The poor credit history card industry has been in the news a lot lately as new legislation has been signed into law protecting consumers from abusive poor credit history card practices. Consumers have found poor credit history card issuers taking the pain of the recession out on them as more and more cardholders fall behind on their payments. Because the law has changed to protect consumers, many assume that poor credit history card companies no longer have the ability to change the terms on their customers, but many of the changes that have been announced don’t take effect until sometime in 2010.
In the meantime, cardholders need to continue to be watchful of their poor credit history card companies and keep an eye out for rules that might be changing. Here are five areas to watch with each poor credit history card bill you receive.
- Interest Rate: The news has publicized the fact that poor credit history card companies are no longer going to be allowed to raise interest rates arbitrarily, but that change doesn’t take effect until February. Even when the new rule takes place, it will only cover existing card balances. Card issuers can still raise rates on new purchases that customers make. Over the first 12 months of a new relationship with a poor credit history card company though, the rate can only be increased if the cardholder is at least 60 days late on their payment.
- Fees: The good news for cardholders is that laws will protect them from changes to card fees that already exist. However, there is no protection against new fees that card companies are able to come up with. Many poor credit history cards that previously had no annual fee are informing customers that an annual fee is going to be a new feature of their poor credit history card. Other customers are finding new fees such as inactivity fees or low usage fees to grow accustomed to.
- Rewards Programs: If you enjoyed accumulating points and miles toward trips, electronics, cash, and other awards for using a particular card, you’ll be disappointed to learn that many of these programs are being eliminated entirely. Others are scaling back award programs and making them much less attractive.
- Minimum Payments: poor credit history card companies can’t control how much of a balance cardholders pay, but they can at least require a minimum payment and those minimums are on the rise. Most companies have historically used 2% as the amount for the minimum payment, but now 5% is becoming a more common minimum payment amount. Part of the reason that minimum payments are increasing now is that beginning in February, the minimum payment will be capped at a 100% increase over the life of the card. Bumping up minimum payments to 5% now will allow companies to legally move the payment amount as high as 10% in the future.
- poor credit history Limits: Banks don’t even have to notify customers if they reduce their poor credit history lines, and some are cutting available balances by as much as 75%. Some customers don’t notice for several months. This is important because your poor credit history-worthiness is partially determined by your poor credit history utilization ratio, or how much of your outstanding poor credit history you use. Cutting card limits can significantly increase utilization ratios. Most people consider their poor credit history line an emergency fund of sorts, so monitor any changes your card issuer makes to your account.
