Wednesday 19th of December 2018

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New Laws Favoring Credit Card Holders Debut This Week

Time will be on the side of credit card holders, thanks to new legislation that takes effect this week.

Thursday is the day that customers begin receiving additional time to pay bills they receive. Instead of mailing monthly statements two weeks before payments are due, the issuing companies will have to send them three weeks before.

Additionally, the customers will not be rushed to decide whether to stay with a company that is going to increase rates on card balances. Instead, the warning of pending increases must have a 45-day window before the hike instead of 15 days.

For the credit card companies, they will be allowed to increase the minimum payment up to double the percentage of the balance. For example, if a minimum had been 2% of the balance, it can be increased to as much as 4%.

The changes are actually the first phase of a wider package of laws that take effect in February. Under those changes, the card companies will not be allowed to raise the rate on an existing balance unless the customer is a minimum 60 days late paying the bill. Also, the former rate will be reinstated if there are no late payments during the six months that follow.

In other provisions, a cardholder will have to approve the company’s letting him or her exceed credit limits by paying a fee. And the practice of charging interest on debts that are paid on time will no longer be allowed.

Card companies already seem to be preparing to do business under the new guidelines. A report by Consumer Action indicated more than half the credit cards surveyed had changed rates from fixed to variable.

Separately, Bank of America on Monday reported the default rate of its credit card customers finally had dropped last month to 13.81 percent. That was slightly better than June’s 13.86 percent charge-off rate, which is the debt expected never to be collected.

Other companies also have indicated their charge-off rates fell in July compared to the previous month. JPMorgan Chase & Co. said its rate dropped to 7.92 percent from 8.04 percent — the second month in a row for a decrease. Discover reported a new 8.43 percent from the earlier 8.75. Citigroup’s rate was down to 10.03 percent following the 10.51 percent the month before.

Reports said analysts were pleased the rate of payment delinquencies had declined for Bank of America, JPMorgan and American Express. This rate can reflect the defaults expected in the future.