LAKE CHARLES, LA (KPLC-TV) - The most significant credit card rule changes in more than a decade take effect on Monday, February 22nd.
Part of the Credit CARD Act of 2009, the new regulations are designed to make dealing with credit card companies easier.
"[It] basically offers consumers more rights when dealing with their credit card [company]," said Carmen Million, president of the Lake Charles Better Business Bureau.
The new rules primarily target how credit card companies handle interest rates.
In the past, consumers would sign-up for a credit card using one set of terms, but found the credit card companies would retroactively and suddenly raise interest rates without giving any advanced notice.
However, under the new rules, credit card companies can no longer raise interest rates during the first year on new accounts and when they do change interest rates, companies must give their customers 45 days advanced warning.
If customers do not agree to the new terms, they will have the option of "opting out" and will have five years to pay off their balance under the original terms of agreement.
In addition, payments will now be due on the same day of every month and consumers will no longer be charged extra fees for making payments online or over the phone.
The new rules also offer protection for young people, particularly college students.
"Consumers under [age] 21 are not going to be allowed to be given a credit card, unless they can show means of paying that credit card or unless they have a co-signer," said Million.
Credit card companies will also be prohibited from luring students into signing up for cards by offering free gifts and free food within a thousand feet of a college campus.
The new rules are expected to save consumers and cost credit card companies $10 billion annually, but critics say credit card companies are likely to find new ways to make up for their losses.
A White House economic advisor will host a virtual town hall meeting on Monday, Feb. 22 at 1pm/CST to answer questions about the new credit card regulations. You can submit your questions by clicking here.
For more information on the new credit card regulations, click here.