New credit card rules mean changes for consumers


Mary Milz/Eyewitness News

Indianapolis - As of Monday, new credit card rules take effect and some represent significant changes. It's all part of the 2009 Credit Card Accountability, Responsibility and Disclosure Act (CARD.)

The new rules are meant to offer new protections and make it easier for consumers to understand their bills. Some provisions took effect last summer (consumers now have 21 days to send in payments versus 14 and issuers must give 45 days notice if terms of the account change.)

Starting February 22, credit card issuers can't raise rates for one year when a customer opens a new account. And if they raise rates on existing accounts, that new rate applies only to new purchases, not the old balance.

The customer's due date must be the same each month and anyone under 21 years old will need a co-signer to get a credit card or show proof they're able to pay.

Another big change involves the monthly statement. It must make clear how long it will take to pay off the balance if you make just minimum monthly payments. And it must show how much you'll pay in interest over the course of those installments.

Todd Roberson is a senior lecturer in finance at the Kelley School of Business at IUPUI.

"A lot of these things are good common sense measures and should have been done a long time ago," said Roberson.

But he also said it's now more important than ever to read the fine print.

"I don't know about you, but a lot of times when the letter from the credit card company came, I never read it. I threw it away," Roberson said. "This will be the credit card companies defense in making significant changes to the terms. It will be, well, we told you about it in the letter."

Examples may be suddenly charging an annual fee for the card or a charging a fee to get a paper statement.

Also, if you want overdraft protection, you must now opt in. That means agreeing to fees if you go over the limit. If you don't sign on, your purchase may not go through.

Roberson's advice?

"You should opt out of every add-on because they always come with some sort of fee."

"If you're constantly coming up with overdraft protection than you should probably come up with a different way to manage your finances," he added.

There are a few things some consumers may want to do before Monday.

If you're under 21 and financially responsible, apply for a card now. If you have a high credit card balance, consider transferring it to another card with a lower interest rate and have a back-up card in case your credit limit is suddenly lowered.

Roberson said it's not a bad idea to have two-to-three cards "and use them a little (on a regular basis) and that way if you (need to exceed your credit limit) and you're in a bind, you have an extra card and you don't get dinked with fees."