While the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (the  CARD Act) placed restrictions on credit card issuers, it left enough loopholes to get unsuspecting cardholders in trouble.

For instance, according to the CARD Act, your credit card issuer cannot raise the interest rate on your existing balances unless you’ve been 60 days late with a payment, or when a promotional rate expires.

However – in addition to imposing a penalty fee for missed payments and overlimit violations, they are free to penalize you by raising the interest rate on all your future purchases. In fact, they can raise your rate on future purchases for no reason except that they want to do so.

They are required to notify you 45 days before charging that new higher rate. That should give you time to get your mail and discontinue using the card well before the new rate goes into effect. But… that requirement isn’t quite as it seems. Any new charges accrued 14 days after the bank sends the notice can and probably will be subject to the new rate. The loophole: They can’t bill you at the new rate until the 45^th day.

So if you’ve been late with a payment – even by one hour – or if you’ve gone over your credit limit, stop using the card immediately. Otherwise, you may find yourself paying as much as 39.9% on any new purchases. In fact, it could be more, because the CARD Act did not impose any limits on the interest rate that credit card issuers could charge.

If you have gone over limit and been hit with a fee, do ask for proof that you opted in to over limit protection. Issuers aren’t allowed to assess an overlimit fee unless you’ve agreed to allow transactions that exceed your credit limit. Of course, the alternative is that your card would be rejected at check-out. But you do have a choice.

If you’ve been a faithful credit card user, making payments on time for years and never going over your limit, you could be justifiably angry if they penalize you for being two hours late with a payment.

It might even make you angry enough to cancel your account. But do think twice before you do that.

Your card issuer can’t require you to pay in full at the time of cancellation, but they can double your minimum payment percentage or require you to pay off the balance within 5 years. And of course, loss of a credit line will be damaging to your credit scores.

The CARD Act promised protections, but it’s just as important as ever for consumers to use their credit cards wisely and to avoid going over credit limits or making late payments.

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When it comes to government regulations and banks, “You can” doesn’t translate into “You will.” This was the case with loan modifications and “underwater” refinances, and now is the case with the new FHA guidelines.

The new FHA guidelines allow a minimum credit score of 500 when the borrower makes a 10% down payment. Borrowers with only a 3.5% down payment are eligible with a score of 580. Gift funds are allowed, as are seller contributions.

That sounds good, but in reality, only 5-10% of all banks will approve such loans – and then only if all the other requirements are met and borrowers are willing to pay higher interest rates.

Most lenders impose their own requirements, known as “overlays.”

Many banks adhere to an in-house credit score overlay, regardless of what FHA says they “can” do. But there are other overlays as well.

Some lenders will go along with the low score/ low down payment requirement, but will prohibit the use of gift funds. Others impose stricter debt-to-income ratios. Others impose overlays related to job security and primary residence.

Some banks even impose different requirements for borrowers who apply through their own retail branches as opposed to those who apply through a mortgage broker.

As it turns out, the bottom line is that you still need a credit score of 640 or higher if you want to be assured of getting a mortgage loan. You also need a reasonable debt to income ratio and a reasonably secure source of income – just as everyone did before the whole mortgage crisis began.

Some are up in arms…

The National Community Reinvestment Coalition has filed a complaint with HUD, charging 22 lenders with violating several laws, such as the Federal Fair Housing Act, by imposing these overlays.

They allege that these banks are discriminating and illegally denying qualified African-American and Latino borrowers access to FHA insured loans.

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Experienced travelers have learned the hard way that all credit card rental car insurance is not created equal. Each credit payment network, like Visa and Mastercard, started offering rental car insurance coverage as a perk to attract new clients and retain their valuable cardholders. The expense of repairing rental cars started to weigh on their profits, so they have changed the rules somewhat and every cardholder would be wise to understand the coverage, the exemptions, and how to qualify for coverage from each of the different credit card payment networks.

Coverage Details

Most auto insurance companies work with their policyholders to insure against most eventualities that could cost money. The credit card payment networks are more interested in saving money than paying claims so the cardholders must be educated about the actual coverage offered.

• The credit payment network offers the rental car insurance instead of the bank that issued the credit card.
• Repair or replacement of the stolen or damaged rental cars as the secondary insurer behind the driver’s car insurance carrier for their personal vehicle.
• Towing charges from the scene of the accident to the nearest authorized repair facility that is recommended by the rental car agency.
• Each payment network has a specific limit of insurance for repair or replacement of the rental car, which is usually $50,000, but the driver should confirm the actual limit prior to denying the additional insurance offered by the rental car company.

Exemptions from Coverage

With each iteration of the program definition benefits are removed, so the cardholders must stay current on their knowledge of credit card rental car insurance coverage. When changes are made, cardholders must be notified, but most people do not read the fine print.

1. The cardholder might be charged for the loss-of-use fees charged by the rental agency for the time that the car is out of service because of the damage incurred.
2. Rental periods longer than 30 days will not be insured under the credit card plan.
3. Certain rented vehicles are excluded from these basic insurance plans, including: campers, exotic cars, cargo vans, pickup trucks and limousines.
4. Activities that are considered high-risk will also be exempted including all off-road driving.
5. Rental cars in certain countries are exempted by each of the networks, so the documentation must be verified prior to renting a car in one of the excluded countries.

Qualifying Requirements

In order to qualify for the credit card rental insurance, all of the following statements must be true:

1. The rental car agency’s collision waiver was declined at the time that the rental contract was signed.
2. The driver must be the same person who signed the rental car agreement.
3. The rental contract must be paid in full with the credit card that provides the rental car insurance coverage.

Summary of the Payment Networks

Every credit card network manages their rental car insurance program differently depending on any number of factors. Cardholder classifications are the driving factor behind the cost of these programs to the cardholder who wishes to rent a car and have a secondary insurance policy.

• Diner’s Club – Cardholders are offered a no-cost primary coverage insurance policy for all rental car contracts.
• American Express – If the cardholder wishes to purchase a primary coverage policy for the length of the rental car agreement, the fee is $24.95. Otherwise, American Express provides secondary coverage for the expenses the cardholder’s car insurance company does not cover.
• Visa – Cardholders of every classification are offered the rental car insurance coverage up to the actual value of the vehicle as it was manufactured. Visa is more flexible in paying administrative and loss-of-use fees.
• MasterCard – Premium cardholders are given this benefit, but standard cardholders are not allowed to use this program even under a fee-based program. The rental car contract cannot be longer than 15 days. Reimbursement limits are set on the actual value of the vehicle.
• Discover – Only the premium cardholders are offered the rental car insurance program through Discover. This provider is one of the least likely to pay administrative and loss-of-use fees in the event of an incident.

Recommendations to Confirm Coverage

Simply walking up to the rental car counter, denying the collision waiver, and driving off in the rental car might be a very expensive series of decisions. Every rental car company is different and the credit card rental insurance must be determined along with auto insurance coverage to mitigate the risk of an incident. The cardholder must take some specific steps to ensure that coverage exists at a sufficient level before deciding if they should choose rental car insurance:

• Prior to departing for vacation contact your auto insurance agent and ask questions concerning coverage of rental cars including the limitations. Have your auto insurance documentation available so that you can see the coverage statements in writing.
• Contact your credit card company and ask similar questions about rental car coverage and the limitations. Ask about exclusions that apply to the type of vehicle and the destination where the car will be rented.
• At the rental car counter, decline the rental car agency’s collision waiver. Pay for the contract in full with the correct credit card that will provide the rental car insurance coverage (almost all travel credit cards offer some kind of rental car insurance benefit but be sure and read the fine print carefully). List all of the drivers on the contract to make sure every driver is covered under the insurance.
• Drive the rental car safely on paved roads. Any accidents that are proven to be your fault because of negligence can invalidate the insurance coverage.

Take Action to Document Incidents

If an incident occurs and the rental car is damaged, the insurance companies will take a defensive posture in order to minimize their expenses. Most disputes will be heard and addressed if the driver of the rental car will provide substantial documentation and file all the necessary paperwork. Deductibles and extraneous fees might be the responsibility of the insured, but exorbitant and unproven expenses should be disputed appropriately with all involved parties.

Author: Emily

Q:

Equifax, have 1 creditor that has put “deceased” on my file.  Tried 3 times with Equifax to remove, other 2 bureaus have removed.  Whats the secret with Equifax.

A:

I would consider calling the creditor that is reporting this information to Equifax and asking them to update Equifax since they are reporting your information incorrectly. The credit bureaus only reports what is being sent to them by creditors.You could also get the information from the creditor verifying you are not deceased in writing asking the bureau to remove reporting this information improperly. After you get this information in writing from the creditor you can mail to Equifax asking them to remove this particular comment regarding you.

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