Analysts urge consumer caution over credit cards
Credit card pointers:
What you need to know before the bill goes into effect:
• Interest rates could go up overnight.
• Interest charges might start the minute you swipe your card, rather than after a grace period.
• Free cards might incur fees.
• The “universal payment default clause” still exists. If you’re late on any credit payment — any of your credit issuers can hike your interest.
• Read all mail sent to you by your creditors thoroughly — especially fine print and extra leaflets.
What you can do now:
• Read and watch consumer and finance news often to look for major changes.
• Thoroughly read all mail from your creditors.
• Stay current on financial terms.
• Call your company and ask for a phone call if terms are subject to change.
• If your interest rate does go up, look into transferring the balance of the card to another with a lower rate.
Reading the fine print on your credit card statement might seem like a hassle, but after passage of a credit reform bill, credit counselors say it is essential.
The new Cardholder’s Bill of Rights that was signed into law last Friday is meant to give consumers more power than credit card issuers. However, because the bill will not go into effect until February, some experts believe credit card companies might use the next nine months to their advantage.
“A lot of people are speculating that one of two things is going to happen,” said Robert Baker, education director of the Lawrence branch of Housing and Credit Counseling Services.
“Number one: There will not be any free credit card; everyone will pay a yearly fee. Or number two: They will change how interest is computed so that the interest will kick in immediately the day you charge your item.”
Lawrence resident and card user Ron Renz said he does not plan to keep his cards if extra fees are involved.
“We’ll probably dump a whole bunch of credit cards because we’re not going to pay fees — just not going to happen,” Renz said.
Baker said staying informed is the best way to avoid issues with your card company.
“Whenever credit card companies make a change in terms, they usually include something in the mail to you. … It would probably be to every consumer’s benefit to read those right now,” Baker said.
Another piece of advice from Baker: “Be proactive, and call your card company, and say, ‘Are you going to change terms? If you are, can you let me know in a way other than a fine print notice?'”
He also said to check consumer and finance news often.
The Cardholder’s Bill of Rights will end overnight interest rate hikes and cut down on solicitation of credit cards to adults under 21. It will also ensure notification of an over-limit transaction at the time of the purchase.
For more details on the bill, visit govtrack.us.