What does this mean for current card holders?
In the next several months you should be getting letters in the mail from your credit card companies explaining new changes to your terms & conditions. You will see higher interest rates and fees because they will no longer be able to change the APR’s on existing balances under the new bill.

What does this mean for new credit card offers?
It will be much harder to get approved for a credit card. They are tightening up who they allow credit. If you do get accepted, you will see a lower credit limit than what you would expect. For those who are 21 years and under will need to show they have an independent source of income or will need a cosigner. This is particularly good because credit card companies would prey on college students often getting them into debt before they graduate. Under this new bill it also helps protect young people from being irresponsible.

How does this effect the communication between the consumer and the credit card company?
Credit issuers will no longer be able to raise interest rates on existing balances. In a case when a payment is 60 days late they are allowed to raise the rates as high as they want. Not much has changed here right? The only difference is they are required to inform you 45 days in advance and explain the reason for the increase. In addition, your statements will be sent at least 21 days before your payment is due.

To help card holders stay away from debt, statements will clearly show how much it’s costing you to borrow and how long it will take to pay off a balance if you are making the minimum payments. If you can avoid it, never pay the minimum, always pay more. If you are paying the minimum payments now, you will see when these updated statements come, that by paying only the minimum payments, you are often further in debt the next bill cycle.

Photo: AP

The day he told me about this I came across an article by Hank at MyInvestingBlog entitled: What do I lose by not going to the “certified” annual credit report site? This prompted me to do further research on these scams so they don’t happen to anyone else.

The FTC published a report about these fake credit report sites. The FTC also has a list of precautions to take when following up on a free credit report service provider. Everyone is entitled to a free credit report once every 12 months and the Only Official Website is annualcreditreport.com

According to the FTC…

“A recent amendment to the federal Fair Credit Reporting Act requires each of the nationwide consumer reporting companies – Equifax, Experian, and TransUnion – to provide you with a free copy of your credit report, at your request, once every 12 months. But there’s only one online source authorized to do so. That’s annualcreditreport.com. Beware of other sites that may look and sound similar.”

After doing a simple google search, there are a couple free credit score estimators. FICO Score Estimators powered by myFICO, and a Credit Survey at MSNMoney.com. They don’t pull a real credit score but they can give you a pretty good idea, which is what most people are looking for. If you are interested in looking up your real credit score you should go to annualcreditreport.com.

I hope this information is helpful and that no one else gets duped into this scam.