The Good News:

In December of 2009, the Office of Thrift Supervision issued a stinging 300page report about the credit card industry saying the tactics used by credit card companies are “unfair, unreasonable and deceptive.”

This prompted the Credit Card Accountability, Responsibility and Disclosure Act, signed into law by President Obama in May of 2009.

The Bad News:

The law President Obama signed in May 2009, doesn’t go into affect until July 1, 2010. That means the credit card industry had a full 18 months to continue being unreasonable, unfair and deceptive, while they were getting their house in order. Less than two months from now

The Fine Print:

So now that the credit card companies have had more than a year to clean up their act and implement the new rules they must play by, lets take a look at what we as consumers can expect.

1. New credit card recipients will be happy to know that your interest rates cannot be raised in the first year after the card has been issued to you.
2. The credit card company’s ability to raise your interest rates when you make late payments has been somewhat limited. What this means is, if you make a late payment they can raise the interest rate on any new purchases or charges you make, but they can’t raise them on previous existing balances before you made the late payment. (Known in the industry as double cycle billing) This also means your monthly statement will have different sections showing the previous rate charges on the previous balances and the new rate charges on the new purchases you made and after your late payment arrived.
3. Credit card companies now have to give you at least 21 days to pay your bills. In the past if your payment was due on say the 17th of the month, you would get your billing statement in the mail on the 4th or 5th day of the month, giving you only 12 days to make the payment.
4. You may have not known about this one but if you read the fine print on your billing statement, the time of day on the due date was also stipulated. Meaning, if the billing statement said your payment was due on the 17th, the fine print also specified by 12PM on the 17th, or something similar to that If your payment got delivered with the afternoon mail after 12:00, your payment was considered late and they could hit you with late fees.

These are just some of the changes taking place for credit card users after July 2010. In part four of this series I will cover more of the changes you can expect and they are not all so user friendly.

If you would like more information on managing your finances, go to http://thecreditsaver.com/index.html

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U.S. Treasury Secretary Tim Geithner on April 28, 2010, wrote an OP-ED piece in the Huffington Post along with U.S. Secretary Arne Duncan and Senior Advisor and Assistant to the President, Valerie Jarrettt; about the need for financial reform and financial education for all Americans.

Last Year, The Financial Industry Regulatory Authority (FINRA) did a study in conjunction with the Department of the Treasury and found that most Americans are financially illiterate. When it comes to managing credit cards, calculating interest rates to compare costs on loans, or trying to figure out how much money to save, Americans are at the rear of the class. The study found that young adults are the least money savvy when it comes to managing money, and most older adults are not much better off. In short, we can spend money, we just don’t know how to manage it or save it.

But rather than pointing fingers, there is a much more important question to ask here. Why? When we have a world economy that is driven by money and credit, why are so many of us ignorant of the skills necessary to use and manage our money or using credit?

Well for one thing, unless you go to school for banking, finance or accounting, you will never get the skills necessary for financial survival. And while you don’t need to be a CPA or a Banker to learn these skills, the truth is, even the basic skills necessary for understanding today’s financial tools are not taught to the average person except through the school of hard knocks. In short, the only ones who really know the rules of the game are the guys who write them.

But you shouldn’t have to go through a bankruptcy or financial meltdown in order to develop a basic understanding of how to manage your finances or to use credit as a tool that works for you instead of the other way around.

It took the global financial meltdown of 2008, to make not only Washington realize the game of finance is in need of serious reform and regulation; but the rest of the world as well. Greece, Russia, Japan, China and a host of other countries have all learned the same hard lessons. That the rules of the game need to be put on a level playing field so that everyone involved in the game has a fair chance of succeeding at it.

This insight also raises more questions in need of answers. How do you regulate an industry where the primary motive is financial gain, without letting the major players and rule makers stack the deck in their favor? How do you minimize greed and corruption? How do you make sure everyone involved understands the rules and the consequences of playing the game and playing it fairly? It all comes down to transparency and education. Know what the rules of the game are and learn them so you can play!

A simple metaphor I like to use to explain this concept is the game of football. Imagine knowing nothing about the game and trying to play it successfully. It won’t happen. In football, the object is to win. That’s done buy using rules, strategy and skills. A football team uses those tools to make sure the opposing team is prevented from doing the same thing. In the finance and credit industry it’s the same thing except they call winning, making money, your money!

If you would like more information on managing your finances, go to http://thecreditsaver.com/index.html