New Credit Card Rules Effective August 22. What you need to know

Credit card companies have done their fair share of making sure they make money at your expense. Before now, they had really come up with their own set of rules. Well, there are new consumer credit card protection rules that are set to begin August 22, 2010.

This set of rules is the latest in a series of regulations that implement the Credit Card Accountability, Responsibility, and Disclosure Act (the Credit Card Act). For other credit card rules that already went into effect February 22, although you can go the the website here. You can see some of the provision below. Here’s what you can expect from these new protections:

Reasonable penalty fees

• Today: Your late payment fee may be as high as $39, and you likely pay the same fee whether you are late with a $20 minimum payment or a $100 minimum payment.
• Under the new rules: Your credit card company cannot charge you a fee of more than $25 unless:

1. One of your last six payments was late, in which case your fee may be up to $35; or
2. Your credit card company can show that the costs it incurs as a result of late payments justify a higher fee.

What’s even better, your credit card company cannot charge a late payment fee that is greater than your minimum payment. So, if your minimum payment is $20, your late payment fee can't be more than $20. Similarly, if you exceed your credit limit by $5, you can't be charged an over-the-limit fee of more than $5.

Additional fee protections

• No inactivity fees. Your credit card company can't charge you inactivity fees, such as fees for not using your card.
• One-fee limit. Your credit card company can't charge you more than one fee for a single event or transaction that violates your cardholder agreement. For example, you cannot be charged more than one fee for a single late payment.

Explanation of rate increase

• If your credit card company increases your card's Annual Percentage Rate (APR), it must tell you why.

Plus a Re-evaluation of recent rate increases

• Today: Your credit card company can increase your card's APR with no obligation to re-evaluate your rate increase.
• Under the new rules: If your credit card company increases your APR, it must re-evaluate that rate increase every six months. If appropriate, it must reduce your rate within 45 days after completing the evaluation.