Holes in the Credit Card Act of 2009

Today’s Money Monday comes from my friend, Jill Russo Foster of Cash, Credit and Your Finances.

The Credit Card Act of 2009 created some welcome changes. You have more time to pay the bill after your statement is posted which helps prevent late fees and penalty interest rate increases. You can also see how long it will take to pay off your credit card if you only pay the minimum payment. These are good things.

But, there are holes in the Act that could leave you unprotected. Here are some items that I find troublesome:

College Marketing
Many of us assumed that credit card companies were no longer allowed to market on college campuses, but there are loopholes, so the jury is still out. We can’t discount direct mail, either. I know a two-year old toddler (daughter of a good friend) who got her first pre-approved credit card application in the mail! So, the under 21 crowd on college campuses could be receiving credit card offers by mistake. I will keep you posted.  Let me know what you hear as well.

Business Accounts
Did you know that the new rules don’t apply to business credit cards? This includes credit and debit cards, fleet cards, travel and entertainment cards. If you ask me, this was a big oversight.

As a small business owner, I have both personal and business cards. That makes my accountant and the IRS happy, but it doesn’t make me happy to know that my business accounts won’t be protected from random interest rate increases and a shorter payment schedule.

Military Personnel
Military personnel returning from active duty are in a dilemma. Apparently, if you’re on active duty you have lower interest rates. When you return, your interest rate is returned to a higher civilian rate. But, which rate will it be? Will you see a comfortable 8% or an impossible 25-30%? This is an issue. The new Credit Card Act only allows interest rate increases in certain situations, but military personnel were not addressed.

I hope this made you aware of the risks you could be facing. As always, be careful with credit. The companies that offer credit are in business to make money. They have a right to make a profit, but don’t let it be at your expense. We will have to wait and see what problems arise from the holes in the Credit Card Act of 2009.

Jill Russo Foster is the author of Cash, Credit, and Your Finances: The Teen Years. She provides practical tips for every day finances. Learn more about protecting your credit and living within your means, with Jill’s popular free reports and bi-monthly ezine, available here ==> CashCreditandYourFinances.com