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FAQs On the New Credit Card Rules

Sweeping changes shift the game in your favor.

By Joan Goldwasser, Senior Reporter

Editor’s note: This story has been updated since it originally was published in the February issue of Kiplinger’s Personal Finance.

Striking a blow for freedom and transparency, consumer-friendly rules mandated by the Credit Card Accountability Responsibility and Disclosure Act of 2009 took effect on February 22, Washington’s Birthday. Not sure what this means to you? We have answers to your questions.

I know that my bank can’t raise my interest rate anymore if I pay my credit-card bill on time, even if I am late paying other bills. But can an issuer restrict use of my card in other ways?

Yes. Under the Credit Card Accountability Responsibility and Disclosure Act, if your credit report shows late payments, your card issuer could decide you have become a risky customer and cut your credit limit, impose an annual fee or raise your interest rate on future transactions. You must receive 45 days’ notice of any such change.

What happens if I decide to opt out of a rate increase?

After you notify your credit-card issuer, you won’t be able to use the card to make new purchases. You will have five years to pay off your account balance at the old rate, but you can’t be required to make monthly payments that exceed twice the old minimum payment.

I bought a new refrigerator using my card last spring and was able to defer payments for 12 months. But if I don’t pay off the balance by the end of the grace period, interest is applied retroactively to the purchase date. Here’s my problem: If payments now go to the highest-rate balance, how can I pay off the 0% deferred balance?

Don’t worry. There’s an exception to the highest-balance payment hierarchy. During the last two billing cycles before a deferred-payment period ends, all payments above the minimum must go toward paying off the deferred balance. So you could pay off the deferred balance in the final month and avoid interest charges.

My credit-card company used to insist that my payment arrive by 10 a.m. on the day that it was due and charged a fee if I didn’t meet the deadline. Do the new rules offer any relief?

The CARD act imposes clear and simple payment rules. Payments are always due on the same day of the month and are considered to be on time if they are posted by 5 p.m. If the due date falls on a weekend or holiday and your payment isn’t processed until the next business day, it is still considered on time. Your card issuer may not charge you a fee to pay by phone or electronic transfer unless you receive expedited service.

Can retailers still offer customers approval for a store credit card at checkout?

The CARD act requires that issuers consider your ability to pay before extending credit. Previously, retailers could enter your name, address and Social Security number into the computer, get your credit score and decide whether you were creditworthy. It’s unclear how the new system will work and how much financial information you will have to provide.

Does the CARD act apply to gift cards?

Yes, although the provisions that cover them do not go into effect until August. After that, gift cards will have to remain valid for five years. Inactivity fees will be forbidden unless the card has not been used for 12 months. You may not be charged a fee to replace an expired card, but you may still be charged a fee of $4 to $8 to purchase or activate a new card.

Will my monthly statement look different?

Yes, it will show how much you really pay in principal and interest if you make only the minimum payment, as well as how long it will take to pay off your entire balance. It will also tell you how much you’d have to pay each month to repay the balance in 36 months and the total amount you will pay[MSOffice1] in principal and interest. Plus, the statement must conspicuously display the payment due date, any late-payment fees and the late-payment penalty rate.

I never keep those fine-print agreements that come with new credit cards. Is there a way to verify the terms and conditions of my card?

Yes, issuers must now post card agreements on their Web sites and provide a copy to the Federal Reserve Board, which will compile and post them on its Web site,

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7 Things Every Apartment Renter Should Know

By: Ann-Marie Murphy,

If you’re a renter, you’re in good company. More than 95 million Americans rent their homes, according to the American Tenants Association. Maybe you live in a part of the country where the costs of home ownership are out of reach. Perhaps you don’t have the time or desire to tend to a home. Or maybe you’re not in a position to commit to a location for more than a few years.

Whatever your reason, renting is a perfectly reasonable and relatively non-committal way of living out on your own. But just because your home is in someone else’s name – ahem, your landlord’s – doesn’t mean you relinquish all rights. Here are seven tips that can make your renting experience easier and more affordable:

1. Protect Your Stuff with Renter’s Insurance

Nearly two in three college-age adults have no insurance protection, despite almost half reporting belongings worth more than $10,000, according to a recent study from Allstate Insurance. The reason? Misperception of cost.

The truth is renter’s insurance is perfectly affordable; the national average is just $16 per month, according to Allstate. And the insurance protects your stuff against fire, theft and vandalism. Think of it this way: If a fire sweeps across your apartment destroying everything in it, is the ability to replace all of your stuff worth just four fancy cups o’joe a month?

2. Lease Your Apartment during Low-Season

Just like there’s a purchase season for homes, there’s a high- and low-season for renting. These seasons vary depending on your location, but typically follow demand. For example, in northern states, high season is often in the summer or when college kids are scooping up apartments. Low season, on the other hand, ordinarily occurs during the winter.

With apartment leasing, inventory dictates price, so your best bet is to lease your place during the low-season. Not only will you have a greater variety of apartments available to choose from, but you’ll be in a better position to negotiate price.

3. Don’t Be Afraid to Negotiate

You’re likely stuck with your rent payment for at least a year, so get the best deal you can! Before you start negotiations, make sure you have all the information your landlord has about you, including your credit report and score. To take a peek at your credit report and score for free, no strings attached, swing by

To be a smart negotiator, you don’t have to be a seasoned salesman. Here are five tips to help you get the best deal:

  • Know Your Neighborhood: Find out what comparable apartments are going for in your area, including any specials that are running.
  • Know Your Apartment Complex: Is your complex completely occupied or are there a lot of units available? The more empty apartments your landlord has, the more willing he may be to negotiate.
  • Time It Right: Make sure to give yourself enough time to negotiate so if dealings fall through, you can find another place.
  • Promote Yourself: Tell your landlord why you make a good tenant and give him reasons to keep you around.
  • Think beyond Money: Your landlord might not be able to budge on rent, but may be willing to give you other perks like free storage, flexible move-in/out dates, premium parking or new carpet.

4. When Money’s Short, Talk to Your Landlord

This tactic doesn’t count if you spent your rent at the mall, bar or casino. But if you’re truly strapped for cash, talk to your landlord. There’s no guarantee a landlord can or will help, but if you don’t ask, you’re never giving him or her a chance. If you’ve experienced a hardship, your landlord may be willing to work out a payment plan with you, cut you some slack on your rent payment due date or help you get into an apartment that’s better suited for your situation.

5. Know Your Lease Terms and Termination Fees

Many landlords offer a variety of lease terms: six months, one year, two years, etc. Make sure you choose the lease term that fits your situation. Typically, the longer the lease term, the sweeter the deal. But, if life happens and you need to bail, breaking your lease could cost you. Before signing anything, take a look at your lease-break fee. Can you negotiate it? Is the potential cost worth it?

6. Know Your Rights

Just because you don’t own your home, doesn’t mean you don’t have rights. For example, if you rent a home from a landlord who then lets the house go into foreclosure, you may remain in your home through the end of your lease unless a home buyer purchases the home to live in, in which case you have 90 days to find a new place to live. You may get scary letters from the bank, lender and everyone who has financial interest in the house telling you to get out, but you signed a binding contract that protects you from being kicked out of your home without notice.

Different states have different protections for renters, so do your homework. If your landlord does something that feels unfair, you may have a legal recourse. There are numerous free law resources online for renters, as well as tenants’ rights organizations that you can contact for help.

7. Uncle Sam Likes Renters Too!

Many states offer a “Renter’s Credit” or “Homestead Property Tax Credit” when you do your income taxes. The credit is typically based on the difference between your household income and property taxes. As a renter, you may not directly pay property taxes, but your landlord does, and those taxes are figured into your monthly rent payment. Make sure you hang onto any receipts showing you paid your rent so you can provide the IRS with documentation should they request it.

Create Your Plan B, Part 1: Take Control of Your FutureThe uncertainty of the recent economy has left many people wondering how to get back on track toward their financial goals. Some feel paralyzed, afraid of making the wrong decision. But even if your path to the future looks very different than it did a few years ago, it is important to keep moving forward. How? Take control where you can to achieve the best possible outcome.

Plan for risk as well as reward

To take control of your finances and avoid being caught off guard in the future, you need a new, two-part game plan for the new economic reality. Your best next step is to create both a “Plan A,” for when life goes as you hope for, and a “Plan B” for when it doesn’t.

Plan A enables your dreams. It is based on what you want your future to look like, what that might cost, and how you can fund it. Making a plan is a positive step to move beyond the inertia of uncertainty. Even if your economic situation has changed, don’t give up on your dreams. Look at the new landscape with a sense of adventure and think creatively about how to achieve them. Sharing your dreams and aspirations with your Northwestern Mutual financial representative will help him/her develop the plan that will work best for you.

Creating a new Plan B, along with Plan A, prepares you for the risks that many people overlook. While some things are beyond your control, you can protect yourself where you possible and take action to minimize worry. Consider the various ways you could be financially vulnerable, including things you don’t hear about often, and address them now. Be sure to include the following:

Disability – Your ability to earn an income is your greatest asset because it provides for current living expenses as well as long-term savings. Disability income (DI) insurance is essential to your financial wellbeing because it provides income if you become disabled, making it possible to cover today’s expenses and tomorrow’s needs.

Health insurance – If this is provided by your employer, consider what you would do if coverage were no longer available. Total average health insurance costs have increased 131% in the past 10 years, from $5,791 in 1999 to $13,375 in 2009i. Take advantage of what you have by staying current on preventative tests and medical check-ups such as annual physical exams, mammograms and dental care. Set aside funds for emergency medical expenses should they arise.


Job security – Protect yourself from the worst-case employment scenario by being proactive while still employed. Improve your career skills, expand your network of contacts through tools such as LinkedIn, and look around at the options available if you were to become jobless. Save religiously for a rainy day and be sure your emergency fund can cover at least six months’ expenses in case unemployment hits your income streams.Long-term care – Plan for the risk of a long-term care event when you are healthy. Be sure you understand the costs of long-term-care in your area, how they could affect your family’s future financial security and your options for protecting yourself.

Premature death of yourself or spouseLife insurance. A breadwinner’s death can take a financial toll as well as an emotional one. A life insurance death benefit helps survivors meet living expenses and important goals such as post-high-school education and retirement. Permanent life insurance provides additional security by accumulating cash value that can be tapped for emergencies and future needs.

Serious injury or illness – An adverse health event can have physical, mental and financial consequences over the long-term. Recognize how an unexpected health issue could affect your life and take action now to prevent it with good daily habits of nutrition, exercise and lifestyle.

Stress – Financial uncertainty, work issues and family demands can be stressful, but stress does not need to overtake your life. Reevaluate to reduce unnecessary commitments, plan time for stress-releasing activities such as exercise and time with friends and family, and focus on the positive. Enjoy what you have and what is most important in life.

The key to any well-executed financial security plan is taking a prudent, disciplined approach to preserving and building your assets to meet long term goals. Taking action where you can, sooner rather than later, is in your best interest. With a plan that considers the various possibilities, you can let go of worry and know you have done all you can to be prepared for risk as well as reward.


iKaiser Family Foundation/HRET Survey of Employer-Sponsored Health Benefits, 1999-2009

Article Courtesy of:  Rick Kalb-800:725:KALB; Visit My Web site:

There are a number of Home Affordable Modification Programs available for those of you that are having a hard time conforming to your loan terms during these difficult economic times.  Before you explore your options, there are a number of issues that have to be considered, including terms and trial periods.

Is a Trial Period Required to Get a Modification?

The general answer to this is yes, particularly If your mortgage modification is part of a government sponsored program. For example, Fannie Mae’s guidelines require a three month trial period if your loan is in default when the trial period starts, or four months if your loan is current but default is imminent when the trial period starts. Alternately, Freddie Mac requires a three month trial period.

What is the Purpose of the Trial Period?

The purpose of the trial period is to test a customer’s commitment to make the modified loan payment because the loan servicer does not want to complete the loan modification requested if it does not truly help your financial situation and if a future default is probable.  This trial period also permits you to make the modified payment while the lender completes the documentation.

Will a Trial Period Stop or Postpone a Foreclosure?

Generally loan servicers will not pursue foreclosure action during the trial period, but that is contingent on you complying with all the requirements of that trial period.  State laws dictate whether the foreclosure process can be delayed during the trial period, and how soon after the trial period ends it can resume. You should check with your local state laws to be sure of your protection.

Are there Additional Requirements During the Trial Period Other than the Payment?

The primary requirement is that you make the required payment on time during the trial period.  However, the lender might require you to submit other documentation or proof of financial fitness, and also may require you to complete their loan modification paperwork during this trial period.

Once Begun, Can the Terms Change During the Trial Period?

Depending on the information collected during the trial period, and if there are changes to the financial circumstances of the borrower, the terms might change.  It is important to provide accurate information to the lender during this process.

How Will my Credit Rating be Affected During the Trial Period?

The answer to this depends on the status of the loan before entering the trial period, and if you are participating in a government sponsored program such as Fannie Mae or Freddie Mac. You should speak with your lender about your particular situation.

Is the Loan Servicer Required to Complete the Modification if I Meet the Requirements?

There is a financial incentive for lenders to complete the modification if they are part of the Making Home Affordable Program.  You should check with your lender to see if they are participating in a government sponsored program.

What Happens if I Miss a Payment?

If you miss a payment during the trial period, your eligibility to participate in the program might end. You need to check with your lender to see what rules exist for late or missed payments, or if there is a right to pay off the remaining balance due during the trial period to ensure continued eligibility.

Bottom line is that you should speak to a trusted mortgage broker or lender to find out about your individual circumstances, and read the information carefully to ensure you understand the terms of your particular loan modification program.  For referrals to trusted lenders, please call the Law Offices of Daniela Lungu at (925) 558-2710 or email

Do you want a specific topic discussed in this blog? If so, please contact us at with your suggestions.

About Daniela Lungu, Attorney at Law

Daniela Lungu, founder of the Law Offices of Daniela Lungu, devotes her law practice to asset protection through estate and business planning. Ms. Lungu’s goal is to provide the people of the Bay Area and California with the highest quality, and most personalized legal services possible. Her attention to detail and a high level of communication with her clientele distinguish her from other attorneys in the field.



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