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Credit Card Statement Changes Now Effective – Will they Help You?

Credit Card Changes, will they help ?

Another one of those new regulations from the CARD Act just went into effect on July 1. This one affects the look and content of your credit card statement.

Will these changes help you take control of spending and raise your credit scores? For some, seeing exactly how much money they’re giving to credit card issuers might cause some behavioral changes.

The first section gives an overview of activity, including the fees and interest charges for the billing period. You can see at a glance if you are using more than the “magic 30%” of your credit limit. This is a section to pay close attention to, because your credit limit could change at any time – with no advance warning.

The CARD Act didn’t restrict the banks on this point, and credit limit reductions are the reason why so many who pay their bills on time have seen their credit scores drop. They thought they were using 20% of their credit limit and suddenly found they were using 100%. The new rules only prevent banks from triggering over limit fees by lowering your limit to less than your current balance. (Yes, that happened to many consumers.)

The next section shows your new balance, minimum payment due, and the due date. It goes on to outline the fees you’ll pay if you fail to meet that due date. One thing it does NOT clarify is the time of day the payment is due on that date. Some cards require that payment be there by 5 p.m. – or even 3 p.m. – in the time zone where the bank is located. So if you’re on the west coast and the bank is in the east – payment might be required by noon, your time. To be safe, make sure your payment is made a day or more early.

Next, it shows how long it will take to pay off the balance if you make only the minimum payment. It should be sobering to many to see that making minimum payments will result in paying nearly as much -or even more- in interest as the original balance. This of course depends upon your interest rate. This box also shows the monthly payment required to pay the debt in 3 years, along with the total cost.

Another section gives  the required 45 day warning about changes to your account interest and / or fees.

The best course of action: Pay off your credit card debts, and then only charge as much in a month as you can pay off when the statement arrives. Your credit scores will go up, and you’ll have more money to save or spend on the things you want.

Mike Clover

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