Credit Cards & Your Money

We've been hearing the ills & pitfalls of credit card debt for years. There have been horror stories of excessive over the limit fees bestowed upon unsuspecting consumers. Credit cards weren't always the problem; the debt associated with those credit cards & loan shark like interest rates was the problem. For many of you who have credit cards, Congress recently passed legislation requiring credit card companies to get their act together & exercise more responsibility.

Here are the top 5 things to know about the new credit card bill:

1. Minimum Payment Explanation on your monthly statement
2. Limiting Credit Cards to People Younger than 21 yrs old.
3. College Bank Curtailment
4. Protections against Random Interest Rate Increases
5. Protecting cardholders from Misleading Terms ie. Fixed rate vs. Subprime Interest Rates.

You're probably thinking "It's about time, I wish I had this information ages ago". It's been a long time coming but better late than never. Congress felt the same way. Here's what #1 means in everyday terms:

1. Minimum Payment Explanation on Your Monthly Statement

The new credit card regulation requires all credit card companies to provide the amount of time it would take to pay off your existing debt if you ONLY made the minimum payment each month.  The credit card companies are providing a comparison of how to accelerate the pay off of your credit card balance by paying a little more than the minimum payment.

Depending on your existing balance, following an accelerated payment schedule could knock years off the time it takes and lower the amount of interest you would pay on your credit card debt. 

-SEE SAMPLE CREDIT CARD STATEMENT BELOW-

If you're younger than 21 years old, my next post will be useful to read. We'll be talking about #2-Limiting Credit Cards to People Under 21yrs old.

As always, please email me if you have any questions or comments.

Ebong Eka, CPA
info@ebongeka.com