Basic credit card reform

Credit card reform is on the way. The reforms are to protect consumers from the abuses that take place now from credit card companies. Basically the credit card companies can raise interest rates, minimum payment amounts, or any terms of the contract at any time, but with the new laws enacted the credit card companies will be required to give written notice.

Channel3000.com:

The Credit Card Act of 2009 is being hailed as the largest reform ever imposed on the credit card industry, and the move is meant to increase consumer protection -- but it could also have some negative effects for those with good credit.

In the current fast-paced world fraught with economic challenges, paper or plastic has taken on a whole new meaning. More and more people are relying on plastic for their purchases, but credit cards as we know them today are undergoing a big change.

"It's going to be a different playing field," said Michael Johnson, finance instructor at Madison Area Technical College. "It's not going to be quite as easy to get into trouble as it has been in the past."

The Credit Card Act of 2009 is 33 pages of very complicated material, but it is full of important information for those who use credit cards. For example, under the legislation, 18 to 20 year olds will no longer be able to get a credit card without a co-signer.

Another change aimed at protecting consumers adds the right of the cardholder to reject an interest rate hike.

Starting in February, when the legislation takes effect, credit card companies must inform you in writing that they're going to increase your rate -- and you can say no. The rejection would close your account, but would still allow you to continue paying off the balance at the current interest rate.Another thing that will change is how credit card companies apply your monthly payments to your credit card balance.

Unfortunately, the credit card companies have already taken preemptive action to get around those new laws. Specifically, they have already raised interest rates and payments, and changed fixed rate to variable interest rates.