The New Credit Card Law: No Big Deal

by Mark Brinker

no big deal

There’s been a lot of talk lately about the new credit card law that went into effect on 2-22-10. In case you missed it, here are some of the highlights:

  • Credit card companies are now required by law to disclose how long it will take you to pay off the balance and how much interest you’ll accrue if you just make the minimum payments.
  • Credit card companies are also required to show you how much needs to be paid each month to pay off a balance within three years.  NOTE: The Detroit Free Press published a really neat graphic to illustrate these first 2 points and it can be found here.
  • Credit card companies cannot raise interest rates on existing credit card balances. In addition, rates can’t be raised unless the account is at least 60 days past due. If payments are made on time for six consecutive months, the original rate must be restored. In the past, if you made a late payment on even just one credit card, a loan or even a utility bill, that could trigger interest rate hikes on your other credit card accounts … also known as a “universal default”.

There are additional changes, but these are 3 of the big ones. For more complete coverage of the new credit card law, please see the links at the bottom of this article.

No Debt, No Worries

Many financial journalists and bloggers are spending a lot of time discussing the new credit card law and how it will affect you, not to mention how the credit card companies might now try to creatively (but legally) come up with new ways to charge consumers. 

I don’t know about you, but modern life is complicated enough without having to learn a whole new set of rules/regulations/policies/procedures regarding my credit card or having to read credit card industry trade journals.

Therefore, if you want you want the quick and easy interpretation of the new credit card law, here it is:  If you don’t have outstanding credit card debt, this new credit card law does not affect you.

Keep in mind that the new credit card law assumes that a person has an outstanding balance on their credit cards. But if you pay off your credit card bill(s) in full each month, you don’t have to concern yourself with the new credit card law. Yes, it really is that easy.

Simple Is Good

I haven’t carried a balance on my credit cards for nearly 15 years, and I know plenty of other people that live a perfectly normal life without credit card debt.

It’s all about being disciplined and not spending more than you earn, and having the courage to just say no when everyone around you is using their credit card like a drunken sailor.

When you live within your means and commit to paying off your credit card bill(s) in full each month, your life immediately becomes simpler and less stressful. You’ll gradually pull out of the system that used to own and control you. And it’ll be one of the best decisions you ever made.

 

For additional information on the new credit card law:

http://www.federalreserve.gov/consumerinfo/wyntk_creditcardrules.htm

http://freep.com/article/20100304/COL07/3040482/1088/New-credit-law-means-youll-see-what-you-pay-in-long-term

http://www.federalreserve.gov/creditcardcalculator/

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