Credit card changes you need to know about

Happy President’s Day weekend!


The good news is that most of us get the day off for work and school. YAY! The bad news is that there are some presidential-sized changes to credit card rules that we need to be aware of. The Federal Reserve has issued final guidelines on the new credit card rules that go into effect Feb. 22. Here's a quick rundown of some of the highlights:

• Banks must give 45 days notice before raising the interest rate on future purchases.

• Your interest rate on existing balances can't be raised until you're in default for 60 days.

• Your monthly statements going forward will reflect how many years you'll be in debt if you only make minimum payments.

• Any annual fees must be capped at 25 percent of your card's limit.

• If you have multiple interest rates on your account, anything you pay over the minimum balance will be applied to the highest rate first. But beware, if you only pay the minimum, the money will still be applied to the lowest balance first.

• Teaser rates on new cards must be honored for one year.

• Two-cycle billing will no longer be allowed. This was a sneaky way that banks would charge massive interest if one month you paid in full and the next month you didn't.

The bottom line? Read the fine print carefully on all of your credit card contracts. Pay in full each month! Debt is a disease and credit cards are one of the easiest ways to get sick. If you can’t pay for something in 25 days, don’t buy it!

There are several steps you should take to get out of credit card debt. Paying off several thousand dollars or more in credit card debt takes time, so you must discipline yourself.

1) If you have several cards, your first goal is to pay off the card with the highest interest rate. This process is called laddering.

2) Pay more money toward that credit card and slightly less toward the other cards, and eventually you can rip it up. Then you move onto the next card, and so on, and so on...

3) One proven way to pay more toward the most expensive card - and to get rid of it faster - is to make a separate payment every 14 days to the credit card company. Mark your calendar every 14 days and write that check or send your online payment that day. Making a payment every 14 days equals one extra month's payment you've made at the end of the year. Work these payments around your statement cycle to avoid paying lates fees.

For help during the process, contact the NFCC at nfcc.org or call 800-388-2227. You may also want to check out the book Invest in Yourself: Six Secrets to a Rich Life by Marc Eisenson