New Law Forcing Credit-Card Issuers to Play Fair

The rules of credit are changing. Consumers will see improvements this month as credit-card companies roll out the latest in a big series of government-ordered reforms on how they operate.

Wes Bedrosian

The various provisions of last year's Credit Card Act give consumers more disclosures and restrict credit-card rates and fees. Further, the financial-overhaul bill signed by President Obama last month creates a new consumer-protection agency and entitles consumers to more information.

"Institutions are going to be forced to become more accountable to consumers," says Adam Levin, chairman and co-founder ofCredit.com.

But the news isn't all positive: Credit-card companies are making up for lost revenue by adding new fees and increasing interest rates.

More Disclosures

The Credit Card Act, formally known as the Credit Card Accountability Responsibility and Disclosure Act, requires card companies to give consumers 45 days advance notice before increasing interest rates, changing certain fees or making other significant changes.

It also requires banks to add more information to statements. The biggest wake-up call might be a table now required on all credit-card statements that outlines how long it will take you to pay down your balance if you make only the minimum monthly payment -- and how much you'd pay in total including interest. The table also estimates the monthly payment needed to pay off the balance in three years.