Monday, June 1, 2009


A new national bill has just been signed which addresses the credit card companies seemingly endless ways of making arbitrary changes. We have all read or watched the news covering the issues of unexpected account closures, sneaky rate increases, big late fee charges and other nasty credit card related practices. And maybe you’ve even experienced one or two of these unexpected changes yourself?

So, does this new law provide actual relief for us as consumers and will it make an impact on our struggling economy? No easy answer to that, sorry. We’ll all have to take a “wait and see” approach. But, let’s review the highlights of the bill and think about what this means for us as borrowers.

* No overnight change: The bill allows nine months for the credit-card companies to implement the changes. Many consumers would be happier with a faster turnaround time in this tough economy; the good news is that these changes take place sooner than the new Federal Reserve regulations which become effective in July 2010.

* Free and easy bill payment: Credit card companies must now accept telephone and internet payments, and best of all, these services are to be free! This is a big change from current practices, where most credit card companies collect extra revenue from charges for online and telephone payments.

* New on-time policy: Did you realize that some companies required our payment to arrive by 9am or noon on the due date to be considered on-time? If it arrived in the afternoon mail delivery on the due date, it could be considered LATE. Now, if our payment arrives by 5 pm on the due date, it is to be considered an on-time payment.

* Be forewarned: We will get a notification 45 days in advance of an interest rate increase, according to the new rules. Meaning: we’ll see this coming and be able to make adjustments to our budgets or plans.

* Grace period: Once the bill is implemented, we will no longer be immediately charged a higher interest rate for being late on a payment. The lender has to give a 60 day grace period to us before they retroactively charge a higher rate to existing balances.

* Restoration: According to the new bill, if a borrower falls more than 60 days behind, we’ll be able to get back the earlier, lower rate after six consecutives months of on time payments.

* Promotional rates: The special promotional rates are allowed, but must be a minimum of six months and card companies won’t be able to raise rates during the first year an account is open.

Other provisions include making credit cards harder to acquire for college students under 21 years old, and eliminating tiny print in the applications and disclosures.

There seems to be a “but …” following the good news, right? Well, there is speculation that the issuing banks will add new types of fees and find ways to get around the new rules. After all, they profit from the fees they charge as well as the rates on balances carried month to month.

As with all things financial, use good common sense, ask questions, be responsible for your actions. Another resolve would be to just pay off all credit card debt. Prov. 22:7 says ”Just as the rich rule over the poor, so is the borrower servant to the lender.”

Avoid the financial stress by working on getting out of debt. Insight Mortgage Group has folks who can help you achieve financial freedom. Please give us a call at 913-642-3334 or email me at

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