How Credit Cards Have Changed

In mid-2009, President Obama signed a consumer protection measure known as the Credit Card Act (or Credit Card Responsibility and Disclosure Act). The Credit Card Act’s main objectives include protecting consumers from unreasonable fees and penalties. Credit card companies, however, have devised other ways to extract fees from consumers despite the act, which went into effect this Monday. The Wall Street Journal has a roundup of what it now means to have a credit card:

Here are the things you need to watch out for should you be tempted by any of the credit-card offers you receive:

Average annual interest rates:
The average annual percentage rates, which climbed steadily most of last year, are now at the highest level in five years.

Rate increases: The new law prohibits card issuers from escalating rates during the first year. Rates cannot increase without a 45-day notice — and the opportunity for you to opt out and cancel the card. But it you’re more than 60 days late on payments, all bets are off.

Annual fees: Some 35% of cards now have annual fees and a number are raising or imposing new charges for balance transfers and inactive accounts.

Application fees: These are new to most people. It’s a charge for the opportunity to apply for a card, whether you get the card or not. Annual and application fees cannot exceed 25% of your credit limit.

Hybrid cards: Watch out for low-fee cards that could have other high-interest charges or fees.

Late fees: Many issuers are looking at tiered payments such as $29 for balances below $500 and $35 for those above $500.

Over-limit fees: You have to let the card issuers know you’re willing to pay a fee should you go over your limit. If you don’t, you’ll be turned down at the cash register.

Now more than ever, it helps to be a vigilant credit card consumer.

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