New rules to apply for credit cards

By: Liz Crenshaw Email
By: Liz Crenshaw Email

Significant changes in credit card rules have taken place over the past year, some more taking effect this month.

The new rules were designed to make credit cards and debit cards more transparent to the consumers using them.

But depending on your financial situation the new rules may help, or hurt.

Brian Bradshaw is a stay-at-home dad. While his wife is working, he's taking care of the kids, which does not come with a paycheck.

A new credit card rule now prohibits Bradshaw from applying for a credit card in his name.

"Once you're married, you're a family. Everything is the family's. So the idea that I couldn't use my wife's salary for proof of income or that my wife couldn't use mine for proof of income I find kind of strange," says Bradshaw.

The new rule essentially says non-working spouses can no longer claim household income when applying for a credit card.

"This rule stems from a serious problem that's been around for a long time. Credit card companies too often doling out credit without taking any real consideration into that person's ability to repay it," says David Butler, the Deputy Director of Consumer's Union.

Butler says there could be unintended consequences to the rule.

"Some people may have a much harder time getting credit, even though they may be the primary person in the house who manages the finances, has access to the money, and pays the bills," he explains.

This new rule will also prevent marketing to college students on campus, and prevents students from using household income when applying for a card.

"The credit law ensures that there are much stronger controls and how credit is extended to college students who aren't yet bringing in any salary of their own," says Butler.

One complaint regulators heard from consumers was banks marketing low interest cards only to have the consumer sign up for them and have the rate skyrocket. The new credit card rules make it harder for banks to raise a promised rate.

"This law does crack down on the so-called tease rates and ensure if you're promised a certain rate the credit card company is under a much stronger obligation to continue to offer you that rate and notify you if and when there are any changes in advance," says Butler.

You may have noticed on your bill clearer disclosures on how much you really owe. The rule requires banks to print on every bill what happens if you pay only the minimum balance, the interest accrued, and how long it will take you to pay off the balance.

"The most important thing that I could advise any consumer, now that we have this new card act as law is read your mail, because typically that's the only obligation the credit card company has to tell you about changes in many cases, good changes you are going to want to take advantage of," says Butler.

Some advice for those without their own personal income: you can apply for a joint credit card, or get a co-signer on a card, but it will not help build your credit, that will only happen once you have your own income.

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