In 2009, Congress passed a new credit card law with much fanfare. Consumer protection groups generally praised the legislation as helping consumers. But what does that mean for you and me on a practical level? Beginning February 22, credit card companies will have to give you a break on jacking up your rates, slapping you with extra fees and give you sufficient time to pay your bill.

The new law will:

• Require companies to credit payments to balances with the highest interest rates first. This means you are paying down your most expensive debt first, a good way to help you get out from under it.
  
  

• Banks cannot charge retroactive interest, also called double-cycle billing. Creditors can go back and charge you retroactively only if there is an adjustment due to dispute of a charge or a returned payment.
  
  

• Creditors now have to pick a date and keep it. Due dates for your bill must remain the same.  This is a good budget-planning tool for consumers.
  
  

• No more over-the-limit fees, unless you opt-in.  If you don’t, any purchase that would set you over your credit limit will be rejected.
  
  

• No more fees to pay over phone or electronic transfer, unless it’s to expedite a payment.
  
  

• No retroactive interest rate hikes unless an introductory rate ends, there is a variation in the rate because it is tied to an index that varies, failure to comply with a debt repayment plan, or if you are more than 60 days late with a payment. Also, a bank cannot increase rates in the first year, unless any of the above happens.
  
  

• The bank cannot increase any rates due to payment records on other unrelated accounts. This is great because it makes sure individual creditors base their relationship on their own dealings with you.
  
  

• If you’ve got a subprime credit card, creditors cannot charge any upfront fees that exceed 25 percent of the available credit limit.

There are more changes coming in August related to lowering rates. Stay tuned and we will update you as the date gets closer.

This blog entry was featured in Carnival of the Young and Thrifty: Edition #2