Effective from 22nd February 2010, there will be some key changes on credit card rules in United States. Many financial expects predict that after the enforcement of the new rules by the Federal Reserve, it will be “more difficult” for the credit card holders to be drowned in debt.

How true this statement is?

Let’s analyze some new rules which are in favor to the credit card holders:

• Under the new regulations, if the credit card companies are going to make changes to the terms of the cards, they MUST give their clients option to cancel their cards before certain fee increases. If the clients agree to terminate their cards, the card providers have the right to increase the monthly payments but subject to certain limitations. It has indirectly encouraged the clients to pay off their outstanding faster.
• Once the new regulations are enforced, all the credit card bills are required to include the information about the duration of the debt repayment. For instance, if a credit card holder only makes minimum payment monthly, he or she will be informed about how long it will take to pay off the outstanding balances. At the same time, the card providers will also tell their clients how much they need to pay monthly if they want to be debt free in 3 years time. By having all the information on the monthly bills, the cardholders will be able to manage their debts in a more proper way.
• Nowadays, the credit card companies are not allowed to increase the interest rates for the first 12 months after their clients open new accounts. As a result, the new cardholders are not required to bear high interest rate for the first year. However, there is an exceptional case. For those card users who are still “enjoying” the introductory rate, it will take at least 6 months before the new rate takes effect.
• The new rules have assisted the cardholders to reduce their high interest debts. Under the amended rules, if the cardholders make more than the monthly minimum payment on their credit card bills, the creditors must apply the excess amount to the balance with the highest interest rate. If the debtors are able to pay more every month, they will be able to save a lot of cost in the long run.
• Many people are trapped by the over-the-limit fee. Under the new rules, if the cardholders do not opt for over-the-limit transactions, the card providers MUSTN’T charge any over-the-limit fee if they approve the transactions. Isn’t it an advantage to the debtors?
• Credit card companies can only impose interest charges on the balances in the current billing cycle. In another words, there is no more double cycle billing. Indirectly, it has reduced the financial burden of the cardholders.

With the New Year in full swing, the US government is actually working hard to assist their people to get out of the RED and into the BLACK. As a smart consumer, you are advised to make use of the new rules and regain your financial strengths.