good news for debtors

Found some tidbits of info on the credit card war. The war I'm speaking of is the card companies versus their customers.

The Fed Reserve finally got around to issuing new regulations and they're doozies.
1) Card companies must give 45 days notice before changing terms and conditions. This means in English that instead of the previous 15 days before jacking up an interest rate (to something in 30%+ range), they must give 45. That doesn't help much if you owe a pile of money, but if its possible to pay it down relatively fast or transfer it somewhere else, there's more time to escape. One extra month is huge for procrastinators (people who would have problems being on time with payments anyway)

2) Card companies must explain in English (instead of lawyerese in mice type) what the rewards are and how to attain them. And must also do so with penalties, such as late payments. In some manner which demands attention. In other words, not in mice type and not in vague suggestion, but in clear delineated form. Make a late payment and interest rate goes to__. That information is on the T&C sheet most of the time, but there is no mention of what the rate would be if a late payment or other error occurs.

3) This is the big one. With all the offers for transferring balances out there, the manner in which a card with a transferred balance (with its special rates) and a regular balance on the same card is paid out is important. Currently a payment is applied to the lowest balance rate. Which means that if there is a transfer balance rate, it goes toward that and not the much higher consumer rate. Which means that the card company makes more money and you the debtor must pay for a lot longer to get out of debt. The new regulations say the money goes to the highest interest balance first. Excellent news.

Now the bad news is this is merely a regulatory agency, the Federal Reserve. Credit companies are still fighting the regulations as well as seeking overturning legislation, so these are not official changes to date. But they do illuminate some processes that are going on beyond the curtain for most consumers out there so it was time to share.

By the by, if you're looking to get out of debt much faster, pay half payments in consistent amounts every two weeks. This is very easy if you get paid that often and it basically means that debt becomes a budgeted feature. The card company will begin lowering your minimum payments until they reach a floor figure to attempt to string out the debt, but if the payments remain basically the same, this is irrelevant. It also makes an extra monthly payment over the course of a year and applies some extra money each month to principal and not interest because of the way credit card interest charges are computed. If you're of the internet generation, this is usually extremely easy and doesn't cost extra money from stamps.