New credit cards regulations may help consumers

February 2, 2010 9:15:36 AM PST
New regulations kick in this month to protect consumers from what some see as unfair interest rate hikes and excessive penalties on credit cards.

The credit card reform act kicks into gear this month and aims to give customers a more level playing field when paying with plastic.

"The essence of the new law is basically making sure that consumers understand what they're signing up for when they apply for a credit card and making sure that they get what they signed up for," Kelli Grant from "Good Housekeeping" said.

Up to now, card issuers could raise your interest rates on existing balances, but that's changing.

"So it helps people when you're deciding if a purchase is affordable. You're thinking about buying something for a $1,000 at 15 percent interest--you know that down the line, you're going to be paying off that purchase at about 15 percent interest," Grant said.

"Good Housekeeping" also points out you now have to get your bill 21 days before the due date -- otherwise late fees can't be charged.

"So it gives you, when you get the bill, you've got ample amount of time to figure out how much of that purchase you want pay, scrap together a payment and really make a smarter decision about how you're going to pay off a purchase or pay down your balance," Grant.

It's also less likely you'll be charged $39 because you went over the credit limit buying a cup of coffee.

"Under the new regulations, it's up to the consumer to decide whether you have a fixed credit limit or one is a little more flexible and would allow you to go over limit," Grant said.

It's a good idea to read the disclosures on your statement carefully, to make sure you're not getting hit with a higher annual fee or lower credit limits.