January 5, 2010 Dollars & Sense
January Rates are lower but may change once a year. The Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 will change the way rates are set on SLFCU credit cards. Lawmakers were concerned that card companies are using high penalty rates and exorbitant late fees to unfair advantage. In response, the CARD Act changes the way financial institutions may establish rates on credit cards. In the past, your Credit Union has set card rates and terms based on our cost to run the program, on market conditions and in the best interest of our members. We have never charged a penalty rate and our rates on balances have been consistently low. We changed credit card rates only twice in the past decade; in both cases we lowered them.
Variable rates
The new law disallows our long standing method for setting rates but because true fixed rate cards would expose your member-owned Credit Union to unacceptable risk, on February 1, 2010 we will change to a variable rate system with rates based on the Prime Rate published in the Wall Street Journal plus a reasonable margin. A ceiling and floor rate will protect individual members and the Credit Union as a whole. This system is good news especially for members who carry a balance.
Rates drop again
SLFCU decided to lower rates on credit cards on December 15, in time for the holiday shopping season, rather than wait until February 1. The new rates range from 9.25% to 11.50% depending on the type of card you have. Once each year, on July 1, our rates will adjust to reflect the Prime Rate as published on June 15 in the Wall Street Journal. That means that if you carry a balance, your rate will be predictable for a full year. Your card’s travel benefits, long grace period, zero liability policies and purchase protection remain fully in force.
Summary of Credit Card Rates and Fees
Effective December 15, 2009
Visa Gold - 9.25%
Visa/Mastercard Classic - 9.75%
Visa Gold with rebate - 11.00%
Visa/Mastercard Classic with rebate - 11.50%
Visa Student with rebate - 11.50%
Effective February 1, cash advances including overdraft transfers to checking accounts will be charged a $5.00 fee in order to cover costs.
New information on statements
The new law also mandates that we provide information on your monthly statement specifying how long it will take you to pay off your balance making only minimum payments, what payments would be necessary to pay off your balance in 36 months and more. This means that the design and format of your statement will change somewhat. Your statement will also have a fixed due date so that you will always know when your payments are due. Your credit card number will not change.
Student Credit Card changes
On December 15, 2009 we’re changing all of our Student Cards so you’ll start earning a .50% cash rebate on purchases. The rebate will be credited to your SLFCU statement each year beginning in December 2010. On December 15, 2009 your APR if you carry a balance will drop from 14.75% to 11.50%. The rate will be variable, based on the Prime Rate plus a margin. It will adjust only once per year, on July 1. You’ll still pay no annual fee, and you’ll get car rental collision insurance, travel accident insurance and emergency assistance service at no extra cost. After February 21, Student Card applicants under the age of 21 will need a qualified co-signer or the ability to repay. Applicants under 18 will need a co-signer.
SLFCU credit cards remain best values
According to the Pew Research Foundation, even after February, most bank and commercial credit cards still won’t compare favorably to credit union credit cards. SLFCU cards are still great values when compared to other cards that are offered in our markets.
SLFCU has made every effort to comply with the CARD Act in ways that benefit our members. Should you have questions about changes to your credit cards, please call us at 505-293-0500 or 800-947-5328.
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