4 Ways The New Credit Card Rules Can Benefit You

By Tisha Tolar, on June 9, 2010

After what we’ve all been through with the recession, the good to come out of it is that many of us have vowed to stop spending foolishly using credit — and even better we seem to be sticking to that vow. Families are struggling to keep it together and pay off the bills. It hasn’t help that credit card companies keep changing the rules.

Photo by Andres Rueda via Flickr

Not so long ago, credit card holders got the shock of their financial lives when they discovered how their credit card companies jacked up their interest rates and tried to capitalize on the time they had left before the new federal regulations went into effect. These changes put card holders deeper in debt and made it much harder to find the light at the end of the tunnel. Finally the federal government stepped in and called for an end to the many unfair credit card practices that had been taking place at an increasingly alarming rate.

For those finally getting back on track financially and are getting serious about ridding their lives of credit card debt, those new regulations will make things easier — saving you time and money. Here are four changes that will help you get a grip on your credit debts and help you take back your good credit:

Old Debts Don’t Incur Higher Interest Rates

The amount of credit debt you racked up before the regulations went into effect (as of February 22, 2010) can not be subjected to higher interest rates by the credit card company. As long as you pay on time each month, you don’t have to fear rate hikes tacking on more debt to your balance due.

Payments Go Toward Highest Rates When Different Interest Rates Apply

In the past, credit card companies applied your payments however they saw fit. This was not always helpful to those whose payments were applied to the lower interest rate balance. Now, if you have a 15% interest rate for existing purchase balance and a 3% rate for balance transfers, the credit card company must apply the payments to the highest rate balance first. The perk for you is that you’ll end up saving a lot of money the more you pay off in a faster period of time, allowing you to rebuild your credit.

No More Over-the-Limit Fees

You can no longer be subjected to over-the-limit fees because you are no longer able to go over your credit limit. The only way you can spend more than you have is by writing to your credit company and notifying them you would like to spend more than the limit you have. So many consumers were overspending on credit because they could — no one ever stopped them. Credit card companies were thrilled to let consumers spend and then they could sit back and collect on the fees month after month. Card holders who were not keeping tabs on their spending had no idea the amount of fees that were being added or how far out of control their balances were quickly becoming. Now you will not be able to spend more than you have, giving you a chance to pay off debts instead of adding to them.

Your Bill Is Your Guide

Credit card companies must now provide card customers with very important information each month that relates to your credit and finances on each month’s credit card bill. Monthly statements will now give you an overview of how much debt you have, how long it will take to pay off the balance in full, and how much it will cost you in interest fees by only paying the minimum payment each month.

This invaluable information is critical to putting your credit spending in check. Now you get much more than a balance to consider when paying your bills. Seeing the numbers in black and white and understanding it will take X number of years to pay off your debt in full may help you limit your spending and increase your regular payment amounts. More people are looking over their credit card statements now than in the past. Reviewing statements line by line not only gives you a clear picture of what you owe, it also helps prevent fraudulent charges and mistakes being made on your bill.

The new credit card regulations are meant to serve the consumer and not benefit the credit card companies. If you are not sure of what is happening with the rule changes concerning your specific credit cards, you need to contact customer support and read the disclosure information being mailed out to you. Unless you understand exactly how things work, you’ll never be able to take full advantage of the benefits your credit cards can offer to you.

Tisha Tolar is a co-owner of Trifecta Strategies, LLC and the author of Gen X. When she is not busy being a fiction writer, she writes personal finance articles for several web sites, including Moolanomy.com.

Add Your Question or Comment (4 Comments)

1. Jenna:

   June 9, 2010 at 4:06 pm

   It also seems like when you can a credit card customer support line, the people have been nicer lately. I think that this is because the amount of “stupid” questions that get annoying have significantly lower in regards to the “your bill is your guide” comment. Has anyone else seen this shift in behavior?
2. Doug Warshauer:

   June 10, 2010 at 7:37 am

   Glad to hear they’ve been nicer! That’s a great (but surely unintended) way the new credit card rules can benefit you.
3. Anna Thomas:

   August 18, 2010 at 12:30 am

   Wow, Great information on How to Benefit with the New Credit Card Law. thanks for sharing this post.
4. Jenifer Larson-Hall:

   December 9, 2010 at 10:06 pm

   This is good information, but I would like to point out that the amount paid to the higher-interest portions of your bill only applies when you pay MORE than the minimum payment. I just found out from reviewing my credit card statements (which I admit to foolishly ignoring for some time with some cards which I haven’t been using and have just been paying the minimums on) that if you have a purchases portion where you pay 19.99% interest and a balance transfer at 2.99% interest, if you only pay the minimum the amount that is accruing at 19.99% is going UP even if you are not continuing to purchase anything! They add the interest they’ve charged you to that same pool of money, and then charge you more interst on it! Yes, your overall bill will go down because the money you are paying is going toward paying off the 2.99% interest pool, but going down very slowly. You would be wise to try to make payments somewhat above the minimum, if possible, to start paying down that higher-balance portion. I was outraged that $2200 (total) in overdraft amounts charged to one credit card had grown to an amount over $3500 in only two years because I had a large balance transfer and all the money I paid was going toward paying that down. They just kept ADDING money to the higher-interest account because they threw the interest (which I thought they were charging me and I was paying off at least) into that hopper eveyr month. How could I have been so dumb?