Expert: Beware of New Credit Card Rules
POSTED: Friday, September 3, 2010 - 11:45am
UPDATED: Saturday, September 4, 2010 - 11:54am
El Paso- President Obama's plan to overhaul the credit card industry went final last week.
The biggest change is that you can't be charged more than $25 for making a late payment. That could be a welcome relief in E Paso.
Since the recession, credit scores have taken a dive in the Sun City.
"We're seeing an increase in people who are now in credit trouble and then we're seeing a larger amount of debt that people are bringing into debt management," says Maureen Hankins of the YWCA's debt counseling service.
Job loss leads most to use credit cards more often, Hankins says. But job loss also means less income and more late payments on overdue balances.
With penalty fees capped on those payments, banks can't profit from them like they used to. Hankins says they'll look elsewhere for cash.
"The banks are going to recoup their money by raising their interest rates."
It's the other side of the coin. Companies make more money off cardholders by raising their rates.
Hankins assured us that consumers will have less leeway with payments.
"They're going to rise if you're not paying regularly the contracted amount, the agreed upon amount, every month, on time."
She has a warning for those who always pay late. Penalties might be low, but your interest rates will be sky high. And so will your debt.