The truth about the new credit card law
Next week, a new federal credit-card law goes into effect that could significantly decrease the amount of fees and interest paid by card holders. WSJ’s article, “Credit-Card Fees: the New Traps,” highlights how the law may affect consumers.
The biggest change is transparency. Credit card companies must publish the hard truth — how long it will take to pay off the full balance with minimum monthly payments. Additionally, the cardholder can only exceed the credit maximum by first acknowledging a penalty fee, and he or she need only pay interest rate increases on new purchases (provided that the account is no more than 60 days late).
But buyer beware — with the new law may come new tricks. Credit card companies may lose up to 12 billion in annual revenue, and they are quickly maneuvering to recover some of this loss by hiking interest rates and adding or increasing other fees (e.g. overseas transactions, annual card fees), which they can legally do as long as they give consumers a 45 day notice. The smartest move by the cardholder will be to stay proactive by learning the rules of the game and avoiding the penalties.
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