New Credit Bill Lends Support for Consumer Rights

By: Felix Torres Colon, Executive Director, NHS of Baltimore

The President recently signed legislation that reformed the credit card industry. Key provisions included:

Banks can only raise your interest rates if you are 60 days late on your payment. If you pay on-time for six consecutive months, they must return you to your original rate.

You must get 45 days notice of interest rate increases for future purchases.

Payments on credit cards with more than one interest rate must be applied first to the debt with the highest rate.

Young credit card applicants (college students) must be able to repay money borrowed or have parents cosign.

No fees for paying a credit card bill online or through automated phone system.

These changes are all very good for consumers and will help us manage our credit cards better. The key is managing our credit cards. At NHS of Baltimore, we see many of our customers' homeownership dreams derailed or delayed by excessive credit card debt or poor payment histories. Here are some tips to help you with your credit cards and make your homeownership dreams more reachable:

If you can’t afford it, don’t buy it. Only buy items you can pay back in a short time period. The card should be a bridge for your cash flow not a substitute.

Avoid paying unnecessary fees. Review all the fees your bank charges and don’t do anything to trigger them.

Avoid interest payments altogether. Pay your balance in full by the due date.

Minimize interest charges. If you can’t pay your balance in full, make more than the minimum payment every month.

Shop around and compare cards. Cards have different rates, terms, etc: pick the one that works for you.

Use the rewards. If you have a rewards card, you are paying for it. Use them!

Credit cards are a necessary part of life: use them wisely, pay them promptly and keep your balances low. If you do, they will increase your credit score and help you buy a house.