Credit card issuers now come under the Credit Card Accountability, Responsibility and Disclosure Act — or Credit Card Act that goes into effect today. The law creates sweeping consumer protections and reigns in industry profits, maybe. The new regulation limits interest rate hikes, requires companies to send bills earlier and apply payments to balances more fairly – they can no longer apply payments to the lowest interest portions of a bill first. Before you charge out to rack up your card balance, check into what the new law does and doesn’t do to protect you.
You will find a good bullet list on Consumerism Commentary’s blog.
gives a more comprehensive report on the consumer protections, history and impact of the new rules. “Charrrrge it,” reads the headline.
tells us, “The new regulations ban banks from things like suddenly shifting the due date for payments or imposing surprise interest-rate hikes,” and that, “…card issuers are already devising new ways to introduce fees and interest rate changes.”
warns that, “In an unusual move, credit card providers are going after good customers, those who pay every bill in full and on time. Customers who use their cards rarely or not at all are also being hit with new fees.”
, if you think the new regulations can protect your business credit cards, think again. The new regulations won’t be there for the small business owner according to this article from CNN Money.
While the regulations end some unfair practices, everything I’m reading warns that the card companies have already put into place ways to replace any reduction in their revenue. The same consumers as always will be paying as much as ever, just under a new guise. In other words, the card companies have had months to make sure that the only thing they change is the name of the fees and fines they will be demanding from you.
Credit cards and the banks behind them have such a bad rap lately that it’s hard to remember that they do offer the small business a real service, allowing quick access to short term loans, letting us save by purchasing everything from inventory to travel tickets to brochures and office chairs online. Because credit cards are unsecured debt, we do not risk losing our home, car or furniture. Still they have grown some teeth and claws. Some of us have had to learn the hard way about protecting ourselves. Here are six ways to keep cards from biting into your tulip:
Make payments online to rest assured they won’t be lost or delayed in the mail.
To avoid overdraft bank charges, sign up for emailed bill payment reminders. Then check your balance ahead of the payment date as the reminders arrive.
Get credit cards out of your purse or wallet. Leave them in a locked drawer, a safe, or even a freezer. You’ll not be tempted to make unplanned purchases and it reduces the likelihood of theft or loss.
Frequently check your credit card charges, payments and balances online and always look over your statements and invoices for errors. Contact the card company immediately if you spot a problem or have a question.
Never take cash advances on your credit card. The interest rate will be terrible, and you will miss an opportunity to establish a good relationship with a local bank or credit union.
If you co-sign to help someone else secure a credit card, you are just as responsible for all purchases and payments. If payments are late or missed, they will show up on your credit report. Even if you pay off your card balance each month, but he/she carries a high balance on that new card you co-signed, you could find your FICO score slipping.
Please leave a comment
How do you use credit cards to help with your small business finances? What do you advise someone just starting out in a new business regarding credit card use or misuse?
