New credit card rules take effect - KWWL - Eastern Iowa Breaking News, Weather, Closings

New credit card rules take effect

IOWA CITY (KWWL) - "We've been educating our members for the last several months because of these upcoming changes."

Steven Quigley is the Senior Vice President of Retail Sales at the University of Iowa Community Credit Union. He says out of all the new credit card rules taking effect, one of the biggest changes is the new limitation on marketing of credit cards to students.

"They get hit with so many different offers when they come on campus, or even when they're out and about," Quigley said.

Credit card companies won't be able to offer freebies like shirts or water bottles as incentives for students to sign up. That doesn't mean those advertising tables and booths will disappear from campuses, but they may become less prevalent.

"I think we've got to educate them on how they can maybe start paying that debt down, instead of taking on additional debt."

Applicants under 21 must also have a co-signer, or be able to prove that they have the financial stability to make payments.

Scott Shook, credit counselor for Horizon, says creditors must now give cardholders 45 days notice before upping interest rates. Cardholders will then have the option of rejecting the increase, but there's a downside to that.

"What they're going to do there, is then close your account," Shook explained, "and probably [make you] pay the account off within five years, which might increase your monthly payment a little bit."

Shook says there's another plus: no more universal default clauses, which enabled creditors to hike interest rates due to late payments on other accounts.

"Previously what could happen is they could increase interest rates, regardless of if your account was okay with them."

However, they can still up your rates, after a payment is late for 60 days.

Online Reporter - Brady Smith

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