When the Credit CARD act passed earlier this year, we weren’t expecting to see many changes until February 2010, unless taken voluntarily by individual companies.
Thankfully (for me, anyway, since I have a personal vendetta against many aspects of credit cards, admittedly due in part to my own foolishness), some of the rules described in the law were designed to go into effect earlier than others. As the Wall Street Journal reports:
Credit card issuers, starting next week, will be required to give consumers 45 days’ notice before raising their interest rate or making other significant changes to a card plan’s terms.
I don’t see this as a punishment, or a blow to capitalism in any way. I think it levels the playing field, assuming life is a competition between a consumer and the huge corporations who do everything they can to maximize profits.
Furthermore:
Issuers also must begin sending bills 21 days before payment is due.
In related news, Discover and American Express are getting rid of fees for exceeding your credit limit. A part of the upcoming Credit CARD rules also has something to say about those fees:
The law doesn’t require issuers to eliminate over-limit fees, but it will prohibit them from imposing these charges unless consumers say they want the ability to exceed their credit line.
Once again, I find that totally fair, and I think it’s a shame that we had to have the legislature step in and finally put a stop to such offensive practices.
New Credit Card Rules To Take Effect Next Week , Jessica Holzer, Dow Jones Newswires, August 13, 2009
Discover, American Express end fees for exceeding limit, Kathy Chu, USA Today, August 11, 2009
A new law signed by the president yesterday gives the Food and Drug Administration the ability to regulate the tobacco industry. The primary focus of the law is to stop cigarette companies from aggressively marketing to children.
To that end, it will soon be illegal to:
- sell candy-flavored and fruit-flavored cigarettes
- put tobacco company logos on sporting, athletic or entertainment events or on clothing and other promotional items
- place outdoor tobacco ads within 1,000 feet of schools and playgrounds
There are some other changes coming for all smokers, including adults:
- tobacco companies will be prohibited from using terms such as “low tar,” “light” or “mild” – so-called light cigarettes make no difference to a smoker’s health
- cigarette packages will carry larger warning labels, up to 50% of the surface of one side
- depending on the results of upcoming FDA studies, tobacco companies may be required to reduce the amount of nicotine in cigarettes – nicotine is the strongly-addictive stimulant which makes cigarettes a logical part of the FDA’s oversight
To summarize: cigarettes, aside from the candy-flavored kind, aren’t going anywhere, though they may become less addictive.
Lawmakers have been trying to pass this legislation for over a decade. 70% of the House voted in favor, as well as 79% of the Senate.
And according to CNN:
Despite a significant decrease in the percentage of Americans who smoke in recent decades, more than 400,000 Americans still die from tobacco-related illnesses every year, the president noted. Tobacco-related health care costs exceed $100 billion annually.
Obama signs bill putting tobacco products under FDA oversight, CNN, June 22, 2009
Photo by isabel bloedwater
When talking about the 790 billion dollar stimulus bill currently nearing the end of its congressional marathon, it’s tempting for people to focus on the direct, short-term benefits, namely a $400 tax credit, and how such a thing won’t go very far in benefiting most people.
I tend to agree, but I’m also the first to admit that I’m no economist, in fact I’ve never studied macro-economics, and everything I know about personal finance I’ve learned by making mistakes. In my case, an $800 tax credit (married, filing jointly) would go toward paying down the $6,000 IRS bill we were surprised with in 2008.
That tax credit is just one part of the American Recovery and Reinvestment Act (AKA stimulus bill, AKA stimulus package, AKA spending bill, AKA “pork-filled liberal wish list”). For those of us who are already struggling in the post-toxic asset economy, here are some other highlights that should, even if indirectly, help make life a little easier:
- $4 billion for job training
- one-time $250 payments to Social Security recipients, poor people on Supplemental Security Income, and veterans receiving disability and pensions
- my personal favorite: $7.2 billion to bring broadband Internet service to underserved areas
- $24.7 billion to provide a 65 percent subsidy of health care insurance premiums for the unemployed under the COBRA program
- $5 billion to weatherize modest-income homes
- $11 billion toward a so-called “smart electricity grid” to reduce waste
- $44.5 billion in aid to local school districts to prevent layoffs and cutbacks
- $4 billion in grants to state and local law enforcement to hire officers and purchase equipment
- About $70 billion to spare about 24 million taxpayers from being hit with the alternative minimum tax in 2009. The change would save a family of four an average of $2,300
- About $14 billion to provide a $2,500 expanded tax credit for college tuition and related expenses for 2009 and 2010
- $4.7 billion to expand the Earned Income Tax Credit for low-income families with three or more children
- $6.6 billion to repeal a requirement that a $8,000 first-time home buyer tax credit be paid back over time for homes purchased from Jan. 1 to Nov. 30, unless the home is sold within three years
Those bullet points were pulled from this Associated Press story. Check out the whole list and see if anything else strikes your fancy. There are bound to be things in there you don’t agree with, but I’m personally proud of our Congress for managing a workable compromise in such a short amount of time.
It’s also important to pay attention to your state and local news to see how they’re planning on using the funds being offered. Try searching Google News for “stimulus bill” and your closest city.
Every Tuesday, Smithee presents an article about his own experiences credit cards with and observations about the credit card industry.
The U.S. Federal Reserve is set to vote on Thursday (Dec. 18) on a set of rules which could change credit policy affecting all Americans. The full set of proposals is more than a thousand pages long, but here are the highlights:
Fewer interest rate hikes
It would no longer be allowed to raise the interest rate on an existing balance, and credit issuers would have fewer options for raising rates seemingly at random on their customers with good histories.
An end to Universal Default
Some companies would penalize customers for having a bad history outside of the issuer’s credit account, such as with a utility company. This will no longer be legal.
More on-time payments
Payments will have a due date at least twenty-one days after statements are delivered.
Payments to be applied first to the highest interest items
Currently, your credit card payments are likely going toward the part of your balance with the lowest rate. This benefits the credit issuer and extends the length of time you’ll be paying. This practice will be reversed.
New information design
From creditcards.com:
Credit card applications, monthly statements and other materials would clearly display terms in reader-friendly boxes with large type. Credit card issuers would have to disclose the consequences of only making minimum payments each month — namely, that it will take much longer to pay off the credit card balance. Issuers also must eliminate the use of the term “grace period” on credit card applications and solicitations. Instead the phrase “how to avoid interest” or similar wording would have to be used. The term “fixed rate” card can only be used if the rate will never change. Monthly statements would also carry boxes that provide year-to-date totals on the amounts paid in fees, interest and other charges.
This is probably my favorite of the new rules, as it most closely attempts to inform and educate consumers, instead of telling people what they can and can’t do.
More accurate credit offers
Credit issuers will have to work harder when attracting targeted future customers with low interest rates, in that the low interest rate quoted will have to be close to the rate that the customer is approved for. People are frequently surprised when they apply for a 9% card and are awarded a 23.99% card.
Naturally, credit issuers are decrying the proposals, saying they will end up hurting consumers by making it more expensive for the credit card companies to do business. This may turn out to be true, but at least in some cases, it’s obvious that credit card companies make money by being deliberately deceptive, and as a recipient of that deception, I’d like to see it stop.
The new proposals are expected to pass the vote, and companies will have up to a year to put the new practices in place.
More details are at Reuters, and there’s audio at NPR.
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