After filing for bankruptcy, it’s important to remember that the day your case is closed is the day you can begin rebuilding your credit score, by adopting responsible spending habits, paying your bills on time and not applying for too much credit at once. You may think that living on a cash-only basis is a smart choice, but if you want to begin rebuilding your credit score fast, you have to take the plunge and allow yourself to open up new credit cards. A few recent laws have been enacted to protect the consumer and give you a better chance of attaining a good credit score.
On May 22, 2009 President Obama signed the Credit Card Accountability, Responsibility, and Disclosure Act to combat the unjust practices of credit card companies. This new law establishes principles necessary for consumers to get ahead, which include: bans on unfair rate increases and fee traps, plain, understandable language, accountability, and protection for students.
Additional Protections to the Consumer include:
- Consumers will no longer endure unfair and hidden spikes in interest rates.
- Consumers will have an adequate time period, at least 21 days, to pay a monthly bill.
- Deadlines, such as weekends and random monthly dates, are abolished.
- Institutions must receive the consumer’s permission when charging an account at its limit.
- Credit card companies must disclose account information in plain sight and plain language, i.e. how long it would take to pay off a balance and the total interest cost, if the minimum payment was made monthly.
- Credit card contracts are now made available online…keeping companies accountable for their terms and conditions.
- Consumer protection regulators must publish up-to-date findings and report misconduct.
As of August 22, 2010, the Federal Government is adding new rules to the Credit Card Act to create even more protection for consumers.
- Consumers can only be charge $25 in late fees, unless you have been late on payment in the past 6 months or the cost a credit card company acquires due to your tardiness justifies a higher fee.
- Late fees cannot be more than your minimum credit card payment
- No more inactivity fees, i.e. if you aren’t using your card, they cannot charge you
- No more double fees for single transactions.
- Explanation if they increase the APR.
However, even with the new laws, credit card companies continue imposing fees on consumers; labeling these “fees” by other names, now that more stringent laws are going into effect. The so-called “annual fee” is back. Companies will wave an annual fee if you purchase enough throughout the year; if not, the fee is tacked on, ultimately charging you for inactivity. Another fee to pop up is the foreign transaction fee. Anyone who has traveled abroad knows that card companies take a percentage for converting moneys. Now, regardless of what currency a transaction takes place in, if done overseas, they will charge you 2 to 3 percent. Cash advance fees are becoming larger. Additionally, companies are charging for paper statements. You can avoid this by paying your bills online.
To learn more about how to protect yourself from incurring hidden credit card fees, visit:
http://www.walletpop.com/blog/2010/07/21/the-latest-in-sneaky-credit-card-fees/
http://www.whitehouse.gov/the_press_office/Fact-Sheet-Reforms-to-Protect-American-Credit-Card-Holders/
http://www.federalreserve.gov/consumerinfo/wyntk_creditcardrules2.htm
If you have any questions on this topic, please feel free to contact me at (305) 285-9100. You can also find useful consumer information on the Kingcade & Garcia, P.A. Web site at www.miamibankruptcy.com.
-Timothy Kingcade
