With the new Credit Card Act in place what does this mean to consumers?  Consumers may now see a return to annual credit card fees.  Although the new Credit Card Law restricts certain fees, such as those charged for surpassing credit limits or paying credit cards late, it leaves many other charges as “fair game”.  We may start seeing credit card issuers preparing to implement additional fees.  For instance, Fifth Third Bank last year began charging some cardholders $19 for not using their cards for 12 months.  In addition, there is NO LIMIT to how high annual percentage rates can go.

Although the new Credit Card Act heavily restricts rate hikes on consumers that have existing balances, it DOES NOT prohibit card issuers from raising consumer rates on future purchases.

Will this also be the end to fixed rate interest terms?  Balance transfers from one credit card to another with lower interest rates or new credit card offers may now only go to select consumers.  Will the consumers with poor credit face reduced credit limits and in turn have more difficulty acquiring credit?  Will program benefits that now offer rewards be a thing of the past?

Other important highlights you should know about the new Credit Card Act are:

• Late payments before the 60 day window will not increase your interest rates, but it will still show up negatively on your credit report.
• You should now open your credit card statements quickly and review them to keep abreast of new terms.
• Some of the credit cards may have deadlines that you must meet in order to opt in or out of in order to get certain terms.
• The new Credit Card Act does not cover Business and corporate credit cards.
• The Act does not cap interest rates. The increased rate can still reach triple your existing APR.
• A rate increase can't be applied to existing balances unless the cardholder is delinquent.

• Cardholders must be notified of a rate increase 45 days in advance, but there is no cap on rates.
• Those under 21 can't apply for a credit card unless they have a co-signer, sufficient income or show proof that they have an independent means to repay the card debt themselves.

Credit Card companies cannot raise rates on an existing balance unless a promotional rate has expired, the variable indexed rate increased or you paid late by 60 days or more.  No longer will they be able to punish borrowers for late payments on unrelated accounts under the practice of universal default or due to "anytime, any reason" clauses.
If the cardholder does trigger the default rate because of a 60-day delinquency, the bank must restore the lower rate once the cardholder demonstrates six months of consecutive on-time payments.

Consumers will now get 45 days notice from the credit card companies before any key contract changes take effect, including rate increases.  Under the current Truth in Lending Act, cardholders only receive a 15-day notification.

3. Fee restrictions

Cardholders will not face over limit fees unless they elect to allow the creditor to approve over limit transactions.  Issuers can't charge more than one over limit fee per billing cycle.
In general, banks can't charge consumers a fee to pay their credit card debt, a cost some cardholders encounter for payments made by telephone or Internet.  They can impose a fee to expedite a payment.
Payments received by the due date, or the next business day, if the bank doesn't accept mailed payments on the due date, won't trigger a late fee.  If the cardholder pays at a local branch, the payment must be credited the same day.

4. Credit for Those Under 21

If you are under the age of 21 you will now have to have an adult co-signer or prove you have enough income to repay the card debt that you accumulate. Credit card companies must now stay at least 1,000 feet from college campuses if they are offering incentives to attract students to apply for credit cards.

5. Ends double-cycle billing

The Credit Card Act will now ban double-cycle billing, the practice of basing finance charges on the current and previous balance.  Under this method, the issuer could charge interest on debt already paid off the previous month.

A close look at your card agreement will likely reveal a clause that explains that payments will be applied to lower-rate balances first.  Not so anymore.  The Credit Card Act requires above minimum payments to be applied first to the credit card balance with the highest interest rate.  Credit card issuers must disclose to cardholders the consequences of making only minimum payments each month.  Issuers must also provide information on how much users must pay each month if they want to pay off their balances in 3 years, including the amount of interest.

Credit Card companies must now send statements 21 days before a payment is due.  Previously, only 14 days were required.  The law requires card holders must now be given a reasonable amount of time to make payments.  The due date should be the same date each month.  Payments that are due on the weekends, holidays or when the credit card issuer is closed for business will not be subject to late fees.  When the cardholder goes into a local branch to pay, the payment must be credited the same day.

The legislation includes protections for gift cardholders.  The new law prohibits gift cards from expiring for at least five years.  Issuer cannot assess inactivity fees unless the card has gone unused for 12 months.