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Friday, May 13, 2011

5 Credit Card Facts You Need to Know in 2011

If you are using a credit card this year, and who isn't, then you need to be aware of some of the changes as a result of the CARD Act. To my surprise the credit card companies did not get away with persuading government enough and some of the new regulations might actually be good. Here are some of the key ones:

1. No More Surprises - if they are going to increase your rate, change some of the fees they charge you or make other significant changes to your agreement they have to give you 45 day notice. Therefore you would have the option to cancel the card. However...if you choose to cancel the card they can stick it to you by requiring you to pay off the balance sooner or increase the minimum payment.

2. If you use a credit card, be ready to pay more - now, some merchants can charge you more if you decide to pay them with a credit card. The way they can do this is by requiring a minimum purchase amount if paying with credit card. So if you are one of the many that barely carries cash around, you might have to buy more crap at a store in order to meet the minimum purchase price.

3. If you don't use the card you can loose it - If you have a credit card that you don't use the issuer can try to close the account. Which is not a big deal to begin with if you were not using it. The only down side could be that if you have had the card for a long time, and you close it, it might affect your credit score. I know it's asinine but that is one of the criteria that papa FICO uses to calculates your credit score.

4. They have to tell you exactly how long you will be in the hole with them - you probably have seen this in your statement already. They are now including this "idiot proof" box that clearly spells out how long it will take to pay off the balance. If you are one of the persons that chooses to pay only the minimum (which is what the credit card company wants) then you will be able to see exactly how freaking long it will take to pay it off. And that is if you don't keep on adding to the balance!!

5. Caps on high-fee cards - If your credit card company requires you to pay fees (such as an annual fee or application fee), those fees cannot total more than 25% of the initial credit limit. For example, if your initial credit limit is $500, the fees for the first year cannot be more than $125. This limit does not apply to penalty fees, such as penalties for late payments.

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