Credit Cards Holding Off on These Reform Rules

Credit card purchasesThe much anticipated credit card reform laws making their full debut Feb. 22 have spurred card issuers to already implement, at least partially, most of its provisions – except for two of them.
The website, billshrink.com, refers to the provisions as “Fair allocation of payments” and “Education on dangers of minimum payments.”
Billshrink.com, which provides personalized savings tools to help consumers and businesses save money on bills, has been keeping track of major credit card issuers and the reform provisions they have initiated ahead of the legislation’s start-up.
The website shows that credit card companies have yet to put into compliance the two reform categories covering “allocation” and “education.”
According to the Fed, the fair allocation rule applies as follows:
If a consumer makes more than the minimum payment on a credit card, the credit card company must apply the excess amount to the balance with the highest interest rate, reports the Fed, which last week issued the final rule covering most of the provisions of the Credit Card Accountability Responsibility and Disclosure Act of 2009.
Consumers have had to deal with the allocation of extra payments to  balances with a lower interest rate, providing the credit card company with more interest over a period of time – sometimes without clearly indicating such allocations to the consumer.
When the card companies move forward with the rule next month, it “will ensure that cardholders who make their payments on time will be in a position to pay the least amount of interest,” Billshrink.com says.
The Fed reports that there is only one exception to the allocation rule. If a purchase is made under a deferred interest plan – “for example: no interest if paid in full by March 2012” – the credit card company “may let you” apply extra amounts to the deferred interest balance.
“Otherwise, for two billing cycles prior to the end of the deferred interest period, the credit card company must apply your entire payment to the deferred interest rate balance first,” according to the Fed.
The “education rule” will provide card consumers with vital information on how long it would take them to pay off their balances if only the minimum payment due was made on a monthly basis. It will also tell cardholders how much they would need to pay each month to pay off a card’s balance in three years.

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