If you are a credit card user, there is definitely some good news for you, at least that’s what it seems with the implementation of the new credit card law. Providers, now, have to legally issue a warning in advance if they intend to hike your interest rate. Which was certainly not the case previously.
Every bill they issue must possess information on how many months it would take to repay the total amount if they make the minimum payment every month. Wow! What a relief for credit card users! It seems to be a beginning or end of the credit card loot era.
Most people, however, believe this relief is very short lived. Although card providers wouldn’t be able to earn through a sudden hike of interest rates, they have many other ways to exploit their users. But why the hell they do these things? Because they want you to suffer? No, because a huge chunk of their annual revenue is earned through various penalties and most importantly, interest.
The new law, however, has made it a bit more difficult for companies to take undue advantage of customers as they are now required to provide at least a buffer of 60 days before they can actually hike your APR.
Hence, you can expect an increase in various kinds of fees like annual fees, inactivity fees, international exchange fees, etc. And the decrease in benefits as the companies will strive to recover their profits through other means. This is not to say that you wouldn’t see much of reward plans. They actually earn a lot through reward plans. For instance, if you make a purchase of $200, a small part of it goes to Visa or Master Card. And a larger part goes to the bank or card provider. This is known as the interchange fee. So, be ready to see lots of such reward plan cards and offers flooding your inbox.
For users, it is suggested to have less number of credit cards especially the one that provides good service and lowers interest rates. Avoid getting cards on introductory offer as the interest rate may hike unexpectedly after a stipulated period. Don’t opt in for overdraft facility unless necessary and don’t link this facility with your saving or checking account.
Also, keep a regular check on your statement. I am sure you will find surprises every month. And strive hard to maintain a good credit score.