Money Matters – Managing Credit: The New Credit Card Rules
BOSTON (CBS) – Credit cards and debit cards now have new rules. And the banks have been looking for ways to circumvent the rules for they are losing revenue because Congress put a cap on many of the fees they were charging.
Some of the fees went away and some were lowered but with some planning on your part you can avoid all of the fees. The banks earned $35 billion in just overdraft fees. Now the only way that happens is if you let it.
Balance your check book each month. Know how much you have in it when you write out a check. Make sure your deposits have cleared before writing checks on them.
As for your credit cards your bank was supposed to give you the option if you wanted to opt in for the overdraft protection on your credit cards. I would suggest opting out of the overdraft protection. Then if you are over your credit limit the transaction is denied and you do not incur an over the limit fee. Watch these fees very closely for they add up quickly.
Pay your bill on time and avoid the $25 late fee. Payments are due on the same day each month and the bill should be in your hands 21 days before the due date. So you can now plan to have the money to pay the bill. Your credit card company can also increase your interest rate if you don’t make the minimum payment within 30 days of your due date.
No interest rate increases are allowed on pre-existing balances. If your card company increases your rate they must give you 45 day notice and they can only charge the new rate on a new balance.
If you have balances with different interest rates, the new rules require banks to allocate anything over the minimum payment to your highest interest rate balance. Try hard to pare down those balances.
Beware of some of the new fees. Lose your card and the bank may charge you $20 to replace it. Transfer a balance to a new card and they may charge you 5% as a transfer fee. And the average interest rate has increased from around 11% to 14%.
A very simple way to beat all of the fees is to pay off that balance every month. Do not charge more than you have the ability to pay back. Find a low fee card or a no fee card. If you are not looking for a reward program you can easily find a no fee card especially if you are charging most of your monthly expenses on your card.