If you use a credit card like millions of us do, there's another layer of protection for you. New rules took effect Sunday, providing more protection for consumers against credit card abuses. Forget the astronomical late fees and sudden skyrocketing interest rates. And that's not all. If your interest rate is about to go up, your credit card company has to tell you why. Here are some of the highlights:
*No more inactivity fees for not using your cards enough
*A cap of $25 on late payment fees
*Fees for going over your credit limit cannot exceed the amount of overspending
(**exception: if you've had another late payment in the last six months, the fee can be as much as $35**)
*Your bank or credit card company can't arbitrarily raise your interest rate
*If your rate has been raised since January 2009, your credit card company has to go back and make sure the higher rate is justified
(they have to do this every six months from now on with every rate hike)
*If they decide to lower your rate, they must do it within 45 days
These new rules will affect most of us. A new study from Experian, a credit monitoring agency, finds the average consumer carries three credit cards. Three or four years ago, most people had four. "Well, it appears their attitudes have changed by closing some of their credit cards and that they are consolidating them and that they aren't using them as frequently," said Michele Ranieri of Experian Credit Monitoring.
Have you ever wondered who carries the most credit cards? That would be people living in New York City, with most people carrying four credit cards these days. People in Phoenix, Arizona carry the fewest, with just three cards on average.
Can you guess who has the highest average monthly balance? That would be people living in Atlanta with a more than $6700 balance each month. People in San Francisco, California had the lowest, with a monthly balance of $5300.
Balances overall, though, are actually down 3 percent from what they were three years ago. "It was a little bit surprising just considering the cash-flow problems that we know people have encountered in the economy," Ranieri said.
So what does this all mean? Well, some analysts say this research shows more Americans are paying off old credit card debts before taking on new ones.
Click here to read in full detail what the new credit card law means for you.
Click here to read more about how credit card rates are climbing, fueled by the new rules which limit penalty fees.
If you use a debit card, you must now opt in or out of an overdraft agreement with your bank. Banks will no longer automatically authorize a transaction when there are insufficient funds to cover it.
Here's what you need to know about new overdraft rules for debit and ATM cards.
Do you need help getting out of debt? Do you still have questions about how the new credit card rules will affect you? Consumer Credit Counseling Service of CNY may be able to help.
You can also click the video player to hear from Cynthia Scott of OMC Financial Services on the new overdraft rules.
Have you seen big changes in your credit card statement? Do you think the new rules do enough to help protect consumers? Or do you think credit card companies will find their way around the new law and find new ways to charge you? Leave your thoughts below.
