New Credit Card Rules To Protect Consumers Go Into Effect Today

August 22nd 2010

As of today, August 22nd, 2010, new credit card rules go into effect with a potential of wiping out $3 billion in annual revenues for credit card companies while protecting consumers by limiting excessive fees issuers can charge.

The new regulations require credit card companies to follow a guideline for extra charges such as late payments or over the limit purchases. The regulations also prohibits credit card companies from charging fees in excess of the amount. For instance, if you miss your payment in the amount of $10 then the credit card companies cannot charge penalties exceeding $10.

Other important notes about the new regulations:

Interest Rate Hikes: The law requires credit card issuers to review any rates they may increased every six months. Furthermore, the law requires issuers to reduce the rate if warranted. Results are dependent on cardholder's credit history and risks. Ultimately, issuers have the final say if rate increase is justified.

Excessive Penalty Fees: As mentioned above, credit card issuers are limited in terms of how much they can charge for penalties. Furthermore, the maximum amount a cardholder can be charged is $25 for penalties. Also, there will be no charges for inactivity.

Gift Cards Expiration: The law prohibits gift cards, gift certificates and prepaid cards from expiring in less than 5 years. Furthermore, there can be no inactivity fees for at least 1 year and any inactivity fees after a year, are to be clearly disclosed

Many experts are predicting that credit card companies will eventually find a loop hole and exploit it to continue charging fees somehow. At the end of the day this is $3 billion in lost revenues.