It seems more and more that this Brian Zalkowski cartoon sums up what is happening in the world of consumer credit. Today marks the official beginning of new credit card rules as a result of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act passed in 2009 and signed in May by President Obama. Here's a general guide to the bill and its effects. So what does this mean? For credit card users there are more protections in place against unfair practices, however many will also face additional, stiffer fees especially if you carry balances or make late payments. Here are a few highlights or lowlights depending on how it affects you:
Credit card companies are now required to tell customers when they plan to increase rates or other fees.
Standardize payment dates and times to keep companies from tripping you up into late charges by moving your due date.
Limit fees on charges for exceeding your credit limit or paying your bills online or over the phone.
Monthly statements that clearly show how long it will take to pay down your balance by paying the minimum.
Curb interest rate hikes by prohibiting credit card companies from retroactively jacking up rates on existing balances until the customer is 60 days behind on payments.
Forbid credit card companies from automatically enrolling customers in often-pricey programs that offer the option to charge beyond credit limits.
Crack down on marketing campaigns targeting college students and other young adults, requiring anyone under the age of 21 who wants a credit card to either demonstrate the means to pay down their debt alone, or get an adult to co-sign on the account.
Ban the practice of double-cycle billing in which your creditor uses your average balance over the current and previous billing cycles rather than the previous one — a trick that can wind up costing you a pretty penny.
Time Magazine's article that you can find here will have a lot more detail. How does this affect you as a small or mid-sized business? It should make you less likely to pull out your credit card for capital purchases especially for technology. There numerous sources for leasing capital, some with 0% financing, that are far more appealing. It may also make you a bit more wary of accepting payments by credit card from your customers. Read the guidelines and make your own decisions and conclusions. Sure, paying with cash is always preferable, but with the programs available and the tax incentives that may apply you'd be foolish not to take a look.
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