It’s been a big week for the long awaited new law designed to protect consumers from abusive credit card practices. After the bill overwhelmingly cleared the House and Senate earlier in the week, President Obama signed the bill Friday in a ceremony at the White House. The rules go into effect in nine months, but you should begin to see changes in the way credit card companies operate much sooner than that.

Financial institutions argue that the bill rewards people’s irresponsible behavior with credit cards, an idea that President Obama refuted as he signed the bill. He said Friday, “Some get in over their heads by not using their heads. I want to be clear: We do not excuse or condone folks who’ve acted irresponsibly.” He stated that the seriousness of debt problems for Americans are magnified by credit card companies changing the rules partway through the game.

Some of the practices that the bill will put a stop to include the ability of credit card companies to apply payments to low interest rate balances and keeping the higher interest balances outstanding, changes in deadlines for when payments must be made, and adjusting interest rates even when there hasn’t been a late payment. There will be rules about issuing credit cards to people under age 21, times that rate increases are justified, and when rates must be restored to their original levels by card issuers.

Because credit card companies will be under stricter controls, many expect that more credit card companies will increase revenues by charging annual fees, starting with high interest rates, and eliminating grace periods before balances begin to accrue interest.

There was one part of the bill that Obama didn’t like: an amendment that will allow registered gun owners to carry loaded guns into National Parks. What does this have to do with protecting consumers from credit card companies? Nothing at all, but it goes to show that the fine print included in Federal legislation can sometimes be just as confusing as the terms of newly issued credit cards!

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Tags: credit cards, fees, legislation

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