It seems that every time Americans turn around, there's a new credit card law going into effect. And though the purpose of all these rules is to protect consumers, they sometimes have unintended consequences.
Most recently, a law went into action this weekend to limit credit card penalties. Previous legislation enacted this year restricts credit card issuers from suddenly changing interest rates. On the one hand, both laws can help us save money on our credit cards. On the other hand, banks are finding fresh ways to take our money - this time, through higher interest rates on new cards and purchases.
In some ways, better consumer protection might be worth the pain of higher interest rates. In the past, banks could immediately add fees and raise your interest rate the day you missed a payment or made another mistake. If you already had a large balance, a suddenly higher rate meant suddenly higher debt - so much for second chances. With today's new laws, however, banks must wait at least 45 days before changing your terms. That means more time to get current and figure out how to prevent future missed payments.
What the new laws don't protect against is changing rates on new credit card purchases - so while your credit card issuer can't raise interest your current balance, they can charge you more in the future. You should also expect any future cards you sign up for to have higher interest rates to begin with.
It's inconvenient, for sure, but consider looking at it this way: at least you have some control over your finances. If you don't want to pay more for the same purchases - or if you can't afford to - you can choose to rely less on credit. If you can wean yourself off plastic, you can prevent future debt - and the hassle of future payments. If your debt keeps you reaching for the credit card, make a commitment to lowering it - bankruptcy can help. Find out more about how bankruptcy can help you get a fresh financial start with a free one-on-one debt analysis from a Chicago bankruptcy attorney.
