How New Credit-Card Rules Affect Your Wallet

Consumers are one step closer to a less frustrating credit-card experience.

On Thursday, two new rules of the Credit Card Accountability Responsibility and Disclosure (CARD) Act will go into effect. One will require credit-card issuers to give cardholders at least 45 days’ notice before changing their interest rate or fees paid, up from the current 15-day requirement. Separately, banks will have to mail out their billing statements at least 21 days before their due date, up from the current 14 days ahead.

Expect a relatively smooth transition. Many issuers have had the new rules in place since early summer, thanks to class-action attorneys and consumer watchdogs ready to pounce on a misstep. “Major issuers aren’t going to risk being noncompliant,” says Samir Kothari, a co-founder of BillShrink.com, a credit-card comparison site tracking issuers’ compliance with 10 rules from the CARD Act.

The rest of the legislation’s reforms -- which include ending double-cycle billing, applying payments to the highest-rate portion of a balance first and setting a deadline of 5 p.m. EST for on-time payments -- won’t take effect until Feb. 22, 2010. “This [first] round is like the sneak preview at the movies,” says John Ulzheimer, the president of consumer education for Credit.com, an advocacy group. “It’s the stuff that’s easy to comply with.”

For cardholders, there’s good and bad news. Although the two August regulations give consumers more time to position themselves for changes to their accounts, they’ll probably need such protections soon. In recent months, Capital One has increased its average purchase and balance transfer rates 50%; Citibank, 27% and Discover, 30%, according to data collected by BillShrink.com.

Issuers will likely continue to raise interest rates, slash credit limits and finesse other account terms and conditions as 2010 approaches. “There are a lot of moving parts still in motion,” Ulzheimer says. “Issuers are in turnover mode -- they want to see a different customer base come February.”

If you get a letter from your issuer, use that 45 days’ notice to assess the new terms and see if you can get a better deal elsewhere. Here’s a selection of cards currently offering low rates (for those carrying a balance) and decent rewards (for those who aren’t):