March 10, 2010
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Paying over to reduce that high-interest portion, Pt.1
Consumer protections.This is the comprehensive summary if the new CCARDA regs introduced in the news article entitled: "New CC Regs - A more-level playing field". For the overall rundown, please refer back. With the intent of helping us credit card consumers avoid those ugly surprises, it still may be a challenge to ensure the scoundrel element doesn't skirt the purpose. With the brand new scheme of credit card consumer protections only now being implemented, there may will be some rough spots. For sure, there are some large credit card issuers with challenged scruples who will be testing out loopholes.
For example, I had advised a friend to hold off on making those large credit card payments over the minimum until the end of February and save that extra money away. After the new CCARDA regs go into effect, then pay all that extra money saved up in order to pay down the higher-interest credit card accounts. My friend did as I suggested and the March statement arrived today. Right away, I scanned at the figures to see what Chase had done with the extra moneys. Shocked and perplexed would be putting it mildly.
My friend had allowed a deadbeat jerk to keep her credit card in his possession and then when out and made a huge cash advance which he squandered and lost. Since she wasn't willing to shoot the guy (or even give him life in prison), she was stuck with the result. After seeing what Chase has been doing to her ever since makes me wonder who was the worst.
Since the jerk had also maxed out the credit card limit on purchases as well, my friend was bound into paying it off over several years (20 years, if only minimums were paid). Of course, the Cash Advance interest rate was sky high. Of course, it could not be paid down at all until after every other lower-interest account was paid in full. What I didn't realize until today was that the large finance charges accumulating on the Cash Advance account were continually be added to the Cash Advance principle. So, the new finance charge every month would spiral upward as each month would increase the principle and there wasn't a thing my friend could do about it.