Atlanta Bankruptcy Attorneys Discuss Effects of New Credit Reform Legislation
You can't teach an old dog new tricks - especially when that dog is a credit card company, say Atlanta bankruptcy attorneys.
The last of President Obama's credit card reform laws went into effect Monday - and most of the news is good. In summary:
• Creditors aren't allowed to raise rates on existing balances - so if you're paying 20% on a $5,000 debt, they can't suddenly decided to charge 30%, unless you're late on a payment.
• They must provide a 45-day notice period before altering your account, for instance by changing a fee
• No more fees for maxing out your credit card, unless you fail to opt out of that service
• Customers must receive their bills 21 days before the due date
• On cards with several lines of credit at various rates - for example, maybe one line is for purchases while another is for cash advances - credit card companies have to apply any payment beyond the minimum to the balance with the highest rate
Now here's the bad news - and some advice on making it not-so-bad.
The moment you make a late payment, forget about protection from rising rates. Creditors can charge you what they want - at least for the next six months, or as long as you keep making late payments. Not to mention that they can raise rates for new customers, making credit a lot harder to come by. And just because they aren't allowed to charge certain fees - for going over your limit, for instance - doesn't mean they can't come up with new fees. Say hello to annual fees, inactivity fees, and more.
Are you one of the many credit customers who choose to pay just the minimum each month? Not only are you not doing much to pay down debt, but you won't be able to take advantage of one of the new rules. If you've got several lines of credit, creditors can apply your minimum payment to whatever balance they want - and they'll probably choose the one with the lowest rate. They don't want you to start paying off the balance that charges you the most interest - that would mean less money for them.
My point is, no matter what new rules we come up with, creditors are always going to be after our money - and they'll come up with new ways to get it. But maintaining control of your credit will always be easiest if you follow a few of your own rules: keep close watch on your balance, make payments on time and pay more than the minimum when you can.
And if you can't manage your balance because of your debt has gotten out of hand, get help. Bankruptcy has the potential to lower your debts - and therefore, your interest payments - which can reduce your dependence on credit. Find out for free how a bankruptcy plan can break the debt cycle with a personal debt analysis courtesy of an Atlanta bankruptcy attorney. Reform might not work for creditors, but it can work for you when you reform your credit habits - and relieve your debt.