If you haven’t heard, big changes have arrived for the credit card industry. The CARD Act, which was signed into law last May, went into effect February 22nd, meaning big changes for the millions of card-carrying Americans across the country.
The CARD Act was designed to protect consumers; however advocates warn that despite the new protections, cardholders still need to exercise caution, read the fine print and continue to watch out for a new series of traps, fees and tricks.
Fees
One thing to be on the lookout for is higher fees. Consumers could suddenly find themselves socked with a variety of new fees and charges. Why? Changes caused by the CARD Act will result in potential loss of revenue for banks and other credit. This means they may implement new fees and/or raise existing ones to make up for lost funds. Be sure to pay particularly close attention to the “Terms and Conditions” of your credit card program. That’s how you’ll know exactly what you are being charged.
Marketing Restrictions
Another thing to lookout for is, for some people, it will be tougher to qualify for a new card. As part of the CARD Act, credit card companies will be restricted in how they market to college students and individuals under 21-years of age. This change could cause those under 21 to start asking parents to cosign for credit cards.
Rewards Programs
It wasn’t long ago where a cardholder could easily turn in points towards an airline ticket or cash back. But some issuers may become more begrudging with their reward points in an effort to save money. Be on the lookout for early point expiration gimmicks or simply a reduction in points earned.
Here’s another technique, one issuer recently told its card customers they would not be able to accrue reward points on their purchases if they were late with a payment. Of course they’ll be able to recoup the points but only after they pay a $29 fee. Nice!
Interest Rate Hikes
One of the biggest victories for consumers in the CARD Act is a series of limits on how and when credit card companies can set and change interest rates. In the past, banks could raise your rate just for missing a payment, and could do so without giving much advance notice. These practices are now outlawed and issuers now have to provide at least 45 days advance notice before raising rates.
Truliant’s Program
I would like to point out that the credit card programs here at Truliant Federal Credit Union never entered into these practices. So this law doesn’t affect us or our member-owners very much. We offer a simple card program that is reliable and doesn’t have any tricks or gimmicks.
If you have a card with a financial institution other than Truliant, please make sure you’re reading the fine print and keep on the lookout for new creative fees.
About the Author: Troy Martens is the vice president of consumer and real estate lending for Truliant.
