Credit card reform law in effect

August 23, 2010 1:55:31 PM PDT
All of the sweeping credit card reforms signed into law by President Obama last May are now finally in place.

Starting Monday, credit card companies are limited in the fees they can charge.

Exceed your credit limit buying your morning coffee? Now banks can only charge a penalty equal to how far you went over the limit -- $3 coffee means a $3 penalty. Late fees will drop from around $39 to $25. Card issuers must also re-evaluate interest rate increases every six months to determine whether they are still warranted. A consumer can get their lower rate back by paying on time.

These new consumer protections follow two rounds of regulations that already went into effect. Credit card companies are now required to give consumers 45 days notice before an interest rate hike.

But do loopholes still exist?

Credit card companies say they stand to lose billions in revenue with the new restrictions. Analysts expect them to fight back.

"The banks, the credit card companies will find new and interesting and potentially painful ways for consumers to make up the difference in terms of what they're losing," said Adam Levin, CEO, Credit.com

That means ATM fees, balance transfer fees and foreign transaction fees all could be subject to rate increases

Consumers need to be aware of the changes to their accounts and take the initiative to protect themselves.

"The key thing is it doesn't matter how big, how bold, how bright or better-positioned the now less than fine, more easily understandable print will be if you don't read it," said Levin.

These new protections follow two rounds of regulations that already went into effect, including a requirement that card companies give at least 45 days notice before raising interest rates.


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