With the recent passage of a federal law aimed at protecting millions of consumers who rely on credit cards, you may see many card issuers changing the way they advertise and, in general, proceed with greater caution when soliciting new business.

Some Highlights of the new law are:

1.  Limit interest rate hikes – interest rate hikes on existing balances will be allowed only when a promotional rate ends, the account carries a variable rate, or if the cardholder makes a late payment on that particular card ONLY. Rates cannot be raised if the cardholder is late on payments to other creditors.

2.  More time to pay monthly bills – card issuers must give at least 21 days after a statement is mailed to make a payment. Cutoff times for payments cannot be before 5 pm of the due date. Payments due on weekends, holidays or when the card issuer is closed for business will not be subject to late fees.

3.  Highest interest balances get paid first – when a consumer’s balance carries different interest rates because of different types of purchases (i.e. cash advances, regular purchases, balance transfers or ATM withdrawals), payments in excess of the minimum amount due must go to the portion of the balance with the highest interest rate first.

4.  Limits on over-limit fees – Consumers will have the option to either pay an over-limit fee or have their transaction rejected. By law, the fee charged for over the limit must be reasonable.

5.  Minimum payments – Credit card issuers must disclose to cardholders how long it will take to pay off the entire balance if they only make the minimum monthly payment. Issuers must also provide information on how much users must pay each month if they want to pay off their balances within 12, 24, or 36 months, including the amount of interest.

6.  Restricts card issuance to students – consumers under age 21 who can’t prove an independent means of income or provide the signature of a co-signer aged 21 or older won’t get approved for credit cards.

Because of these sweeping reforms to the industry, many issuers will have to find other ways to generate income or cut expenses, resulting in annual fees, elimination of “rewards” and possibly even grace periods.

Credit and Debt service can be very complicated.   Learn how credit cards can help or hurt your credit score by you actions.   Credit counseling and Goal Managment services at Victorious Visions  – www.victoriousvisions.net