Colorado Law Blog

The banking industry has vehemently opposed the changes at first, predicting the negative impact to consumers through tightening credit lines. Among the most important changes that begin Monday:

• Interest-rate hikes are limited on existing balances unless you have a variable-rate card. You must be 60 days late on a minimum payment before a hike can occur and then must receive 45 days' notice of the impending change, which you can refuse and close the account.
• Punitive rate increases for late payments must be rescinded if you pay your bill on time over a certain period, typically six months.
• No over-limit fees if you don't agree to them. That also means your credit card can be denied at the point of purchase if you've exceeded your credit limit.
• Due dates must remain stable. No more shifting dates which can result in users being late.
• Fair application of payments. The oldest charges or those with highest interest are to be paid down first.

Interest revenue losses are estimated to top $5.5 billion this year and another $11 billion in 2011 for credit card issuers. Prior to the new rules many issuers have attempted to drive existing customers to variable interest rates, which are less affected by the new regulations. Others are moving more toward annual fees or inactivity charges. An unintended consequence of the new law: Average interest rates on new cards are creeping upward, now at 16.7 percent nationally, according to IndexCreditCards.com, a credit- card comparison website.

Though not required until July, changes in credit-card statements are coming too. Statements will have a simplified look that clearly tells consumers how long it will take them to pay an existing balance with just the minimum payments. In August, the Federal Reserve is expected to issue rules on the penalty fees that credit cards can charge and how to ensure they are reasonable.