Congress recently passed legislation that affects the ins and outs of your credit card. One of the key changes hit a nerve, because I was a victim of it.
The issue?
Transferring a high-interest rate balance to a 0% credit card. Now the transfer itself wasn’t the problem. The problem was, I then used the credit card for regular purchases that accrued the normal interest rate, say 15%. What I didn’t know was that any payments I made would go towards the lowest interest rate charges first. Therefore, I was first paying off my “0%” interest debt, while all my other charges were continuing to accrue interest month after month.
Thankfully, this new legislation actually requires that any payment made over the minimum amount due must be applied to the highest interest rates first. Yes!
Other changes require bills must be mailed at least 21 days in advance of the due date and the elimination of fees associated with going over your credit limit. While using a credit card is the worst way to accrue debt (except for maybe a paycheck advance), if you have to use it, the new rules will help the consumer. You can learn about other changes from this short NYT’s video.
Filed under: Personal finance
