What the New Credit Card Law Means to You
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What's new: Two of the most annoying practices are now 100 percent outlawed: No more double-billing cycles, and no more universal default.
Pay attention: These are both big wins for consumers. No longer can the banks use your average daily balance from your prior billing period and your current statement when figuring out your interest charges. Just your current balance will be part of the calculation. This will lower interest charges for those of you with an unpaid balance. And with the demise of universal default, credit card issuers can no longer use the fact that you may have a late payment on another account—such as utility bill or a cell phone bill—as an excuse to raise your credit card interest rate.
What's new: Your card issuer can't automatically let you charge more than your credit limit and then charge you an over-the-limit fee.
Pay attention: Your card issuer will send you a notice asking if you want to opt into this practice. DON'T YOU DARE. Do you hear me?
What's new: Your kids under the age of 21 will be unable to get a credit card on their own unless they have verifiable income.
Pay attention: This is actually great news. The credit card issuers were preying on college students who hadn't yet learned how to handle credit. But that means it's now on your plate to do the teaching. I would start in high school by first adding your child to one of your cards as an authorized user, assuming you have a FICO score of at least 700. They will start to build a credit profile based on your credit history. It also allows you to help them learn the ins and outs of credit cards with a bit of guidance. Sit down together each month and review the bill and talk about minimum payments, interest charges, etc. It's your chance to educate. When they head off to school, you can, in fact, help them get a card of their own, but only if you agree to co-sign. If you go this route, set clear guidelines: Set a very low credit limit that can not be changed without your approval (and decline the option for the issuer to allow your child to exceed the credit limit). Also, make it clear to your child that you will have full online access to the account. Not to snoop, but to make sure the bill gets paid on time.
Pay attention: These are both big wins for consumers. No longer can the banks use your average daily balance from your prior billing period and your current statement when figuring out your interest charges. Just your current balance will be part of the calculation. This will lower interest charges for those of you with an unpaid balance. And with the demise of universal default, credit card issuers can no longer use the fact that you may have a late payment on another account—such as utility bill or a cell phone bill—as an excuse to raise your credit card interest rate.
What's new: Your card issuer can't automatically let you charge more than your credit limit and then charge you an over-the-limit fee.
Pay attention: Your card issuer will send you a notice asking if you want to opt into this practice. DON'T YOU DARE. Do you hear me?
What's new: Your kids under the age of 21 will be unable to get a credit card on their own unless they have verifiable income.
Pay attention: This is actually great news. The credit card issuers were preying on college students who hadn't yet learned how to handle credit. But that means it's now on your plate to do the teaching. I would start in high school by first adding your child to one of your cards as an authorized user, assuming you have a FICO score of at least 700. They will start to build a credit profile based on your credit history. It also allows you to help them learn the ins and outs of credit cards with a bit of guidance. Sit down together each month and review the bill and talk about minimum payments, interest charges, etc. It's your chance to educate. When they head off to school, you can, in fact, help them get a card of their own, but only if you agree to co-sign. If you go this route, set clear guidelines: Set a very low credit limit that can not be changed without your approval (and decline the option for the issuer to allow your child to exceed the credit limit). Also, make it clear to your child that you will have full online access to the account. Not to snoop, but to make sure the bill gets paid on time.
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