Chicago Bankruptcy Attorneys Analyze New Credit Card Reform Laws
It's no secret that recently enacted rules could make having a credit card easier. But while creditors must now limit when they can levy fees, raise interest or even send out a bill, your credit score is still ultimately in your hands, say Chicago bankruptcy attorneys.
The last of President Obama's credit reform measures went into effect Monday. And here's some of the good news.
• Your creditor can no longer raise the rate on an existing balance - assuming you make your payments on time - so if you normally pay 14% on a $10,000 debt, you don't have to worry about suddenly paying 24%.
• Creditors can no longer charge you for exceeding your credit limit, unless you opt in for this service.
• Creditors must give 45 days notice before making certain changes to your account, like raising rates or fees
• You must receive your bill 21 days before it's due
• If you have multiple lines of credit with different interest rates on a single card - for instance, one for cash advance and another for purchases - creditors must apply any payment over the minimum to the balance with the highest interest rate (instead of the lowest rate, as they used to do).
Now here's the catch - and how you can make it easier on yourself.
If you're late making a payment, throw the new rules out the window - your creditor can hike your interest rate, at least for the next six months. And of course, there's nothing to stop creditors from raising rates for new customers, so expect credit to get a lot less affordable. With creditorsunable to charge for exceeding a credit limit, they'll likely start charging other fees - annual fees, inactivity fees, etc.
If you pay just the minimum balance on a card with multiple lines of credit, creditors can still choose where to apply that payment - and you'd better bet they'll apply it to the balance with the lowest rate. And as for that 45 day notice, creditors can still lower your limit or even close your account sans notice.
Maybe the moral of the story should be, you can't teach an old dog new tricks. No matter what kind of reform we enact, credit card companies are still going to find ways to charge fees. But by paying close attention to your balance, making sure to pay your bills on time (which should be easier than ever) and paying more than the minimum whenever possible, you can keep your credit in good shape, whatever the latest reform may be.
If you can't seem to control your credit spending - either out of habit or due to circumstances beyond your control - your debt might be getting in the way. Lowering debt through bankruptcy can lower the amount of interest you owe, freeing up more money every month and reducing your reliance on credit. Find out more for free when you try a complimentary personal debt analysis with a Chicago bankruptcy lawyer. Maybe it's time to start your own reform - and say so long to debt.