If you are like most people, you have one or more credit cards that you use everyday. Even more common is to have at least a thousand or more in debt on each of those cards. When you need financial help, the way your credit card company operates can impact your life in many ways.
Recently, there have been changes in Federal Regulations about how credit card companies do business. You might be wondering if this will affect you?
In short, yes. In the past few years, you might have noticed painful interest rate hikes. This is due to the CARD act, which was legislation passed in 2010 to put a damper on creditors excising profits unchecked during a harrowing economic recovery.
What is Changing?
The CARD regulations are intended to reign in how credit card companies pick up a dime here and there, which results in big profit. Here are some federal regulations imposed on credit card companies: credit card companies can no longer retroactively increase rates, creditors must provide the consumer 45 days notice when raising interest rates, and there are new limits on what they can charge in overdraft fees.
All this is great news for credit card customers, which begs the question, how are credit card companies making up for all this lost profit?
In the world of lending, a fresh coat of paint on an old profit vehicle can make it shine (and run) like new. Banks are implementing new fees, cutting rewards and raising interest rates. Some of the new fees include a two to three percent charge on all foreign transactions and a five percent fee for balance transfers from one card to another.
Banks are also issuing customers variable rate cards. Much like adjustable rate mortgages, ARMs, the interest rates attached these cards are dependent on the fluctuations of the prime rate (currently 3.25 percent). Prime rates, because of the Great Recession, have seen historic lows in the past couple years. If you got a low-low APR, expect big hikes once bulls run on Wall Street again.