How to Combat Credit Reform Backlash

New credit card rules have finally taken effect, curbing some of the most onerous practices, like jacking up rates on existing balances.

So it’s time to relax, right? Actually, it may be time to brace for the worst.

Card experts report that issuers are planning a string of new fees and rate increases to make up for revenue lost through the new rules. And who knows what else the card companies will devise? You can be sure of one thing — they have a lot of clever folks working on it.

Among the key changes that took effect Feb. 22:

  • Monthly statements show how long it will take for minimum payments to pay off balances.
  • Over-the-limit fees can be charged only if the customer has agreed to overdraft protection ahead of time.
  • Interest rate increases will only affect new purchases, not existing balances, unless the customer is more than 60 days late in payments.

That’s all good for consumers. But card issuers are still free to raise interest rates and penalty fees and to charge more for balance transfers or overseas transactions. Issuers are also expected to raise annual fees on cards with perks like airline miles or shopping discounts. You might pay more for the right to accumulate miles.

So, as always, the consumer will need some self-protection strategies.

Rewards are an especially hazardous area. These programs always sound terrific when you sign up. For, say, $60 a year, you might get a free flight or two. But if you are a light card user and take three or four years to earn a free flight, you’d be paying $180 to $240 in fees for the ticket. You might be able to buy an ordinary ticket for that, and not face the hassles, restrictions and blackout periods of a credit card miles program.

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