WASHINGTON D.C. -- Starting Monday,
new credit card rules go into effect that are designed to stop banks
from gouging consumers.
The bottom line is that credit card
companies can no longer raise your rates whenever they want. They must
give consumers plenty of notice.
Ed Mierzwinski of the U.S. Public
Research Group said, "The new law will stop unfair practices and save
consumers money."
As of Monday, credit card companies will have to
give 45 days notice before hiking interest rates. They must give
consumers more time, at least 21 days, to pay their bills. Credit
card companies cannot charge a higher interest rate until the payment is
at least 60 days late.
Consumer groups said in the past, banks
would start charging late fees if a payment was only an hour late. Then,
they would slap consumers with a higher interest rate, sometimes
doubling the rate. It is a predatory practice that one consumer
advocate described as the biggest rip-off.
"So, no more hair trigger
rate increases. That to me, is the biggest change in the law because
they were making millions of dollars. People who carry a balance were
just paying and paying and paying on the same money that they owed,"
said Mierzwinski
The downside? It will be harder for consumers
to get credit cards in the future and if they do, they can expect the
return of annual fees.
Experts said credit card companies will be
working to bring in any money to make up for the fortune they will be
losing because of the new laws.
Also starting on Monday, consumers
may see a new feature on your credit card statement. Companies must
show how long it will take to pay off balances if only the minimum
payment is made each month.
