When your budget won't let you give gifts to everyone in the world—which is always, by the way—who should you give...
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It took an act of Congress in 2009 to make some changes to the ways credit card companies do business, but the time is finally here. The changes stemming from the Credit CARD Act of 2009 went into effect in February 2010.
Some of the new rules and laws that plastic companies must abide by include:
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- Not giving credit cards to people under age 21 unless they can prove they have the means to pay their debt, or a parent or guardian co-signs on the card. (WARNING!)
- Customers must be more than 60 days behind on a payment before their interest rate can increase. If that happens and the customer makes the minimum payment on time for six months, the old rate must be restored.
- Consumers must be given notice 45 days in advance of their interest rates rising, as well as an explanation for why it is happening.
Remember something. There is lots of money at stake here, so don’t expect credit card companies to go quietly. They’ll find ways to get around the rules. There may be a limit on how much interest they can charge, but what if they start creating all sorts of fees that get around the new law? If you save $100 on interest and pay two new fees that total $100, mathematically you are no better off. Thus, the law does nothing to help you.
If you think that the government has finally delivered the solution and you can rest easy with your credit cards, you’re dead wrong.
Washington isn’t going to get you out of credit card debt by changing the way plastic companies charge you fees. Government rules can’t change your behavior. Only you can do that. If you no longer use credit cards and get on a budget, then credit card companies can charge as high a rate as they want—it won’t make a bit of difference to you. You’ll sleep much easier at night, knowing that you’re not paying.