The Survive and Thrive Boomer Guide

Credit card reform law ushers in new era of protection for consumers

President Obama signed a credit law on Friday that will help consumers battered by tough economic times by limiting fee increases and interest rate hikes.

The Credit Card Accountability, Responsibility, and Disclosure Act bans unfair rate increases, prevents unfair fees, requires plain language for disclosures, increases accountability, and institutes protections for students and young people.

The Federal Reserve has adopted similar protections but its provisions won’t become effective until mid-2010.

At the signing of the bill in the White House Rose Garden, President Obama recounted stories of hard-working people who had problems with credit card issuers, and a number of ways credit card companies take advantage of consumers. Obama described the new rules:

So we’re here to put a change to all that. With this bill, we’re putting in place some common-sense reforms designed to protect consumers like Janet. I want to be clear about this: Credit card companies provide a valuable service; we don’t begrudge them turning a profit. We just want to make sure that they do so while upholding basic standards of fairness, transparency, and accountability. Just as we demand credit card users to act responsibly, we demand that credit card companies act responsibly, too. And that’s not too much to ask.

And that's why, because of this new law, statements will be required to tell credit card holders how long it will take to pay off a balance and what it will cost in interest if they only make the minimum monthly payments. We also put a stop to retroactive rate hikes that appear on a bill suddenly with no rhyme or reason.

Every card company will have to post its credit card agreements online, and we'll monitor those agreements to see if new protections are needed. Consumers will have more time to understand their statements as well: Companies will have to mail them 21 days before payment is due, not 14. And this law ends the practice of shifting payment dates. This always used to bug me… suddenly it was due on the 19th when it had been the 31st.

Lastly, among many other provisions, there will be no more sudden charges – changes to terms and conditions. We require at least 45 days notice if the credit card company is going to change terms and conditions.

So we're not going to give people a free pass; we expect consumers to live within their means and pay what they owe. But we also expect financial institutions to act with the same sense of responsibility that the American people aspire to in their own lives.

See "A New Era for Credit Cards" on The White House Blog for a clip of President Obama’s remarks at the signing.

The bulk of the credit card requirements in the new law will go into effect in nine months, which will be February 2010.

The bill calls for phasing in credit card protections, with the earliest provision – giving consumers 45-day advance notice of significant changes in credit card terms – starting 90 days after enactment of the law, which is this fall.

Consumer groups warn consumers to be wary because banks and other credit card issuers may increase fees and interest rates before the law's new requirements take effect.

Copyright 2009, Rita R. Robison, Consumer Specialist

Most consumers eligible for free credit-monitoring services or maybe cash

The credit bureau TransUnion has agreed to provide free credit-monitoring services to millions of consumers in a class-action settlement. The purpose of the agreement is to settle claims that it illegally passed along private information for marketing purposes, according to Michelle Singletary, personal finance columnist.

TransUnion has denied any wrongdoing in the case, but has agreed in the settlement to sign up consumers for either six months or nine months of monitoring, Singletary said in her Washington Post column.

You have until Sept. 24 to register for benefits under the settlement. Any consumer who had an open credit account or an open line of credit from a credit grantor is eligible.

The types of credit might include a car loan, bank credit card, retail store credit card, finance company loan, mortgage, or student loan, Singletary reports. The credit account needed to be opened between Jan. 1, 1987, and May 28, 2008.

To register for the settlement, visit www.ListClassAction.com or call 866-416-3470.

Singletary’s column offers advice on what you should do if you’re a married couple and what options are likely to be available to you.

Copyright 2008, Rita R. Robison, Consumer Specialist

Stress about debts mounting in tough economic times

Americans are under increasing stress about their debts due to rising prices and a sluggish economy.

The mounting pressure is leading to an increase in stress-related illness. Medical professionals are calling the phenomenon debt-stress syndrome.

Recently on the CBS program The Early Show, Dr. Alan Manevitz, a clinical psychiatrist with New York-Presbyterian/Weill Cornell Medical Center in Manhattan, offered suggestions on how to handle debt stress.

When you're constantly worrying and stressing over your debts, you put your body in a constant state of alarm, said Manevitz. It responds by releasing stress hormones, which increases your heart rate, blood pressure, breathing pace, muscle tension, and inflammation, and the dumping of fuel – glucose and fats into – the bloodstream.

This results in an increased risk of diseases such as diabetes and heart disease and infections such as a cold. Stress can also exacerbate preexisting conditions, from chronic pain to cancer, by undermining the body's ability to repair or care for itself, he added.

Other related health problems include muscle tension, upper and lower back pain, ulcers, digestive tract problems, migraines, insomnia, tension headaches, and severe anxiety, Manevitz said.

Three things people need to do to manage debt stress:

• Don’t deny it.
• Be proactive.
• Get help.

Copyright 2008, Rita R. Robison, Consumer Specialist

How many credit cards do you have?

In the United States, the average cardholder has seven credit cards and two debit cards, according to www.cardtrak.com/, which provides consumer information about credit cards.

That’s too many, according to Bill Hardekopf, chief executive officer of www.lowcards.com/, a Web site that helps consumers compare credit cards.

"There is the temptation of using them and charging more and more," Hardekopf was quoted as saying in “Credits Cards: How Many to Have?”, an article that appeared in the Contra Costa Times. "Why tempt yourself with that situation?"

Do you have seven credit cards? If so, how many of them do you use? Is your debt level manageable or are you overextended with credit card debt?

Tomorrow's post will discuss "Stress About Debts Mounting in Tough Economic Times."

Copyright 2008, Rita R. Robison, Consumer Specialist

New credit, debit card rules proposed for thrifts

A plan that would limit many of the unfair and deceptive credit card billing practices in the news recently is being proposed by the U.S. Office of Thrift Supervision, which oversees thrift institutions.

Under the proposed rules, it would be more difficult for a credit card company to increase a card holder's percentage rate on an outstanding balance.

Double-cycle billing also wouldn't be allowed. In this type of billing, the interest charge is calculated from the beginning of the previous billing cycle.

Relief from overdraft fees is being proposed for debit card holders. Consumers would be able to opt out of a thrift's overdraft protection program. Now banks let debit card transactions to go through when a customer has overdrawn his or her account, but they add a large fee.

The proposed rules would only apply to thrift institutions. However, the Federal Reserve, which oversees banks, and the National Credit Union Administration, which regulates federal credit unions, are expected to adopt these rule changes by the end of this year, according to consumeraffairs.com.

Rep. Carolyn Maloney (D-NY) is sponsoring a bill in Congress, the Credit Cardholders' Bill of Rights, that includes many of the measures contained in the proposed rules.

Avoid financial upsets with debit and credit card savvy

Hidden debit card fees skyrocketing

It used to be if you didn’t have any funds in your bank account, the bank wouldn’t give you any money.

Not anymore.

In 2003, a banking policy changed. If a withdrawal exceeded a customers balance, banks used to routinely deny debit-card transactions unless the account was linked to a savings account or credit card to cover the amount.

Now, without alerting customers, many banks are letting the charges go through. And they are assessing a fee of about $30 each time this happens.

This change is it costing Americans about $8.25 billion a year, according to an article in Consumer Reports magazine, November 2007. One study showed that customers who didn’t use debit cards paid $40 a year in overdraft fees, while customers who used debit cards more than 20 times a year paid $223.

Forced arbitration for credit card complaints could cost you plenty

It’s in the fine print when you sign up to get a credit card.

Binding arbitration is required if you get into a squabble with the credit card company. And you don’t have any choice in the matter.

Binding arbitration forces consumers into a private system weighted in favor of corporate interests,  Public Citizen, a consumer watchdog group, states in a report, “The Arbitration Trap: How Credit Card Companies Ensnare Consumers.”

Congress is considering bills, S. 1782 and H.R. 3010, that address the problem, Public Citizen reports in its November/December 2007 newsletter. Contracting parties would still be allowed to choose arbitration, but that choice could be made after the dispute comes up.

Simpler system for filing complaints against banks needed

If you have a complaint about the bank that issued your credit card, what should you do?

With five agencies overseeing banks and taking complaints, including the Office of the Comptroller of the Currency, it’s difficult for consumers to determine which agency to contact.

Consumers Union, publishers of Consumer Reports magazine, told Congress that a one-stop filing system is needed and people should be allowed to complain by phone, fax, mail, and online. The organization also believes complaint forms should be simple and agencies should disclose the percentage of consumer complaints resolved.

For information on how to complain about a bank, see the OCC’s Web site at www.helpwithmybank.govwww.ConsumersUnion.org/money.html.