New Credit Card Rules Going Into Effect - August 2009

If you've been watching the news over the last 48 hours, you've probably heard that some new credit card rules and regulations are going into effect soon. It's actually the first in a series of new rules that will come over the next few months, and this one goes into effect on August 20, 2009.

Essentially, these new rules will give cardholders additional time for paying their bills and for considering a rate increase. Here's a summary of the new credit card regulations that will take effect this week:

• The credit card companies must now give their customers 45 days' notice before they raise interest rates on a card. This effectively triples the current requirement of 15 days. *
• Upon receiving notification of a rate increase, the customer can choose to pay off the remaining balance at the current rate -- but he or she won't be able to use the card anymore.
• Credit card bills must now be mailed 21 days before their due date, as opposed to the current requirement of 14 days. This gives cardholders an extra week to make their payments.
• This is only the first installment of new rules and regulations that will go into effect. The next milestone date is in February of 2010, when another set of credit card rules will be implemented.
  

* Eventually, the card companies will not be able to raise rates on their existing customers (at all), unless the customer is 60 days late or more on making a payment. This is one of the new credit card rules that will take effect early next year, in 2010.

But pay close attention. When you close one door on this industry, you can bet they'll find a window around back. Here is what I mean...

New Rules Will Create New Tricks

You can bet that the credit card companies will find ways to make up for their losses, after these new rules go into effect. All of the new regulations (that take effect over the next year) will reduce the amount of money they make from fees. So I recommend that you keep a sharp eye out for changes to your policy.

I already received a letter from American Express telling me they were going to raise my interest rate -- due to "changes in the economy." I am an excellent customer with not a single missed payment. So if it happened to me, it will happen to millions of Americans. Like I said, keep an eye out for it.

It's also a safe bet that it will be much harder to qualify for a credit card in the near future. The days of "credit for all" will soon be over. And if you ask me, this is a good thing.

New credit card rules are certainly needed. The industry has gotten out of hand with the kinds of money-making tricks they pull. It's time to reign them in with some new regulations -- the kind of rules that are actually enforced.

But if there is one thing we have learned from the financial industry over the last few years, it's this. When you establish new rules to limit the tricks they can play, they will work hard to create a whole new set of tricks. You've been warned.