be very careful to read everything that comes in the mail from any of your credit card issuers.
Attention Travelers: Spirit Airlines wants you to fly free with miles earned using your FREE SPIRITTM Onyx World MasterCard®.
Your first purchase with this credit card earns you 15,000 bonus miles – enough for 3 off-peak round trip tickets to any destination within 1,250 miles. In addition, you’ll get another 10,000 miles when you transfer a balance to your new card within 60 days of activation.
And, if you use your card once per billing cycle, you’ll have complimentary membership in the $9 Fare Club. Of course you’ll want to use this card whenever possible, because every dollar gives you another mile – 3 miles if your purchase is with Spirit Airlines. Unlike many rewards cards, the miles you earn using your FREE SPIRITTM Onyx World MasterCard® never expire, so you can save your miles and use them later if travel is one of your long-term goals.
In addition to free and reduced air fare, you’ll get VIP treatment at the airport – with Priority Boarding and Domestic Priority Check-in.
This offer is subject to credit approval, so before you apply, get your free credit report and verify that there are no mistakes that could be reducing your credit scores.
The annual fee of $69 will be waived for the first year, and you’ll pay zero interest on balance transfers during the first 6 months. A balance transfer fee of 3% or $5, whichever is greater, will be charged on your initial transfer. After the trial period, balance transfers will be billed at 4% or $10.
Your interest rate on purchases and on balance transfers after the initial period will be 15.24%, 18.24% or 22.24%, based on your credit worthiness. (This rate is variable and will fluctuate with the prime rate.)
To decide if this is the right card for you, be sure to check the wide variety of credit card offers here on our site.
You pay every credit card bill in full each month. You’ve never gone over limit, so you’ve never incurred an over-limit fee. You’ve never paid late, so you’ve never paid a credit card late fee. Your credit rating is excellent.
And guess what? In the eyes of your credit card issuer, that makes you a “Deadbeat.”
You’re someone who is using their services without paying for them, so you are not a profit source. You’re even worse if you use a reward cards and get your 1 or 2% back!
Before you start feeling guilty and deciding you should carry a balance for a month or two, don’t. Remember that the business that took your credit card in payment for goods or services did pay a fee for the privilege of offering this service to its customers.
The unfortunate thing is that credit card “deadbeats” may be tapped to make up for losses in profits stemming from the “Credit Cardholder’s Bill of Rights.” And these losses will be significant.
For instance, experts estimate that the prohibition on raising interest rates on existing balances will cause the issuers to lose $10 billion per year. And that’s just one of the new rules.
Financial experts are also predicting that credit card issuers will come up with changes that weren’t addressed in the legislation. For instance, they may begin to routinely charge annual fees – even to their best customers. They may also raise interest rates across the board, add or increase fees, lower credit limits, and either eliminate or reduce benefits on reward cards.
They may also phase out the grace periods. Right now you can charge purchases on your credit card from the first day of the billing period to the last and you won’t pay interest on those charges if you pay the bill in full before the due date. This could change in the near future.
Experts are also advising all consumers to keep their balances low, spend their rewards credits, and keep all credit card accounts open by charging a small amount at least once per quarter. The more available and unused credit you have, the better your credit rating, so if you can get your credit limits increased, do so.
One thing is certain, credit card issuers will be doing all they can to make profit-building changes before the new laws go into effect. That’s why it’s so important that you read all the mail that comes from your credit card issuer.
With the Discover® Student Card Clear you can earn up to 5% Cashback bonuses on selected purchases, plus up to 20% Cashback when you shop online through Discover’s® exclusive shopping site.
There’s no annual fee and no application fee, so as long as you pay your balance in full each month, you’ll earn money with .25% Cashback on all your purchases up to $3,000 per year, and 1% on all purchases thereafter.
The annual percentage rate for this credit card is waived during the first 6 months of use, then goes to the standard APR of 14.99% variable. Cash advances will carry an APR of 23.99%. Variable rates are based on the Prime Rate plus a fixed percentage for each classification.
If you are carrying a balance on your student credit card, your minimum monthly payment will be applied to the lowest interest rate balance. Any sum paid in addition to the minimum will be applied to the highest interest rate balance.
Note that under the new credit card regulations, a student must be employed in order to obtain a Discover credit card without a co-signer. Acceptance will be based on income as well as credit scores.
Since each credit card application triggers a credit report inquiry, and since inquiries by creditors can lower your scores, we recommend that you get a copy of your free credit report and check your scores before making application. Read it carefully to make sure there are no errors and contact the credit bureau immediately if you do find errors.
Then, unless your scores are already above 750, work on raising them. This is the “magic number” that will entitle you to credit at the very best rates.
Student credit cards are fairly easy to get, simply because credit card issuers view high school and college students as a segment of the population with money to spend. Of course if you’re the parent of student, you know that may or may not be true.
What is true is that even when not required to co-sign for the student credit card, parents will generally back their youngsters and pay the bills when the kids can’t. So parents need to spend time discussing the use of the card – and setting some rules of their own.
Students do often need to have access to money for unexpected expenses. A professor may demand an extra textbook or they may become ill and need to have a prescription filled in a hurry. They may even need funds for transportation back to school after an ill-advised side trip with other students. (We’ve all done silly things, after all!)
But unless you’ve set up the student credit card as a way to access to a pre-set allowance for the student, using the card for day to day expenses should be out of the question. The student should view his or her student credit card as a safety net and use it only for emergencies. And contrary to some beliefs, needing a few new CD’s or a pizza are not emergencies.
If your child handles it responsibly, that student credit card will help him or her begin to build a solid credit rating. On the other hand, irresponsible use will cause him to begin his working life with the handicap of low credit scores.
And unless you’re stepping in to pay all the bills, it can also cause him to carry a heavy burden of debt. Over-limit fees and late fees on student credit cards can be excessively high, so that $20 pizza that pushes the card over-limit could end up costing $50 or even $60! Plus interest, of course.
If your student is paying his or her own bills – either via money you provide as an allowance or from a part-time job – impress upon him that his student credit card bill must be paid on time. If he’s going to be short and unable to pay it, he needs to call home before the due date, even if it’s embarrassing. Late fees are already hovering at the $40 mark, and could go higher as credit card issuers seek to expand their profits.
If high interest rates on current credit card balances are getting you down, it’s time for a switch to Bryant State Bank Mastercard®. With a low introductory APR of only 3.25%, you can get those balances paid down quickly.
While other banks charge up to 5% up front just to transfer your balance, Bryant State does not charge a balance transfer fee on your initial transfer. That means your interest rate savings are real savings – money you can use to pay down or pay off your balances.
And, even if you don’t quite get the balance paid off, when the introductory rate expires after 6 months, you’ll still be paying a low rate – only 11.25%.*
When you carry the Bryant State Bank Mastercard® you’re also protected by zero percent fraud liability, and access to emergency cash advances and card replacement should your card be lost while traveling – either in the United States or abroad.
Of course you’ll have access to all your account information on line 24 hours a day. From here you can check balances, make payments, and view your transactions.
The annual fee for this card is a low $20 and you can add additional users for $10.
Your eligibility for this and any credit card is based upon your credit standing at the time of application. To see where you stand right now, and make sure that there are no errors that could lower your credit rating, get your free credit report today.
Before choosing any credit card, be sure to compare offers and terms. You’ll find a wide selection of credit card offers right here, so stay a while and look around.
* Annual percentage rate is variable, based on the prime rate. Interest rate subject to change in the event of non-payment. See our complete terms for full details.
You’ve heard that one of the factors considered in calculating your credit scores is the length of time you’ve had an account – be it a credit card, mortgage, car loan, or retail account. You’ve also heard that closing one credit card account and opening another can pull your scores down.
So what if you lose your card and have to get a new account number to prevent unauthorized use? Or what if you’ve been a victim of one of the recent security breach incidents?
Breathe easy – those reasons for closing a credit card account and opening a new one won’t hurt your credit scores.
In fact, it won’t even be treated as a new account. Instead, your credit card issuer will transfer all of your information from the old account to the new one, which will be opened simultaneously. The new account will carry the same opening date, interest rate, credit limit, and payment history.
When your credit card issuer reports the change to the credit bureaus they may or may not show a closed account and a new account. Instead they may simply report a change in account numbers.
Closing an account to change to a different kind of account can lower your scores.
You may want a credit line increase, or you may want to switch from a standard card to a rewards credit card. Or, you may feel it’s time to switch from a student credit card to a standard card or rewards card. These actions could lower your scores.
Instead of closing the account that has “history,” consider keeping it and making application for a second card. This could be an especially good move if you want a rewards credit card to use for a purpose that will accompany payment in full each month – for instance, to charge gasoline for which you’ll be reimbursed by your employer.
By keeping your rewards credit card charges separate from a card that carries a balance, and paying it in full each month, you’ll avoid paying any interest on those charges.
You should also hang on to your student credit card for the time being. Keep it and use it occasionally to keep the account open until you’ve built a history with your new card. Even if that student credit card carried high interest, you won’t be paying it if you charge small amounts and pay the balance in full each month.