New Credit Card Rules Give Consumers a Break – in 2010
Deceptive credit card practices that have kept consumers permanently in debt are now being reined in by Federal Regulators. That’s the good news. The bad news is that the new rules don’t go quite far enough, and they don’t take effect until 2010.
You know you should read every contract before accepting it, but credit card contracts are often 30 pages long and written in a form of “legal-eze” that even lawyers find hard to decipher. Thus, most consumers don’t even attempt it. If you’re like most people, you probably don’t even know where you put it.
In recent years, credit card companies have added a variety of clauses designed to maximize penalties and fees, while allowing them to increase interest rates to 25% - and in some cases even higher.
A common ploy to lure consumers into the debt trap has been to offer rock bottom introductory rates – some even at zero percent for the first few months. Accompanying those offers are a few checks – with a letter encouraging consumers to “take that vacation” or “purchase that new furniture” with the checks.
Once the introductory rate period ends, rates go back to “normal” – or higher.
To be fair, some companies offer those rates on balance transfers and convenience checks until the balance has been paid off. But they don’t stress the fact that if you use your credit card to make a purchase, the interest on that purchase will be at a high rate. And – your payments will be applied first to the balance transfer or check at the low rate. Thus your high-interest purchases are buried where you can’t begin chipping away at them until you’ve paid off the low rate balance.
Under the terms of “Universal default” credit card issuers are allowed to raise those introductory rates in the event you are late with a payment – and that’s fair except for one thing. The late payment doesn’t have to be on their account – it can be a late payment on any other account that is reported to the credit bureau.
The new rules won’t completely prohibit Universal default, but they will prohibit the card issuers from
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Reasons to Check Your Credit Report
Most people don’t check their credit report until it is time to make a purchase that requires a degree of creditworthiness, i.e. buying a house or a car, opening up a credit card, etc.
Credit Report Blog.com would like to take this opportunity to reinforce to its readers the importance of consistently checking their credit reports for various reasons, as mentioned in this report. When an important decision is to be based on your credit report, it may cause unforeseen delays or rejections, if surprises pop up on your credit report which you were not expecting. The causes of these surprises could be the result of identity theft, reporting errors, mistaken names, etc.
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3 bureaus’ credit scores can be widely varied
Most lenders look at a consumer’s credit scores to decide whether to grant a loan and how much to charge. Consumers can buy a report on their credit scores, but these scores vary — sometimes widely. “There is a pervasive myth that there is one credit score,” said Rod Griffin of Experian.
CreditReportBlog.com advises that everyone get a copy of their FREE credit report from each of the 3 credit bureaus. Although most of the time the information should not be too different on all the credit reports, your credit score may vary somewhat depending on few bits of info that one credit bureau may or may not have. Before applying for any type of loan, a consumer should be aware of where they stand, in terms of their credit score. Read more
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Settlement results in free credit monitoring service
You can sign up today to receive free credit monitoring services from the credit bureau TransUnion due to a settlement the company reached on a class-action lawsuit.
Credit Report Blog.com would like to advise all consumers that a settlement has been reached in the class-action lawsuit filed against TransUnion Credit Bureau. The lawsuit was filed because TransUnion irresponsibly sold customer information in the form of marketing lists to other businesses. TransUnion denied any wrongdoing, while at the same time, stating that they had stopped the practice as far back as 2001.
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How is your CREDIT SCORE calculated?
Well, it’s just a mathematical formula. It’s based on information contained in your credit report which is compared with millions of other people. The resulting number is in indication of how likely you are to repay your debts. The higher your number is the better deals you will get with lenders, in terms of types of plans offered and interest rates. Credit scores are used extensively by lenders when determining what rate you get for a mortgage, car loan, credit card, or auto insurance. There are many different kinds of credit scoring models used by lenders to determine credit worthiness of potential clients.
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Credit Monitoring Services - Wasting your money?
When you listen to ads pitching credit monitoring services, the top benefit they usually mention is to protect you from identity theft. Not true! These credit monitoring services do not really do anything to prevent identity theft. If anything, they may be able to alert you, once the crime has been committed. In addition, you will only receive these alerts on any credit-related activity, if certain conditions are first met. What’s more, these services can be very expensive. Why spend unnecessary dollars when you are entitled to a FREE credit report once a year? You can also receive it FREE if you are denied a line of credit, denied employment, or become victim of identity theft.
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