New Credit Card Rules Take Effect
Some of the rules laid out in last May's Credit Card Reform legislation went into effect this week, offering customers advanced notices and additional time to pay down their balance. NY1's Tara Lynn Wagner filed the following report.
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The first phase of the credit card legislation -- signed into law by President Barack Obama in May -- is finally kicking in and consumers can expect to see a few changes, if not in their wallet, then in their mailbox. For one thing, the new rules require companies to send out bills 21 days before payment is due.
"For the last 10 years or so, the banks have been shortening and shortening the dates down to as short as a week and the goal is to get people to pay late and if they pay late they can hit them with late charges, they can hit them with all sorts of additional fees, with interest," said Consumer Protection Attorney Brian Bromberg.
According to consumer advocate Eleanor Blayney, the change doesn't mean you can pay less, or late. It just means you'll have more warning.
"It helps only in that you have a few more days to get a little bit of money to pay down that balance," said Blayney.
The other big difference going into effect are interest rate changes. While there is no limit as to how high they can raise rates, as of mid-August companies must give cardholders 45 days notice before increases take effect.
"There will be no more stealth increases of interest rates," said Blayney. "You've got to be notified now. Where you'll be told, how fine the print is, that's another matter, but you do need to be told."
Meanwhile, American Express and Discover both announced plans to voluntarily eliminate the fee they charge should you go over your limit. However, consumer advocates say this is a somewhat hollow victory since the new legislation will eventually change the way such fees are handled.
"So they're writing letters saying we're eliminating these over limit fees which they are being forced to eliminate anyway, but at the same time they are raising people's rates. So basically they are trying to sneak in as many changes as they can before the laws change and make it more difficult for them to do that," said Bromberg.
The first round of changes are active as of August 20th, but there's more to come. The bulk of the bill won't take effect until February, with some provisions not kicking in until next summer.
Until then, advocates say keep a close eye on your statements and your interest rates, because you're likely to see more changes before the rules change.