New Credit Card Laws Make Interest Crystal Clear

By: Allison Millar, Contributing Writer
In: In the news
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If you’ve opened a credit card bill lately you may have fallen over from shock. In clear writing near the top is an explanation of all the finance charges. Credit card companies are now required to show what you would pay in interest over time if you paid only the minimum amount.

New Credit Card Laws

These new consumer disclosure laws also require creditors to tell you how long it would take to pay off the bill by making only minimum payments. If you owe $2,000 and paid only $20 per month (without charging anything new) it might take 15 years to pay it off. Scary, huh?

Home Improvement and the Credit Card

As you do smaller home improvement projects around the house you may be tempted to hand over a credit card. This approach is fine if you plan to pay it off each month. If not, be aware of the long term cost of that financing. That $125 faucet might turn into a $250 faucet if you leave the cost on your credit card too long. Multiply that by several home improvement projects….

Financing Protection

If you receive any new credit card offers, think carefully before sending back the form. Do you really need the financing? How is another card going to affect your credit report? As Marketwatch.com tells us, look closely at the:

  • Interest rate–they are going up and many cards have a variable rate. When interest rates go up, so does your card rate.
  • Annual fee–also increasing, says USA Today. What are you getting for that fee?
  • Late fees
  • Over the limit fees
  • Application fees

Credit is a great thing, but it can be easy to overuse, as noted in by National Public Radio. When in doubt, keep reading that statement about how long it can take you to pay off the charges.

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  1. One Response to “New Credit Card Laws Make Interest Crystal Clear”

  2. Emmly
    May 24, 2011

    Thanks for sharing. Always good to find a real expert.

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