More changes coming to your credit cards
SEATTLE -- Starting Aug. 10, a new law will give you more protection against sudden interest changes on your credit card bill.
It's a small change, but it could help you get ready for big surprises on the way.
The new law gives you more than three times the advance warning you get now when your credit card company wants to jack up your interest rate.
Right now, they can raise your fixed rate with just a 15 day notice. After the 10th, credit card companies must give you 45 days notice before they raise the rates, fees and penalties on your account.
This is the first significant change to come out of the credit card reform bill passed by Congress back in May.
But keep in mind, card issuers can apply that higher interest rate to your existing balance as well as your future purchases.
The law that prohibits that practice won't take effect for nearly a year.
Greg McBride, Senior Analyst for Bankrate.com, says card issuers are getting their shots in while they can.
"And so what everybody needs to be on guard for -- even people who have very good credit -- be on the lookout for increases in your interest rate, new and higher fees and also changes in your credit limit."
Another trend to watch for: variable interest rates. Credit card companies are switching to interest rates that change based on the prime rate. That's the short-term rate banks charge their best customers.
When the prime goes up, your interest rates go up by a predetermined amount -- so no 45-day notice required.
And with variable rates, banks can limit how low your rate goes, regardless of how far the prime rate drops.
The big changes in the new law will won't take effect until July of 2010. In the meantime, if you carry a balance on your credit card, money experts say pay it off as soon as possible.
Some companies offer an "opt-out" option, where they'll agree to forego a scheduled rate increase if you agree to pay off your balance, and stop using the card.
Whatever your situation, review the fine print in your last statement and every statement going forward, because even if you have good credit, more changes are on the way.
It's a small change, but it could help you get ready for big surprises on the way.
The new law gives you more than three times the advance warning you get now when your credit card company wants to jack up your interest rate.
Right now, they can raise your fixed rate with just a 15 day notice. After the 10th, credit card companies must give you 45 days notice before they raise the rates, fees and penalties on your account.
This is the first significant change to come out of the credit card reform bill passed by Congress back in May.
But keep in mind, card issuers can apply that higher interest rate to your existing balance as well as your future purchases.
The law that prohibits that practice won't take effect for nearly a year.
Greg McBride, Senior Analyst for Bankrate.com, says card issuers are getting their shots in while they can.
"And so what everybody needs to be on guard for -- even people who have very good credit -- be on the lookout for increases in your interest rate, new and higher fees and also changes in your credit limit."
Another trend to watch for: variable interest rates. Credit card companies are switching to interest rates that change based on the prime rate. That's the short-term rate banks charge their best customers.
When the prime goes up, your interest rates go up by a predetermined amount -- so no 45-day notice required.
And with variable rates, banks can limit how low your rate goes, regardless of how far the prime rate drops.
The big changes in the new law will won't take effect until July of 2010. In the meantime, if you carry a balance on your credit card, money experts say pay it off as soon as possible.
Some companies offer an "opt-out" option, where they'll agree to forego a scheduled rate increase if you agree to pay off your balance, and stop using the card.
Whatever your situation, review the fine print in your last statement and every statement going forward, because even if you have good credit, more changes are on the way.