New credit card rules create tougher times
POSTED: Wednesday, October 19, 2011 - 10:19am
UPDATED: Friday, November 25, 2011 - 12:54pm
NBC NATIONAL NEWS — Significant changes in credit card rules have taken place over the past year, some more taking effect this month. The new rules were designed to make credit cards and debit cards more transparent to the consumers using them. Depending on your financial situation the new rules may help or hurt.
Brian Bradshaw is a stay at home dad. While his wife is working, he's taking care of the kids, which does not come with a paycheck. A new credit card rule now prohibits Bradshaw from applying for a credit card in his name.
Stay-at-home dad Brian Bradshaw says "once you're married, you're a family. Everything is the family's. So the idea that I couldn't use my wife's salary for proof of income or that my wife couldn't use mine for proof of income I find kind of strange."
The new rule essentially says non-working spouses can no longer claim household income when applying for a credit card.
David Butler, Deputy Director of Consumer's Union, says "this rule stems from a serious problem that's been around for a long time. Credit card companies too often doling out credit without taking any real consideration into that person's ability to repay it."
David Butler, Deputy Director of Consumer's Union, the publisher of Consumer Reports, says there could be unintended consequences to the rule. David Butler says "some people may have a much harder time getting credit even though they may be the primary person in the house who manages the finances, has access to the money, and pays the bills."
This new rule will also prevent marketing to college students on campus, and prevents students from using household income when applying for a card.
David Butler says "the credit law ensures that there are much stronger controls and how credit is extended to college students who aren't yet bringing in any salary of their own."
One complaint regulators heard from consumers was banks marketing low interest cards only to have the consumer sign up for them and have the rate skyrocket. The new credit card rules make it harder for banks to raise a promised rate.
David Butler says "this law does crack down on the so-called tease rates and ensure if you're promised a certain rate the credit card company is under a much stronger obligation to continue to offer you that rate and notify you if and when there are any changes in advance."
You may have noticed on your bill clearer disclosures on how much you really owe. The rule requires banks to print on every bill what happens if you pay only the minimum balance. The interest accrued and how long it will take you to pay off the balance.
David Butler says "the most important thing that I could advise any consumer, now that we have this new card act as law is read your mail, because typically that's the only obligation the credit card company has to tell you about changes in many cases, good changes you are going to want to take advantage of."
Some advice for those without their own personal income, you can apply for a joint credit card, or get a clear co-signer on a card but it will not help build your credit. That will only happen once you have your own income.