I could feel the pain felt by every credit card user who suddenly realized it could take forever to retire their debt. The notice from the credit card company said if I paid the minimum balance their way, it would take 502 years to settle the account.
The good news was that account terms must now be spelled out clearly from the lender under provisions of the newly enacted Credit CARD Act. Fortunately, unlike some borrowers, I learned a long time ago that you have to pay more than the minimum each month if you hope to break the chains of financial bondage to a lender. The new reporting laws also require my credit card company to tell me that if I paid three times the minimum each month, I could pay off the balance in three years and save myself thousands of dollars in interest charges and fees.
Last spring, President Obama signed the Act, and since then, my wife and I have undergone a massive change in our relationship with credit. At first, my wife’s platinum card ceased working at ATMs and in stores–a startling inconvenience because we had made automated bill payments each month and remained under the credit line. Like thousands of other Americans, we learned the reasons only after the credit card company sent a belated notice that they were discontinuing cards acquired from the original lender.
How the Card ACT Changed Us
Ultimately, the lender didn’t care if it hurt anyone’s feelings (or financial well-being) by suddenly cancelling cards so it can recover anticipated losses from ending suspect lending practices now prohibited by the Act. Consumers everywhere have been left holding the bill at restaurants, gas stations, and other places where they assumed their card transaction would go through.
Now my wife and I have dropped cards we don’t need, and by continuing to carry low balances, paying more than the minimums, and shifting money to a savings account, we’re able to pay down the plastic debt that, if paid on the bank’s schedule, would still be on the books 502 years from now.