Imagine opening up your credit card statement only to see that your rate has increased substantially. Well, this is the harsh reality that many Americans have been facing over the past couple of years. But wait no more. Recently the Federal Reserve Bank passed a law to limit when credit card companies can raise rates.
With this new law, credit card companies can only raise rates for existing card holders when customers are over 30 days late, when there’s a promotional rate with an expiration date or when the interest rate is tied to an index. The downside is that credit card companies can still raise rates on new charges. However, they must provide you with 45 days notice.
Another important provision is that borrowers with different rates on different portions of their credit card balances may be able to pay off the portion with the higher rates first. Additionally credit card companies must send statements 21 days before the due date.
I think this change will benefit many consumers. I applaud the Federal Reserve for taking such a bold step. This past year has been a very challenging year for consumers. The change will help many people get back on track with their finances and hopefully stay out of debt in the future.
Although these changes will not take place until 2010, I urge consumers to begin assessing their current credit card debt and come up with a repayment plan. Bankrate.com is a great source for information on credit cards. Your accountant is also a great resource for information on managing your debt.