Types of credit cards likely to change under new rules

The new credit card law, which I discussed in the last BLOG entry, is probably going to cause some changes in the types of credit cards issued and the rules applied to them.

For example “rewards cards” are likely to be far more stingy, and “zero interest” cards are likely to disappear.  It will probably not be possible to move balances from one zero interest card to another as the introductory rate runs out.

Also, fees are going to go up and new kinds of fees are going to be introduced — even fees for things like checking balances.  And annual fees are likely to reappear.

Instead of raising fees (or in addition to it) some cards will start to charge interest from the date of purchase on all purchases.  No longer will you be able to avoid interest by paying off your whole balance every month.

However, if you maintain credit balances, your worst problem may be increased interest rates.

ConsumerWorld.com quotes Robert McKinley of industry watcher www.cardweb.com:  “We’re going back to the kind of marketplace we had in the 1980s…..You’ll see interest rates go back to the 19% to 20% range for most people.”  The average variable-rate credit card today charges a 10.79% APR, according to Bankrate.com, says ConsumerWorld.

What to do:

Start by reading the fine print sent to you by your credit card company so you can see what they are doing to your terms.  If you do not like the changes, there are several sites on the web that let you look around for the best terms on credit cards.   You may have to browse them regularly to find a good card for you.

Or you could leave credit cards all together.  There are other types of cards out there.   A description of the different types of credit cards is in our archives.

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