Credit Card Changes Are in Effect, Baby!

Just got our “house” credit card bill this morning, and noticed a VERY sexy box full of information on there ;) Which is funny considering we now have some credit card debt as I mentioned last week (I blame you Europe).

I’m not sure how many of you were reading this blog last year, but I had gushed all about these new c/c rules and got slammed pretty hard for it. There may be one or two that I’m not *as* excited about as I was initially (the over 21 rule specifically), but for the most part I stick by my HELL YEAH! attitude :) Of course we’re gonna get slapped with nasty late fees/returned checks/etc if we don’t pay attention, but you can’t deny this sweet picture I’m about to show you! HOW COULD THIS BE BAD???:

(A snapshot of my actual credit card statement from USAA, minus the awesome doodles)

new credit card changes snapshot

I mean come on, look at those sexy statistics! You think people are going to just overlook that and not think twice? Maybe the first few months, but overtime it will sink in and at LEAST shave off 5%+ their spending (I’m making that up, but I bet some economist will prove it!). I have absolutely no problem with these new additions here and I REALLY REALLY hope this gets people to wake the F up.

Shopping is fun & exhilarating, I get that – but guess what, so is financial freedom. I stick with you, dear credit card changes. Let’s rock this together.

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  1. beckey76 March 8, 2010 at 1:42 PM

    We are loving the new statements! That monthly payment to be free in 3 years is awesome also! I hope people can do that, think about it, if EVERYONE who has a credit card payed that amount instead of the minimum payment, EVERYONE would be free of credit card debt in 3 years!!!

  2. Investing Newbie March 8, 2010 at 1:55 PM

    Do you think it will work? Has there been a study that shows that informing people that paying more than the minimum payment reduces interest paid, actually encourages people to pay more than the minimum payment? Wow, that was long-winded, but do you understand what I'm saying. I feel like people will still opt for the minimum payment because it is what they "can" afford now… Unless those aforementioned studies did take place. Then foot will be inserted into mouth.

  3. Jolie March 8, 2010 at 1:57 PM

    Wow that is a very different looking statement. Certainly those who did not 'get it' before should this time as they really do spell it out for you. Then again, if one never reads the statement or just forces their eye to see the 'minimum payment' amount and avoids the rest….well……….that will be a long sixteen years.

  4. Simple in France March 8, 2010 at 2:09 PM

    Hmm, I get my statements online and scan them plus don't really carry a balance so I haven't seen this yet. I am cynical so I bet that the credit card companies have not been forced to do anything that will really hurt their bottom line. But the new interest rate/minimum payment grid does kind of make me happy. . . a little bit like those big stickers on cigarettes in France that say SMOKING KILLS!!!


  5. mollyonmoney March 8, 2010 at 3:12 PM

    Last year I ran around telling anyone that would listen to me to STOP using their credit card unless they wanted to be at the mercy of their credit cards companies small print.
    I did a little jig the other day when I opened my cc statement and saw this new CLEAR information!
    I agree with Simple in France, its clear information like SMOKING KILLS!

  6. Kira K March 8, 2010 at 3:22 PM

    Or you can go the opposite direction… and have it look like the Notice of Privacy Practices your insurance company has to mail you (and waste trees) or the small print in magazine ads for prescription drugs. The *disclosure* has gotten so much, that nobody bothers to read them anyway.
    My personal favorite of the new CC rules was the end to Universal Default. Citibank can't stand on it's own two feet, but if you don't pay your bill on time… oh boy oh boy.
    Most of the rest of the new regulations are just big brother attempting to save us, like FRANCE.
    And the last time I was in France (like 2 months ago), there were still more people smoking than not.
    Big brother is a business, just like anything else… it's really not out for your best interests.

  7. Evan @ My Journey to Millions March 8, 2010 at 3:25 PM

    I really don't believe the unintended consequences that have been hitting the mainstream news lately is not worth the "sexy" new statement.

  8. Beth March 8, 2010 at 6:13 PM

    I agree with Invsting Newbie, for the general population. A few people will wake up and realize what they need to do, but I think most will ignore it. They'll feel bad that it will take them so long, but they'll say, "I can't afford to send it more right now. In [June] when I get my raise, then I'll send extra in and pay off this credit card!"

    On the other hand, if something only helps a few people, and has very little cost to the credit card company (It's just adding a formula to their program that generates statements), it's worth it.

    And if I'm wrong and more people pay attention to this, I'll be pleased.

  9. TP March 8, 2010 at 6:46 PM

    The only thing that worries me is who is at the other end of the credit counseling services line? Is it the Credit Card company? I worry about how many people will call this number and receive bad advice. The best way to get rid of your credit card debt is to pay it off on your own. But I do love the simple math!

  10. RainyDaySaver March 8, 2010 at 6:48 PM

    I love the fact tthat these CC statements are clearly showing the consequences of dragging out their debt repayment. While I know not everyone can make large monthly payments toward their CC debt, this should be an eye-opener for those who just make the minimum payments because they can.

  11. Josh March 8, 2010 at 8:31 PM

    Hey J – I've been subscribing for about 6 months now and love your blog. I had a quick question. I'm currently looking to get a Rewards card of some sort and was wondering if you've done a breakdown of rewards cards at any point in the past? I am currently leaning towards the Amex Blue, but wanted to consult a financial guru like yourself before making a decision :). Is this something you've looked at before?


  12. bloominglater March 8, 2010 at 9:56 PM

    I am SO excited about this. I believe that it will honestly make a positive difference for people. How can we ignore it when we see the consequences – as RainyDay Saver says: of dragging out our debt. I LOVE this!

  13. Mysti March 8, 2010 at 10:59 PM

    I am with you on the "hell yeah" band wagon. People can't think that they can go on and on indefinitely without consequences. I *hope* that people will see that by adding just a little bit more each month can change their whole financial picture.

    Unfortunately for us, the amount we would have to increase each payment by isn't possible. We are snowballing the debt, but I am totally aware that we are paying all sorts of horrible interest (and at unholy rate at that) the longer we keep the debt.

    I love the new statements!!! Rock on!

  14. Single Guy Money March 8, 2010 at 11:12 PM

    I started seeing this on my Discover Card statement last month and meant to do a post about. Looks like you beat me to it. :-)

    I love it and wish they had put that on credit card bills a long time ago. Maybe seeing how long it would take me to get out of debt may have stopped me from having spending sprees with my credit cards.

  15. Aaren March 8, 2010 at 11:54 PM

    I saw this a few months ago because my card started it a month early. I LOVE it, but I also agree with investing newbie that it probably won't change behavior much. I agree too with Simple in France about the huge sign that it represents to people. But similar to SMOKING KILLS, if people continue to engage in said activity, then who can they blame? Only themselves. Same with this. Although we presume that people know the risks of paying only the minimum, it's never been laid out like this. Now you can't tell me you didn't know how long it would take to pay it off, so I'll just assume you did it intentionally.

  16. myfinancialobjectives March 9, 2010 at 2:08 AM

    I too love this!! This need to happen with student loan companies (coughcoughSALLIESMAE)…

    I think this will wake up SOME people, but not the vast majority.

  17. Kevin March 9, 2010 at 7:53 AM

    I definitely agree about the Student Loans. There was an article on Yahoo recently about someone that owed $550,000 in student loans.

  18. Karmella March 9, 2010 at 2:13 PM

    I get my statements electronically, I wonder if I will see a difference – I usually go and scan the charges and make sure it looks right and then I go to the payment page.

    I hope it's helpful to people, although I think a lot of people will probably look right past it.

  19. J. Money March 9, 2010 at 6:54 PM

    Interesting comments everyone, really enjoyed reading these :) Some responses:

    @Investing Newbie – It def. won't work for everyone, but even if it just affected like 5% of people I would call it a win. You might be able to avoid/ignore it for a while, but eventually it'll "click" and you'll be ready to knock that $hit out ;)
    @Simple in France – Hah! It IS like those smoking labels, you're totally right. Wonder what the study shows on them?
    @Kira K – Ofcourse they aren't doing it for the greater good, but I still don't see how it could be bad. It only needs to affect a small % for it to be more successful than w/out. This box was right up in my face and clear as day – very hard to miss even if they start adding garble all round it.
    @TP – Good point, I wonder if there is an agency auditing these #'s? That would be jacked up if they tried upselling you and then brought on even MORE business by enabling debt! scary. and in which case I'll look like a big ass here saying how much I love it ;)
    @Josh – Hey Josh, thanks for stopping by :) I actually haven't searched around and done any analysis on credit card rewards and what not. I use USAA for everything and their reward cards are pretty decent. Not the best out there (all depending on what kind of rewards you're looking for – cash back, miles, points, etc) but I feel like if you can find one that is 80% good you should go for it. Most of these cards & reward plans change up so much that you'd have to be constantly researching and changing around to eek out every last bit of goodness. If ur leaning towards Amex Blue, i'd stick w/ your gut :)
    @Mysti – Yeah, the fact that you are AWARE of it and understand it's important is GREAT :) Even if you can't pay off more, at least you're cognizant! that's awesome.
    @Single Guy Money – Do the post anyways bro – I wanna see your thoughts on it :)
    @Aaren – haha….yessir.
    @Karmella – Interesting, I'm sure they have to put it somewhere even if it is all electronic. Let us know when you find it!

  20. Kevin March 14, 2010 at 5:14 AM

    Here is something I predict will happen with those that carry a balance.

    The “3” year payment will become a popular amount to pay. At the same time, the people won’t stop using the cards. Each month they will pay the amount it will take to pay off the balance in 3 years and they will be perpetually 3 years away from being out of credit card debt. If, and when, that amount grows to the point that they won’t be able to pay it each month then they will resort to paying less or the minimum.

    But… how many people will pay $89 this month and think, “I could be out of debt in 3 years,” then go and charge a couple hundred dollars. Next month they’ll pay $90 and think, “I could still be out of debt in 3 years.” And so it goes.

    Even if they don’t use the card… and they’re not thinking… they could pay $89 this month. And next month, they’ll pay $82 (or whatever that statement says the new amount to be out of debt in 3 years is)… and still be 3 years away from being done with the card. If they continue to lower the payment, it will take much longer than 3 years to pay if off and they’ll pay more. That’s even if they charge less. What they need to realize, and some people won’t realize this, is that they need to pay $89 a month — every month from now on — without ever charging again to pay off the balance in 3 years.

  21. Adam@Magical Penny March 15, 2010 at 6:27 PM

    It’s cool that you guys finally have these stats. They’ve been in the UK for a while. However, it’s important people actually do something about it, rather than read the stats and just go back to their normal spendy ways.

  22. J. Money March 16, 2010 at 10:41 AM

    I wonder if we’ll get Universal Health Care next ;)