New Credit Card Rules: How can they affect you?

US President Barack Obama has signed a bill into law in order to protect debt-ridden consumers from any surprise charges issued by credit card companies. While signing the bill, Obama has also warned shoppers to act responsibly while using Credit Cards. The new credit card rules are supposed to come into effect on July 1, 2010.
12 new credit card rules
12 new credit card rules are described in the following lines.
• No more universal default – Credit card issuers cannot increase the interest rates due to changes in the consumer’s profile, which is based on the payment records with other non-related credit issuers.
• Limited hikes on interest rates – Interest rate hikes on the existing credit card balance will only be allowed under certain conditions. The interest rate on new transactions can increase after the first year; however, the issuers need to give 45 days notice before implementing the change.
• More time for making monthly payments – Credit card issuers will have to mail the statements 3 weeks before the due date. The due date cannot change without prior notice.
• Highest interest balance to be paid first – If consumers have accounts with different interest rates for varied types of purchases, then excess payments (more than minimum amount due) will be calculated on the highest interest rate or will be divided proportionally.
• Clearer due times and dates – Issuers will not be able to set arbitrary deadlines for credit card payments.
• Limits on over-the-limit fees – Over-the-limit fees will not be charged if consumers exceed their credit limits due to blocks or holds placed on their credit cards.
• Subprime credit cards – While offering subprime credit cards, the issuers cannot charge more than 50% of the credit limit for upfront fees and deposits.
• More clear credit terms – Monthly statements and credit card applications should clearly display terms with large type in reader-friendly boxes. The consequences of making only minimum monthly payments are also required to be displayed in terms and conditions.
• Fees for foreign transaction – If fees are charged for purchasing goods with a foreign currency or using cards outside US, then the fees will have to be disclosed in a table on credit card solicitations and applications.
• Clear terms on credit offers – While marketing the cards, the issuers are required to disclose the credit limits and the factors that determine interest rates.
• Restrictions for people under 21 – Credit card companies cannot issue credit cards to people, who are below 21 years of age; those under 21 can only get a card if a guardian co-signs or they are able to prove that they have means to repay debt.
• No more extra charges for online payment – Customers can pay their bills online or by telephone without any extra cost.
It is evident that new credit card rules will restrict issuers from adding surprise charges and sudden deadlines on the cards. However, these credit rules will result into fewer reward programs and more annual fees associated with purchasing on credit.
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