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Over the past year, negotiations have occurred and laws have been passed dictating what would be fair and equitable practices by the credit card issuers and the people that use their products.  Now, some of the changes discussed over those long months are beginning to take effect.  Although the majority of the changes will be phased in at intervals to prevent a dramatic upheaval of the credit card industry, the changes that are taking effect now should help begin leveling the playing field between the credit card issuers and the consumers holding the credit cards.

Interest Rate Limits

One of the changes currently taking effect is the new implementation of a federal law limiting interest rate increases.  In the past, any credit card issuer could raise the interest rate of any customer for any portion of their credit card balance at any time.  This ability was typically spelled out in tiny print in the middle of long, confusing credit card agreements and was generally ignored by the card holders until they found the interest rate for their credit card dramatically raised with no explanation.

Under the new rules in effect, the credit card issuer must now give you 45 days notice of their intent to raise the interest rate on a portion of the balance or the entire balance of your credit card.  If you decide that you will not accept the interest rate increase, you have the right to refuse the increase and pay off the balance of the credit card under the old terms, although you will no longer be allowed to use the credit card for new purchases. 

There are some exceptions to this rule.  The credit card company does not have to give the required 45 day notice if they are raising your interest rate due to a payment default on the credit card.  Many credit card companies have reserved the right to raise the interest rate charged on the balance of the credit card account if the account holder is late with or misses a monthly payment for the credit card.  Other exceptions to this rule include the expiration of an introductory interest rate or if the credit card has a variable interest rate tied to an index.

Interest Rate Increases

The credit card companies are now barred from raising the interest rate on the credit card within the first calendar year of the account holder opening the account (unless it is a variable rate credit card or the card holder is in default of the credit card agreement).  This would prevent the credit card companies from using a low teaser rate to entice customers to sign up for their credit card products then dramatically increase the credit card rate soon after the person begins using the credit card.  If an introductory interest rate is offered, it must be clearly communicated as an introductory rate and must be in place for at least 6 months before the interest rate can be raised to typical market rates.

Interest Rate Application

One change to the interest rate rules that many credit card account holders are applauding is the changes to how an interest rate increase is applied to the balance of the account.  In the past, the credit card companies could significantly increase the interest rate charged to the account and apply that interest rate increase to the entire balance of the account.  Now, any interest rate increases will apply only to the new charges made after the increase has been implemented, with the previous balance of the account paid under the interest rate that was in effect when the charges were made.