Today, the long-awaited new credit card law comes into effect. AP Personal Finance writers Candice Choi and Eileen Connelly tell us how the new regulations
shaft protect consumers:
THEN: Banks could raise the interest rate on an account at any time, including the rate on an existing balances, even if you weren't late on payments.
NOW: The rate cannot be raised in the first year after an account is opened unless an introductory rate has come to an end. After that, cardholders must be notified 45 days in advance of any rate change.
For existing balances, rates can't be raised unless the account is at least 60 days past due. If payments are made on time for six consecutive months, the original rate must be restored.
There's still no cap on rates. [...]
THEN: Banks could charge as much as they wanted. They could assess annual fees, activation fees and other fees. This was mostly a problem for subprime cards marketed to those with poor credit scores. One popular card, for example, the Premier Bankcard, charged $256 in first-year fees for a $250 credit line.
NOW: Service fees, such as activation and annual fees, will be capped at 25 percent of the credit limit during the first year of use. After that, there is no cap.