The New Credit CARD Act and Why You Need to Read Your Mail

Last Updated Mar 1, 2010 12:27 PM EST

Major changes are coming to your credit card, thanks to new government regulation.

Your card company should mail you information on how the changes are going to affect you - make it a priority to read these details. Here's why.

In many ways, the new law protects consumers. It limits how and when banks can raise interest rates and fees. It insures that the amount you pay over the minimum is used to reduce the portion of your balance with the highest interest rate. It requires companies to mail your bill at least 21 days before it's due.

This all sounds good, right? The cynic in me sees trouble ahead, however.

Read between the lines and you'll see that the regulations make it more difficult for credit card companies to make money. So you can be sure they'll be thinking of new ways to turn a profit. After all, the law doesn't prevent banks from dreaming up new fees and charging whatever they like for them.

And this is already happening. For example, more credit cards are starting to charge annual fees. Others are adding "inactivity fees" for customers that don't charge enough on their cards.

Banks are required to tell you about all of these changes. But you won't know about them if you don't read your mail.

So take a careful look at what you get from your credit card company. The letter will include disclosures of any changes before they apply. Also, you'll want to read your credit card statements carefully too, to make sure that the additional amounts you pay are actually being applied correctly to your balances. Finally, check your balance frequently - since banks can no longer charge over-the-limit fees, many will decline your card if a charge will take your balance over the limit.

  • Ray Martin

    View all articles by Ray Martin on CBS MoneyWatch»
    Ray Martin has been a practicing financial advisor since 1986, providing financial guidance and advice to individuals. He has appeared regularly as a contributor on the CBS Early Show, CBS NewsPath, as a columnist on CBS and on NBC-TV's morning newscast TODAY. He has also appeared on the Oprah Winfrey Show and is the author of two books.