Final Provisions To CARD Act Now In Place

The final set of provisions of the CARD Act went into effect this week.

That's the federal law that's designed to give you more protection from credit card companies.

Newschannel 6 Lindsey Rogers breaks down the latest rules and what they mean to you.

We found many Texomans aren't too fond of credit card companies.

"The extra fees they add on to it and also the interest that they initially place on me," Kamile McFadden said.

"High interest rates, and just I feel like a lot of times they are a rip off and people spend more money than they actually have," Emily Blair said.

In 2009, credit card companies collected nearly $23 billion in penalty fees.

"If they charge me a yearly fee, they don't get my business. If they charge interest on the monthly purchases that I pay off every month, they don't get my business," Bill Hampton said.

The federal government has stepped in to dramatically reduce those fees.

There is now a cap on late fees set at $25.

"Late fees prior to this had been in the $40 range so this could make quite a difference to the consumer. But, don't take advantage of that. Don't think well, that's not an expensive late fee so I can go ahead and take advantage of that and pay late, that's not doing anybody any good," Gail Cunningham with the National Foundation For Credit Counseling said.

If you repeatedly pay late within six months, companies can raise that, but only to $35.

The late fee can not be more than your minimum payment amount.

"So, let's say you have a low balance minimum payment of $15 and you make a mistake and pay late. Your late fee can not be more than $15. So, that's another protection to you," Cunningham said.

The same goes for over-the limit fees if you exceed your credit line.

"So, if you make a small charge, a $5 charge and you exceed your credit line, your penalty fee can not exceed that charge," Cunningham said.

Companies can also no longer charge inactivity fees.

Finally, if your interest rate is increased, the company must provide an explanation to justify the hike and re-evaluate your account every six months.

"If you've had good pay then they have to consider lowering it back down to the original amount," Cunningham said.

It's important to be educated on these new laws and know the terms and conditions of your contract.

"Many have changed most of them in your favor so take advantage of that," Cunningham said.

Although these new laws were intended to protect consumers, we found out many Texomans are still a bit leery, and maybe rightfully so.

"If they do what they're supposed to do that's all well and good, if that doesn't cause everything else to go up," Hampton said.

"My advice to consumers now would be to treat any existing credit you have responsibly because it could potentially be very hard to get new cards in the future," Cunningham said.

The new law doesn't cover everything.

While penalty fees are being capped, other credit card fees are growing.

Pay attention to charges on balance transfers and cash advances as well as annual fees.

There is also no law limiting interest rates. So, be sure to pay your bills on time.

Lindsey Rogers, Newschannel 6