Protections for credit card users fully in effect today

Feb. 21, 2010, 8:52PM
By SHANNON BUGGS HOUSTON CHRONICLE
Finally, credit card reform has arrived. Big chunks of the Credit Card Accountability Responsibility and Disclosure Act (CARD Act) of 2009 become effective today.
We got a taste of some of the changes in August, but the meatier portions were put on a back burner to give issuers time to adjust to the new environment.
During that time, consumer advocates accused card issuers of milking consumers for every extra penny they could get by boosting interest rates and changing credit agreements ahead of the law changes.
But the day of change has arrived, and here's what you should know about the new credit card law:
• Payment timing
Credit card companies must send you a statement at least 21 days before the payment due date. And under the newly effective portions of the law, when payments are for more than the minimum amount due, the additional money must be applied first to the highest-rate balance.
• Double billing
It's no longer legal for credit card companies to charge interest twice on the same balance by collecting finance charges on current and previous balances.
• Rate increases
Credit card promotional rates must be for at least six months. In general, rates on existing balances cannot be raised unless your payment is more than 60 days late.
If you are more than 60 days late and your interest rate goes up as a result, you can get the original rate restored if you make six consecutive months of on-time payments.
Card issuers can raise rates on new balances, but they now must give you 45 days notice, an increase from 15 days.
If you decline to accept the rate hike, you will no longer be able to use the card to make new purchases. You will have to pay off the balance on the card at the old rate and apply for a new card when it's paid off
• Credit limits
Credit issuers can no longer automatically enroll you in over-the-limit protection programs that charge fees for letting you borrow more than you have been approved to borrow.
So when a purchase exceeds your credit limit, your card will be declined. As embarrassing as that may be while you are standing at a cash register, it might keep you from spending more with a credit card than you can afford to pay back.
Credit card issuers do have the option of letting you borrow more than your credit limit in exchange for a fee, but the new law only allows them to charge only one over-the-limit fee in a billing cycle.
If you choose to use this option, you need to know how much you'll have to pay for that service. It won't come cheap.
Shannon Buggs has completed the financial planning certificate program at the University of Houston. She welcomes comments and suggestions but cannot offer specific advice about individual circumstances. Contact her at shannon.buggs@chron.com