Implementation of new credit card rules comes as a welcome change

Quite a few new credit card rules have been implemented to protect credit card holders from the clutches of card issuers. These new changes have come into force through an agreement between the industry and the government and are aimed to giving people more control. Customers who are facing the risk of financial difficulties will also be offered better protection thanks to these reforms.

One of the crucial changes is that the repayments of the card holders would be used to lessen their more expensive debt putting an end to the trick employed by credit card issuers when repayments are used to reduce outstanding balances that incur lesser interest. This happens most in case of balance transfer offers, where there cannot be any interest charged on the balance transfer amount, while there is an interest on the purchases. Also, the minimum amount to be paid will be fixed for those opening accounts to cover the fees and charges and the interest during the month. The minimum payment along with these would also include 1% of the balance outstanding on the card in order to encourage customers to pay back their amounts faster.

Credit card holders will now have better control over the credit limits which means they can pass on the option of credit limit increase. They can also go for a reduction of their credit limit at any time in order to keep down their expenditures. Another change that would be brought about is to allow the customers the option to stay on the card with the current interest rate without making any more purchases. More options will be available for the customers when there are increases in the interest rates and customers can reject these increases in credit limit and interest rate based on the information given to them.

There will be guidance for those customers who are in the risk of falling into financial problems. All the credit card holders as well as holders of store cards would receive an annual report which will show them the cost of credit in a way that will make it easy for these to compare who offers the best rates. Along with all these changes, there would be a ban on increasing interest rates and credit limits for those credit card customers who are in the risk of facing financial problems. Card issuers would have to work out a way to help improve the situation of those in debt.