New Credit Card Act Offers Protection for Consumers

You may have recently received a notice from your credit card issuer, alerting you of changes in interest rates and fees on your credit cards. If you are a credit card holder, it is imperative that you know about the sweeping changes in the credit card industry that will take effect in February 2010.

The Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009, designed to strengthen consumer protections in the credit card market, was signed into law by President Obama last May. The Act limits when credit card companies can increase interest rates and bans billing and payment practices that the Federal Reserve calls “unfair or deceptive.” Some of the provisions took effect in August, including:

• Consumers must be notified 45 days prior to interest rate increases and other key contract changes (previously 15 days). Issuers must also inform cardholders of their right to cancel or close their account – called opting out – if they do not agree to the changes. 
• Statements must be delivered 21 days before a payment is due (previously 14 days).

Effective February 22, 2010, credit card issuers:

• Cannot increase interest rates on existing balances unless the account is at least 60 days past due. (Beginning in July 2010, accounts must revert to the original interest rate after six months of on-time payments.)
• Must clearly disclose terms using wording that is easy to understand. 
• Cannot raise interest rate because you are past due on other accounts (Universal Default).

Other key provisions under the Credit CARD Act:

• Credit card issuers won’t be able to charge over-limit fees unless the card holder has given them consent to extend credit beyond the card limit.
• Statements must show how long it would take you to pay the existing balance – and the total interest cost – if you made only the minimum payment. 
• Those under 21 years old won’t be able to get a credit card unless they have a co-signer or proof of sufficient income. 
• Statements must include information about at least three credit counseling companies for any consumers who have carried a balance within the past 60 days. 
• Credit card issuers must honor promotional rates for at least six months. 
• Credit card issuers will limit fees on sub-prime, low-limit cards.

GreenPath financial counselor Sarah Fouquart recommends that you take the following steps if you receive a notice that your interest rate or fees are increasing:

• Contact your creditor to find out your options. By opting out of the interest rate increase, your account may be closed, so consider whether this is a line of credit you wish to keep or not. If you pay your card in full each month, then the rate increase may not impact you. 
• Weigh your options before deciding to close your account. Think about how useful this line of credit is to you. Do you use the card to pay monthly recurring bills? Do you use it for business expenses? Do you earn points for rewards or other perks? 
• Know what fees are being charged and the frequency of those fees. Is it an annual fee? Is the fee only charged under certain conditions, like when you carry over a balance? Understand how the fees will be calculated so that you can decide if they are going to impact you or not.

“By better understanding your rights as a credit card holder, and learning about the upcoming changes, you’ll be able to make better financial decisions as crucial parts of the Act take effect in 2010,” said Fouquart.

It’s a good practice any time, but be especially careful to read everything you get from your credit card companies in the coming months so you can stay informed of how the changes will impact you. Learn more about the CARD Act. To learn more about using credit wisely, visit our website at www.greenpath.com. 

No-Hassle Holiday Gift Returns

Will they like the gift I got them and, if not, can they return it? This question will be asked over and over during the holiday shopping season. When it comes to holiday gift giving, it pays to know the company's return policy before you buy. Being an educated consumer could save you a lot of stress, time -- and money. According to Kiplinger.com, there are six things you should know to ensure many happy returns:

1. Keep the receipt
   Everything should be returned unused and in the original package, and you should have a receipt. Without a receipt, you may get a merchandise credit -- and then only for the lowest price at which the item was sold in the past 30 days. Some retailers only let you return items without a receipt up to a certain price and others may not give you a refund at all.
   
   
2. Don't delay
   You usually have from 30 to 90 days to return unwanted gifts. But you should act quickly, especially with apparel because with inventory tight, there might not be a lot left over. When it comes to electronics, you generally have 14 days. The good news is that some retailers will offer extended deadlines during the holiday season.
   
   
3. Don't want it? Don't open it
   Not the flat-screen TV you wanted? Don't open it. A growing number of retailers will charge you a percentage of the purchase price (generally 15%) for restocking. Restocking fees are most common for electronics, but other items may apply so make sure you know the policy.
   
   
4. Habitual returners be aware: You may be blacklisted
   Return fraud, which includes bringing back used merchandise for a full refund, will cost the retail industry $9.6 billion this year. According to the National Retail Federation, the industry suffers one-third of that loss in the holiday season. That's why an increasing number of chains are monitoring returns. Each time you bring back an item, your driver's license may be swiped, especially if you return without a receipt. If you exceed a store's set limit for returns, you may be out of luck.
   
   
5. Returning online purchases could get confusing
   Online retailers are making it easier for customers to return items. Look for retailers that will let you return online purchases to their brick-and-mortar stores. Also, more online retailers are including prepaid shipping labels for returns with your orders. Be aware that items marked "online only" may need to be mailed back. Free return shipping deals may only apply for exchanges, not refunds. Keep your packing slip handy to avoid additional hassles.
   
   
6. You could swap that gift card
   Although you cannot return gift cards to the store for cash, you're not entirely out of luck if you get one that doesn't suit your taste. At Swapagift.com, you can sell or trade your card for someone else's. Actively-traded cards on the site include popular retailers and restaurants such as Barnes & Noble, iTunes, J.Crew, Lowe's, Pottery Barn and Tiffany.

Homebuyer Tax Credit Extended into 2010

New legislation under the Worker, Homeownership and Business Assistance Act of 2009, which was recently signed into law, extends and expands the first-time homebuyer credit. The new Act: 

• Extends deadlines for purchasing and closing on a home.
• Authorizes the credit for long-time homeowners buying a replacement principal residence. 
• Raises the income limitations for homeowners claiming the credit.

Under the new law, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return.

For the first time, long-time homeowners who buy a replacement principal residence may also claim a homebuyer credit of up to $6,500 (up to $3,250 for a married individual filing separately). They must have lived in the same principal residence for any consecutive five-year period during the eight-year period that ended on the date the replacement home is purchased.

“This is another step toward stabilizing the housing market and home values,” said Kathy Conley, GreenPath housing specialist. “More people will be able to purchase homes in a manner that is both affordable and sustainable, which will help reduce the number of vacant homes caused by the mortgage crisis.”

People with higher incomes can now qualify for the credit. For homes purchased on or after January 1, 2009 and on or before November 6, 2009, the income limits are $75,000 for single taxpayers and $150,000 for married couples filing jointly. For homes purchased after November 6, 2009 and on or before April 30, 2010, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

Visit www.irs.gov to learn more about the homebuyer tax credit and other ways to save money during the 2009 tax season.