Experts: New Credit Card Rules No Cure-All

(CBS)  Starting today, consumers have some new protections under a federal law designed to clamp down credit card companies.

As CBS News Correspondent Elaine Quijano explains, The Credit Card Accountability Responsibility and Disclosure Act is now in full effect; some of its provisions took hold in Augus.

"There are a handful of practices I think were relatively egregious that are being taken off the table," observes Samir Kothari, co-founder of BillShrink.com.

Among them, "universal default," under which credit card companies were allowed to raise your interest rate if you missed a payment on a different bill.

The new law also restricts interest rate increases for the first year after you open an account.

And, to help you avoid late fees, card issuers now have to send statements 21 days before payment is due, a week more than the previous requirement.

"Hands-down," says Kothari, "consumers are going to be better off with those practices being disallowed now by regulators, but, you know, consumers continue to be vulnerable."

Consumer advocates say you should be on the lookout for new fees in other areas -- such as annual fees for cards that didn't have them before, and new processing and inactivity fees on your accounts.

Money magazine's Amanda Gengler says flatly, "You need to be shopping for your card today."

On "The Early Show" Monday, Gengler told co-anchor Harry Smith, "Your credit card has probably changed drastically over the past ten months, as issuers have prepared for this law to go into effect.

"Some of the nasty practices that we're hearing about are often from the largest banks. That's where most consumers get their credit card. Consumers need to read the terms and then shop credit unions, regional banks, smaller banks, because they often can provide much friendlier credit cards."

Gengler stressed that there's "no cap on interest rates. The big plus is that issuers are no longer allowed to retroactively raise your rate. So, they can't raise your rate on a balance that you already have. They can for future purchases."

The view at Money magazine, Gengler says, "has always been, 'Look, we want the convenience of credit and we have to pay for that in the form of interest. Just enough with all of the "gotchas" all of the traps. You start with one product, you end with another product.' And that's what this bill does. It just helps to make the process clearer and transparent, so you really know what you're getting in to when you sign up."

Gengler added, "You want to look at your terms on your credit card when you get that statement; don't ignore them, and then go to the Web site http://www.creditcards.comCreditCards.com or the Web Site http://www.creditratings.comCreditRatings.com and just search around."

Beware of issuers cutting back on the rewards on rewards cards, Gengler suggested.

And, in general, "Go shopping" for cards!

[dagrandma]

I cancelled all but two last year. And, thank God, I was able to pay them all off, and keep the two paid off when I use them. What's in my wallet? CASH!!

[starleo146]

You know we the people are the consumer of these credit cards, these companies think they have us over a barrel and maybe some of us are, but we have the right to cancel that card, and if all of us did it I wonder what the big credit card companies would do then. They are counting on we cannot live without one, it will be hard but we can do it. I am tired of the consumer being taken advantage of these companies. I never was charged a fee I get a letter and a fee of $60 no less would go on my account if I buy $200 a month for a total of 2400 a year they would remove the $60 dollars.Do you see what they are doing to us. They are worse than loan sharks.