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New credit-card rules may help consumers, but beware of new traps laid by some card companies

New pieces of the most-sweeping credit-card reforms on record kick in today, outlawing double-cycle billing, retroactive rate hikes and many other longtime practices of the U.S. card industry.

Yet even as the tougher rules ban certain practices that have cost card-using consumers billions of dollars through the years, card companies are assembling a new arsenal of fees designed to keep the revenue rolling in.

The industry refers to them as “unintended consequences” of the new law made more apparent by a job-starved economy in which credit-card defaults are setting record levels.

“This is the impact you’d expect to see,” said Paul Gregg, a former corporate executive who now teaches personal finance at the University of Central Florida. “There will be more annual fees, fewer promotions, more rate increases in future purchases, and less credit for risky customers.” (More)

New Credit Card Rules Monday: WSJ’s Take On Changes

The Wall Street Journal’s Robin Sidel gives its readers more insight about credit card rule changes going into effect Monday.

“A new federal credit-card law that takes effect Monday could erase billions of dollars a year in fees and interest charges paid by consumers. But card issuers are already deploying new tactics that could prove costly for even the most cautious cardholder.

“The law made some important changes. Card companies must now tell customers how long it would take to pay off the balance if they only make the minimum monthly payment. Customers can only exceed their credit limit if they agree ahead of time to pay a penalty fee. And unless a cardholder misses payments for more than 60 days, interest-rate increases will affect only new purchases, not existing balances.” (Click here to read the rest)

New Credit Card Rules – How the New Credit Card Laws Affect You

The new set of credit card laws that take effect February 22, 2010 include:

• Telling you 45 days in advance if they raise your credit card rate, change certain credit card fees or make other significant changes to your credit card account. Credit card companies do not have to tell you 45 days in advance if you have a variable rate card or if you have an introductory rate credit card that expired.
• Your credit card company cannot increase the credit card rate for the first 12 months of opening your account. The exceptions include variable rate credit cards, introductory rate credit cards and if you’re more than 60 days late on a credit card payment.
• If your credit card rate does increase after the first year it will only increase for new purchases not existing balances.
• You now have to opt-in for over-the-limit credit card transactions.  If you don’t, you cannot be charged an over the limit fee though your credit card transaction might be declined. If you do opt-in you can only be charged one over-the-limit fee per month. You can also opt-out at any time.
• Your monthly credit card bill will now include information on how long it will take you to pay off your credit card balance if you only make minimum credit card payments. Your credit card statement will also tell you how much you would need to pay each month in order to pay off your credit card balance in three years.
• If you are under 21, you will need to show that you are able to make credit card payments, or you will need a cosigner when applying for a credit card in order to open a credit card account.
• Credit card companies are now required to limit fees and they cannot total more than 25% of the initial credit limit. For example, if your initial credit limit is $500, the fees for the first year cannot be more than $125. Late credit card penalty fees are not included.
• Credit card companies must mail or deliver your credit card bill at least 21 days before your payment is due.
• Credit card companies cannot double cycle bill, they only impose interest charges on balances in the current billing cycle.