Credit Card Reform is Here. What It Means For You.
Learn the Pros of Credit Union-Issued Credit Cards

It’s interesting that the word “credit” appears in both names. If we revert to the core of the word, credit is defined as:
Belief or confidence in the truth of something.
A reputation for sound character or quality; standing.

Call me cynical, but this definition seems to have been lost over the years by the credit card issuers. The mere act of issuing credit has as many definitions, rules and restrictions as there are credit card issuers; forcing major reform and changes to the law.

But just as there are many culprits on the issuer side, there are many that have abused credit making it a “War of the Withs” (meaning: those ‘with’ credit, those ‘with’ bad credit and those ‘with’ credit to issue).

So as the second phase of credit card reform kicks in this month and we stand on the precipice of “one small battle being won” prohibiting arbitrary rate increases, it causes me to reflect back to what I know about credit cards. I’ve since discovered the important differences between credit cards issued by banks and credit unions.

Fortunately my research was already done by professional analysts. A recent study conducted in October, 2009 by Pew Charitable Trusts reviewed terms for the 12 largest banks issuing credit cards and 12 largest credit union card issuers. The study found that credit unions offer more consumer-friendly terms. “In general, the largest credit unions offered lower rates than did the largest banks. In July 2009, median advertised purchase rates were between 9.90 and 13.75 percent on surveyed credit union cards, approximately 20 percent lower than comparable bank rates,” according to the study. It also pointed out that every one of the 12 largest banks’ cards would run into conflict with the restrictions outlined in new credit card reform law.” I also discovered the results of a 2007 Consumer Reports survey stating that credit unions offer cards with low annual percentage rates and “the fewest hassles.” (I don’t know about you, but to me, credit unions seem to operate within the original intention and definition of ‘credit’ in many aspects.)

So I encourage you to become informed on CARD Reform law, read your statements, (the big and the small print); and perhaps visit your local credit union to explore all your options. It may save you some headaches and money. See below to view a concise list of the latest changes to the law.

The law passed by Congress last year overhauling credit card rules takes effect in stages.
• Card-issuers must disclose any changes that take effect when the card is renewed and must inform customers how long it will take to pay off a card balance with only minimum payment.
• In billing statements, card issuers must disclose all due dates and penalties for late payments. Also, the use of the term “fixed rate,” is banned unless the APR or interest rate can’t be changed for any reason.
• Due dates must be the same each month and must be at the end of a designated business day.
• Payments at local branches must be credited on the same day.
• Payments in excess of the minimum are applied to the account with the highest rate of interest.
• Card issuers can’t charge fees to pay by mail, phone, and electronic transfer, except for expedited payments.
• Over-limit fees are banned unless the customer has opted in to such a program.
• APR or finance charge increases are banned during the first year of an account.
• Any promotional rate must last at least six months.
• Card issuers must post credit card agreements on their Web site.
• Issuing credit cards to those under 21, without the permission of a parent or guardian who will take responsibility for the debt is banned.
• Increasing credit limits on the accounts of those under 21 is banned unless both individuals agree.