Countdown to credit card changes

By Gerri Willis, personal finance editor


NEW YORK (CNN) -- A bunch of perks are coming cardholders' way.

First off, issuers will no longer be able to retroactively hike your credit-card interest rate, making it much easier for you to get out of debt.

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Secondly, credit-card companies are being forced to adopt better billing practices. You will get your bill at the same time each month and there will be nor more midday cutoffs or due dates on weekends and holidays.

And the confusing double-billing cycle has been eliminated.

But be aware that after the first year your account is open, a credit-card issuer can raise your interest rate at any time for any reason.

And although 45-days notice is required before making any changes under the new law, your card can still be closed or your limit lowered without your input.

Also watch out for fees! With credit-card companies trying to replace lost revenue, fees are everywhere. There are NO restrictions on the types of fees that credit-card issuers can charge, from dormancy fees to annual fees, and even fees to receive a paper statement.

So read EVERYTHING you get from your credit-card company.

The monthly bill you receive in the mail will look a bit different. It will be easier to read with larger type but it will also include two new features.

The first will tell you how long it will take to pay off your credit card balance if you only pay the minimum payment each month, and this will be compared to what it will take to become debt free in three years.

And to help folks get out of debt, card issuers will be required to provide a toll-free number for a credit counseling service right on your bill.

To prepare yourself for these changes you need to check your credit report for accuracy as soon as possible. The new law restricts issuers from opening a new card or extending your line of credit without taking into consideration your ability to repay.

Creditors will likely use income estimation models, along with your credit report, so head to annualcreditreport.com to make sure yours is correct.

And keep a close eye on your mail over the next few weeks. Credit card companies are likely to hide information about new changes and rules in envelopes that look suspiciously like junk mail.

You can catch Gerri on "Your Bottom Line" every Saturday morning at 9:30 a.m. Eastern Time on CNN.

Talkback: Do you understand the terms of your credit card? To top of page

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