Credit card law protects consumers

For years, many credit card holders have dealt with interest rate increases, lowered spending limits and extra fees. The Credit Card Act is supposed to stop those practices and save customers money.

Card issuers will not be able to raise rates for the first 12 months after new accounts are opened. On existing accounts, they will only be able to increase rates on future charges, not on existing balances.

The only exceptions are that rates can be raised at the end of promotional offers or if customers make payments more than 60 days late.

"I'm glad to see the changes," said Rebekah O'Connell, a credit counselor with Triangle Family Services.

O'Connell said that she's for anything that helps consumers get out of debt faster, so she likes another change regarding how payments are applied.

"With the new rules, any payment above your regular minimum payment must be applied to the highest interest rate on the card," O'Connell said.

Also, fees for going over credit limits are banned unless customers agree to allow transactions that put them over their limit. The downside of that change is that without customers' prior consent, cards will be rejected if charges exceed the credit limit.

In another change, statements must explain how long it will take to pay off the balance and how much customers will ultimately pay if they make only the minimum payment.

Due dates for bills will be the same each month, and customers will have a 21-day minimum to make payments.

Finally, there are new protections for younger consumers. Those under age 21 will have to have a co-signer to get a card unless they can prove they have the means to make the payments. Issuers cannot advertise cards within 1,000 feet of a college campus or college event.

Industry experts believe that credit card companies will make up for lost revenue by adding new fees and raising rates for all consumers.

Most experts, though, said that the Credit Card Act is an overall improvement.

"I may never think that the rules are strong enough when it comes to consumer protection," O'Connell said. "But trying to make the statements more clear, trying to give people real time to get the payments in, giving people fair notice should help people better manage their accounts (and) make better decisions."