Page 31 - Book6E

which the 3% interest has incurred. The last balance to be paid off would have been the additional $500 or the balance with the highest interest rate of 28%.
In knowing how the total balance of a credit card is typically broken up, a credit counselor will be able to correctly assess if payments are now credited appropriate to the Act; that is, consumer payments are credited to the balance with the highest interest rate first. The Act will serve to shorten the length of time in paying off the total balance owed which lowers the overall interest paid by the consumer. It will also ensure that promotional interest rates must stay in place for 60 days.
Another hidden charge associated with credit card interest rates has been the calculation of interest utilizing the balance in a previous month to calculate interest on the current statement. This unfair practice is called "double-cycle" billing and
it is no longer permitted under the Act. In
this type of billing, the payment applied to
a previous month's balance is not consid-
ered or subtracted from the amount owed.
A trained credit counselor has the ability to
assure that "double-cycling" isn't presently
occurring and can accurately calculate what the interest rate should be in subtracting the previous month's payment from the balance and using that amount in calculating the assessed interest.
An issuer can also raise interest rates if they can see that your credit report has somehow suffered a set-back. The new found credit report information could be on another account entirely, but these new and negative aspects of your credit report are enough impetus for the credit card issuer to raise interest rates on your activity with their company. The fact that the issuer can raise interest rates based on your lowered credit report status has not fundamentally changed with the Act, but what has changed is that, unless the consumer has a delinquency of 60 days on his account, the new interest rate can only be attached to
Plastic Money
Creditors have better memories than debtors.
— Benjamin Franklin
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