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Last year, Congress passed a new law to help protect consumers from sudden or unjustified changes in their credit card account terms and conditions. The final provisions of the law, the Credit Card Accountability Responsibility and Disclosure Act of 2009 (otherwise known as the CARD Act), go into effect in August. This article will review just a few of the important changes brought about by the new law.
Rate Increases
During the first year that you own a card, card issuers will generally not be able to increase the APR on your credit card except under certain circumstances. These special circumstances can include the expiration of a promotional period, a scheduled increase disclosed at inception of the account, an increase in the index rate that a variable-rate card is tied to (such as prime rate or U.S. Treasury securities), or the customer being more than 60 days late on a payment.
After the first year, card issuers can raise the rate; however, they are subject to certain restrictions. The new rate is not allowed to exceed the maximum rate previously disclosed to the customer and the new rate can only apply to new transactions. Any existing balance will remain at the previous rate.
In addition, a notice of the increase must be provided 45 days prior to the rate going into effect and the higher rate can only be applied to new transactions made more than 14 days after the date of the notice. For example: A customer is provided a notice on August 1st that a higher interest rate will be applied to transactions made on or after August 16th. The higher rate will be applied to any remaining balance on these transactions after September 15th (the end of the 45-day period). There are a few exceptions to the 45-day notice requirement. The most notable is for rate increase on variable-rate cards tied to an index.
Receipt of the 45-day notice is also important because the customer then has those same 45 days to decide whether or not they want to accept the higher rate. If the consumer decides not to accept the rate, he or she can cancel the card instead. Any balance on the card at that time will remain at the old rate.
If you do decide to cancel your card, the credit card company can no longer require you pay the balance off immediately, but there are other changes they can make. Card issuers can increase your minimum monthly payment (up to double the current level), give you five years or more to pay off the balance, or keep your existing repayment level on your account until the balance is paid.
Other Account Changes
Generally, card issuers must also provide you with a 45-day notice on any other significant changes to your account, such as increased or new fees. You again have 45 days to decide whether to accept the changes or cancel your account.
Penalty Rates
Card issuers can impose a penalty rate on your existing balance if you are more than 60 days late making the minimum required payment. If you miss your due date, it is still important to send in your payment as soon as possible to try to avoid being more than 60 days delinquent. If you do go past the 60-day mark and your credit card company imposes a higher rate, try to bring your account current as soon as possible. Once you make six payments on time, the credit card company is required to reduce the penalty rate.
Since economists still haggle over whether or not the economy is actually improving, it's no wonder consumers can't tell the difference either.
The Conference Board, a private research group who monitors such trends, reported its Consumer Confidence Index slipped in July, down from earlier predictions. The job market has not improved and the stock market is struggling to recover from losses suffered since end of last year.
The Obama administration is right on this call. The only way to assure economic recovery is through spending.
But true recovery will depend on consumer spending, not government which could mire us deeper into this hole.
Jobless and under-employed Americans can't spend money they don't have. So it's up to the rest of us to stretch the little we have left far enough to bolster our local economy. We can make our dollar go a lot farther using some simple savings tools.
When it comes to savings, the Internet is your friend. Whether you're booking travel, buying a new car or household appliance, gift shopping or dining out, savings are right at your fingertips.
Let's start with planning your vacation. You've already narrowed it down to a few possible destinations, it's time to delve into the details. Will you fly or drive?
Visit your favorite search engine to do the math. Multiple sites allow you to enter your start and end points along with the year, make and model of the car you're planning to drive. The calculator will return the distance you'll travel and estimated fuel cost to do so. Don't forget to add meals and lodging to the total.
The airfare may actually be cheaper. And there are plenty of comparison sites that will search through the myriad of travel options available. Will you check a bag? Does the airline charge for soda? Does the displayed fare include fees and taxes? Find the cheapest fares on Tuesdays or Wednesdays.
If you're flying, you'll probably need a rental car. Check rates for agencies off of airport grounds. You can often avoid additional fees by doing so.
Need a hotel room? There are a host of deals to be found online. Choose a few for consideration, then do an online video tour to see what the room really looks like.
Of course, you need to eat. Even if you're staying at home, a night out must include dinner. Before you visit restaurant.com for a discount gift certificate, head over to Twitter account @CouponTweet for a code entitling you to additional savings.
Social media presents a new wave of discount opportunities. Twitter's official deal account, @Earlybird, offers deals throughout the day for a variety of industries.
One last stop you must make before you hit the Buy button should be the company's Facebook page. You'll often find additional specials offered to the site's followers.
Smart phone apps make use of GPS technology to alert you to nearby deals. Yelp shows nearby restaurants offering discounts to users of their service. Foursquare displays marketers near your location, and interconnects your social network so friends can join you for a latte. Their marketers extend special rewards for using their service, such as a recent campaign for free chips and salsa at Chili's.
Deals are plentiful. You just have to know they exist to find them. While you can find anything you need online, you may face the problem of having too much information to sift through. Now if there were only an app that could offer savings on my time.
Financial News
House prices and sales have been a backbone of the economy. The Case-Shiller home price index indicates that home prices are showing strength during spring. The unadjusted composite 10 index in May jumped 1.2 percent, following a 0.7 percent surge the month before. The year-on-year rate improved to 5.4 percent from 4.6 percent in April. The unadjusted index reflects seasonal strength that occurs during spring and summer months - the peak of housing demand during the year. But, seasonally adjusted, the 10-city index still had a 0.5 percent increase as it had in April.
Note that that the Case-Shiller index is based on a three-month-moving average. The May data included two months' of data with tax incentives. This makes interpreting the marginal move (latest month) tricky. Given that both April and May are above February and March percentages seasonally adjusted, the latest number still looks good.
Home sales were expected to drop with the end of the tax incentives. That was reflected with a drop in May sales, but new home sales in June rebounded 23.6 percent after plunging a revised 36.7 percent in May. The bad news is that this is down 16.7 percent on a year-ago basis. Monthly supply has seen sharp movement in recent months as that ratio is moved more by sales than by the number of homes on the market. Supply on the market has dropped to 7.6 months after surging to 9.6 in May. The median home price slipped 1.4 percent to $213,400. Year-on-year, the median price in June is down 0.6 percent. Although sales cannot be called strong, they are not in a freefall!
Are you planning to visit a National Park this summer? Schedule your trip for August 14-15 when the U.S. National Park Service will offer free admission to over 100 parks that normally charge a fee.
Quotable
"Nature provides a free lunch, but only if we control our appetites." - William Ruckelshaus
Today in History
1940 - The first Bugs Bunny cartoon debuted in movie theaters.
Flash Fact
Japan's Tokyo Zoo closes down for two months every year to give the animals a little break from the people.
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