New credit card rules eliminate 'nightmare' fees
SEATTLE - A batch of new rules go into effect Sunday that could mean some people will be paying less to their credit-card companies.
For some time now, the credit-card companies have had a "fee-for-all" - charging fees and penalties that seemed arbitrary.
That's now changed. And there are also new rules taking effect that could make giving and receiving gift cards more appealing.
The new rules will help people like Ann Benedict of Burien.
Her wallet is filled with credit cards and store charge cards - and she says she owes money on every single one of them.
That means late payments - on top of already high interest rates.
"Get in a whole lot of trouble with them," says Benedict. "I did quite a few years ago, got myself out of it, and then turned around and got myself back into it - to now where I'm realizing what I need to do to, where I can get rid of them and all."
The new credit-card changes are meant to help customers like her - even if they put themselves in a bad financial position.
The new rules reel in penalty fees for late payments or over-the-limit purchases.
"So instead of the $39 nightmare overlimit or late fee, it's now a $25 fee, unless you're a cronic violator," says Adam Levin, CEO of credit.com.
Certain fees are now banned, such as the awkward "inactivity fee" for not even using your card.
Interest rate hikes are contained, and if your credit-card company raises your rate, they have to tell you why. Plus, if you deserve to have your rate lowered, your company must comply within 45 days.
And only one fee is allowed per infraction. If you make one late payment, you can only get dinged once - not again and again.
Shoppers say the new rules finally make some sense compared to the way things had been done.
"They change things, and they tell you, but they put it in such a fine print ... that you don't read it," says
Larry Grewell of Burien. "And so they get away with it."
Those ever-popular gift cards are also seeing notable changes.
Starting today, all gift cards must be good for at least five years instead of just a year or so. And cards can no longer be hit with an inactivity fee unless they have gone unused for 12 consecutive months.
Plus, any service fees must be clearly disclosed on the packaging so everyone knows what they're buying into.
The new rules are required under a federal law enacted earlier that has required changes in credit card rules in stages all year - with the last stage effective Sunday.
The timing couldn't be better - because these are tough times for people with credit-card debt.
Even though interest rates on mortgages, autos and many other consumer loans are at all-time lows, credit-card rates are at a nine-year high - and they're likely to head even higher.
For some time now, the credit-card companies have had a "fee-for-all" - charging fees and penalties that seemed arbitrary.
That's now changed. And there are also new rules taking effect that could make giving and receiving gift cards more appealing.
The new rules will help people like Ann Benedict of Burien.
Her wallet is filled with credit cards and store charge cards - and she says she owes money on every single one of them.
That means late payments - on top of already high interest rates.
"Get in a whole lot of trouble with them," says Benedict. "I did quite a few years ago, got myself out of it, and then turned around and got myself back into it - to now where I'm realizing what I need to do to, where I can get rid of them and all."
The new credit-card changes are meant to help customers like her - even if they put themselves in a bad financial position.
The new rules reel in penalty fees for late payments or over-the-limit purchases.
"So instead of the $39 nightmare overlimit or late fee, it's now a $25 fee, unless you're a cronic violator," says Adam Levin, CEO of credit.com.
Certain fees are now banned, such as the awkward "inactivity fee" for not even using your card.
Interest rate hikes are contained, and if your credit-card company raises your rate, they have to tell you why. Plus, if you deserve to have your rate lowered, your company must comply within 45 days.
And only one fee is allowed per infraction. If you make one late payment, you can only get dinged once - not again and again.
Shoppers say the new rules finally make some sense compared to the way things had been done.
"They change things, and they tell you, but they put it in such a fine print ... that you don't read it," says
Larry Grewell of Burien. "And so they get away with it."
Those ever-popular gift cards are also seeing notable changes.
Starting today, all gift cards must be good for at least five years instead of just a year or so. And cards can no longer be hit with an inactivity fee unless they have gone unused for 12 consecutive months.
Plus, any service fees must be clearly disclosed on the packaging so everyone knows what they're buying into.
The new rules are required under a federal law enacted earlier that has required changes in credit card rules in stages all year - with the last stage effective Sunday.
The timing couldn't be better - because these are tough times for people with credit-card debt.
Even though interest rates on mortgages, autos and many other consumer loans are at all-time lows, credit-card rates are at a nine-year high - and they're likely to head even higher.