Today's new credit card rules make banks only slightly more friendly

A small part of the impending Credit CARD Act kicks in today, with the balance of the measures taking effect in Feb. 2010. As of today, card issuers will have to give 45 days notice of changes in interest rates and fees, send out bills 21 days before the due date, and allow people to opt out of some changes to their cards.

These measures will give consumers some advance notice to begin shopping around for new cards if their card issuer does something they don’t like. However, there are still plenty of not-so-friendly ways card companies can alter your terms. Click here or a full explanation of what’s not covered under the changes today.

For one, consumers can’t opt out of changes to minimum monthly payments. Chase recently raised minimums from 2% of balances to 5% on some customers, resulting in hundreds more to pay each month. And card companies don’t have to notify you if they cut your credit limit or cancel your card.

And neither the regs put in place today nor the ones going into effect next year restrict card companies’ ability to charge annual fees. As reported by American Banker last week Citibank recently began charging some customers a $30 to $90 annual fee if they charge less than a certain amount per year, usually $2,400.

This is a trend that’s expected to pick up. According to the financial research firm Tower Group, in the first 3 months of 2009, 27% of card offers carried an annual fee, up from 18% in 2008.

For a full description of all the new regulations, visit CreditCardReform.org, a site run by Consumers Union, the nonprofit publisher of Consumer Reports.– Chris Fichera

Comments

[E. Nowak]

I urge everyone to join a credit union (if they aren't already members). I use a credit card from a credit union that has a fixed 8.9% fee.

[Diane]

- There should be law mandating everyone to read their mail especially those mail from their financial institution. The notification doesn't matter unless it is read.
- People shouldn't wait until the due date to make the payment. Once they receive the bill, they should pay as soon as they can. There are no excuses for "I'm sorry I was busy", "I was on vacation", or "the due date was on a Sunday and there is no mail on Sunday/Sunday is not a business day". Whether it's 21 days or 60 days to pay, if you wait for the last minute, then you're definitely going to be late.
- I am not for the banks and I think the new law is a step forward to protecting consumers. I just think people should take more responsibility. If we don't give banks the chance to nickel & dime us by doing our end of the agreement, then we won't pay fees.

[Jes]

You can go to a credit union, but part of the CARD Act is that Federal credit unions have to have all loan due dates on the same day: the 27th. That's pretty inconvenient as I'm someone who has 3 different sized loans [one a car, two personal] and purposefully chose different due date to coincide with my paychecks. Too bad for that now, I suppose.