Changes in credit cards designed to help consumers pay off more debt

If you have credit card debt, some changes take effect today that are designed to try and help you get closer to paying off the balance.  It’s part of the Credit Card Accountability, Responsibility and Disclosure act of 2009.

The major changes are:

**Card issuers must now give a 45-day notice instead of just 15 days - before a rate increase.  Consumer advocates say this extra time may give people a chance to shop around or pay off the card.

**Monthly notices now have to be mailed to consumers at least 21 days before the payment is due.  It had been 14 days.

**Consumers now have the right to “opt out” of interest rate hikes.  If you decline the higher interest rate you can’t make any more purchases with the card and you pay off the balance at the existing interest rate, within five years.

Many say this should help those with mounting credit card bills.  But the Public Interest Research Group says banks and lenders are making changes to counter the new laws, including raising interest rates and fees across the board. and consumers need to be diligent. “that means you always need to pay your bill as soon as you get it,“ says Ed Mierwinski of US PIRG.  “That way you avoid late fees. You avoid some interest the earlier in the month you pay it. And always pay as much as you can afford, if you can’t afford to pay the full balance.“

Banks say the laws and economy have made it more expensive to issue credit, and as a result, those costs are getting passed on to the consumer.

Some we talked to locally say they have learned the hard way to pay off their credit cards.  “ It took me 8 years and I don’t plan on getting into credit card debt again,“ Colby Newman says.

Mia Carr from Savannah, the mother of three small children says she and her husband stopped using credit cards all together.  “I think companies prey on people, especially young people.“

John Wills from the local Consumer Credit Counseling group says the changes should help a lot of people. “that’s especially true with the change that you now have the option to not take the higher interest rate and pay off the account over time,“ he says. 

Wills also says “I’m sure that some of the credit card companies are going to try and recover some of the losses sustained under these new provisions, maybe with higher annual fees. So if you’re shopping around ,make sure you’re looking for that annual “free” type credit card.

Wills does believe that the current credit climate has prompted many people to take a look at their spending habits. “Many people don’t understand how long it can take to pay off your credit cards if you just pay the minimum every month.  I think more people are realizing what’s going on and opening their eyes. They want top ay the debt down more quickly and that’s going to make them wiser in the use of credit.“ 

Next February, more key provisions of the legislation will go into effect,including limits on the rates companies can charge on existing balances.

other changes that are already in effect: lenders have stopped raising rates on cards when the user has missed a payment with another credit card company, along with the practice of double-cycle billing.