Jackie B asked:

After years of unfair advantages over their consumers, banks have finally had to take a step back.  In May of this year, the Federal Reserve Board made it their priority to take the reigns on issues that have concerned credit card users for years.  In a hearing conducted in the capital, bank representatives and the opposing side got together to discuss a number of pending issues.  Is it unfair to raise a credit card interest rate based on the late payment of another unrelated credit card? Is it unfair to increase the interest rates to 20-30% on previous unrelated purchases?  Is distributing lower interest charges to lower rate balances instead of higher rate balances a fair deal?  These are some of the issues tackled by the Federal Reserve Board. 

 

To say the least, banks and credit unions are not happy.  They make a simple argument; if consumers are not satisfied with their policies then they can easily switch banks.  In reality, every time you close a bank account and open a new one it hurts your credit and in turn, increases your interest rates.  While they claim that their imposed rates and charges are necessary to keep business afloat, it has become obvious to consumers and legislation that these charges go far beyond necessity.

 

One of the things discussed at the hearing was how the “fixed” interest rate increased when consumers used their credit card near the limit.  For example, if a credit card had a $2000 limit and a consumer used up to $1900, they were immediately depicted as a risk and their APR was increased from 15% to 25%.  The Board argued that this was misleading and if banks could so easily impose changes on any consumer’s status, what was the point of instating credit card limits and fixed APRs? 

 

Another issue that was tackled at the hearing was that of double cycling.  When credit card users carry a balance onto their next billing cycle (as most do) and their APR is increased, the new rate is imposed not only on their new billing cycle, but it also affects the remaining balance of their old billing cycle.  The Board argued that any APR increase on a new cycle should not affect old billing cycles.  They are two separate issues and should be treated as such.  Furthermore, interest rates should not be increased on one credit card account when a cardholder fails to make payments on another unrelated account or bill.

 

Giving consumers a reasonable amount of notice regarding any changes on their credit card account seemed to be a big issue at the hearing. The Board suggested a 21 day notice between mailing their new interest rate statement and the new payment due date.  This would give consumers enough time to receive the news and deal with any unfair or inaccurate information.  Also, the Board found it necessary for banks and credit unions not to charge a fee when a consumer was paying an overdraft on a checking account, debit card purchase or ATM withdrawal unless they gave consumers the right to choose not to use overdraft services.

 

The new laws discussed at the hearing were all prepared to benefit the consumer.  Legislation hopes that these new reforms can help consumers better manage their money by giving them alternatives and more space to make mistakes.  However, there are always fears that it is never enough and that credit card companies and banks will find a way around the new propositions by installing new laws and providing more misleading information to their consumers.

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Credit repair services for those who feel their credit scores do not accurately reflect their credit risk. Helping consumers take action on their credit since 1991, Lexington Law has served over 1/2 million clients.

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One of the motivations that make many consumers consider the purchase of credit card is the consequent incentives or rewards that are attached to the cardholder package. With so many card companies competing for customers, it is not surprising to see a variety of rewards packages emerging, all seeking offer the best of the best in attractive incentives for using your credit card for purchases.

Credit card rewards are typically offered on a points system that is keyed into the total amount of purchases made with the credit card. The more purchases you make the more access you have to various levels or types of rewards. Thus, it is a good idea to know whether you are going to make beneficial use of a rewards credit card before you seek one out. Of course, in order to determine the potential benefits, it is important to know what kinds of rewards are available.

Types of Rewards

As far as the types of rewards or incentives, card companies offer a number of exclusive benefits and gifts to cardholders who decide to purchase a rewards type of credit card. Among them, there are at least five basic incentives: cash back rewards, frequent flier miles, cash rebates, gasoline rewards, and retailer rewards.

Cash back rewards. These may be just most common form of credit card rewards offered by the card companies. Basically, the card rewards cash amounts based upon a percentage of the total credit card purchases. In some cases, this might mean a dollar for dollar percentage rate. (e.g. 1% of every $1 charged) With other packages, the cash back is awarded at specified points in time after a certain amount of money has been charged. (e.g. $10 after $1,000 is charged to the card)

Frequent flier miles. There are many credit cards that provide users with frequent flier miles that are accrued over time or on specific usage requirements established by the card company. These rewards can then be redeemed for plane tickets from participating airlines. This is a great feature for business executives who travel across the country throughout the year.

Points Rewards. With the points reward system, a certain amount of points is awarded based upon the amount of a purchase. These points can then be traded in or redeemed for all sorts of products, services, and cash awards. These might include travel discounts, gift certificates, merchandise, and limited-time services.

Gasoline rewards. With this incentive, you can earn some breaks at the gas pump by making credit card purchases. Most of the time, some form of rebate is given on a percentage rate for every purchase made.

Retailer rewards. Various businesses partner with credit card companies to provide an incentive for making purchases with the card and a percentage of each purchase goes towards providing a credit with the participating company. This could mean anything from groceries to cell phone or automobile purchases.

By knowing what types of rewards programs are out there, you will have a better concept of what sort of credit card will provide the most benefits for you. Take the time to research the various plans and be sure about what it is that you want to spend to obtain the rewards benefits.

By: Peter Kenny

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lexcredit asked:

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Credit repair services for those who feel their credit scores do not accurately reflect their credit risk. Helping consumers take action on their credit since 1991, Lexington Law has served over 1/2 million clients.

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At the rate how mailboxes are bombarded with credit card offers, it’s probably amazing for anyone not to have considered these cards at least once. Nonetheless, credit card companies now make it even easier for consumers to apply for a credit card through instant approval card applications. There are a few things you should know before actually making a card application online or through the phone.

You need a good credit history

In order for quick approval, it is essential for a potential user to possess a good credit history. This means that the user pays his bills on time and does not have any financial hiccups in his credit report. The credit report is obtainable from a credit bureau, which will be contacted by the card company at the time of the application. If all goes well, the credit card will be approved within minutes.

Interest rates corresponds with the health of your credit report

If your credit history is not something you are proud of, there is a slight possibility that your application will not be instantly approved. You don’t have to worry if this occurs though, as these companies may make allowances for you due to high competition in the credit business. Most of the time, they will just charge you higher interest rates as you are of a greater risk. Also, due to the extra qualification process, the arrival of your card may be delayed.

You need to wait a few days for the card to arrive

A common misconception with these cards is that the applicant will instantaneously receive the card upon approval. No matter how fast your Internet connection is, the card is delivered in an envelope, not in bytes. Thus, it is not a very good idea to have an urgent transaction depend on these card applications.

You need to do your research

Do not let the convenience of getting a quickly approved credit card cloud your judgement on your selection of a credit card. It is not worth making higher payments in exchange for a shorter wait for a credit card.

You need to find a secure connection to submit your personal information.

As with all forms of online transactions, you should never use a public computer to submit your personal information. With the recent spat of identity thefts, it is wiser to be safe than sorry, especially when it comes to credit cards.

By: Adam Goldman

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CBS asked:

As the economic crisis continues, credit card interest rates are rising dramatically for many consumers who may not even be aware of the increases. Mark Strassmann reports.

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