1. Cardholders Have New Protections
The Credit CARD Act of 2009 curtails many of the most abusive practices. New rules must take effect by February 2010:
• no retroactive rate hikes;
• statements must be mailed 21 days before payment due date;
• payment dates can't suddenly be shifted;
• statements must say how long it will take to pay off balances and the total interest costs if paying just the monthly minimum;
• 45 days notice required for changes in terms and conditions.
For debit cards -- now more popular than credit cards -- the Federal Reserve issued new rules (effective summer 2010) on overdraft fees. So,too, have some large banks:
• card issuers can't charge fees for debit card overdrafts at stores and ATMs unless the cardholder has agreed;
• some large banks (see list) are limiting the number of debit card overdraft fees that can be charged in a day, and changing other policies.
2. Fee Traps Are Still Out There
The new rules and policies do not cover--
• the tricks in late fees;
• fees involving prepaid debit cards;
• inactivity fees, foreign exchange fees, gift cards, etc. Read the full list.
In addition, there's no ceiling on interest rates nor on penalty/service fees for debit, credit and prepaid cards. And small business credit cards aren't covered by the new regulations; their credit limits are being slashed.
3. Credit Unions -- A Better Borrowing Option?
Here's a Q&A on how they work and pros and cons in turning to them for credit/debit cards. One "pro"-- a 18 percent interest rate cap at credit unions that are federally chartered.
4. Be Careful About Those "Free" Credit Scores
It sounds like a good idea, but you could be signing up to get a monthly bill.
5. Interchange Fees Are Part of "The Card Game," Too
Merchants say they're hurting because of the 1.8 percent they must pay on every credit/debit card transaction in order to have payments cleared by the bank. The issue is pitting retailers against banks and interchange fees could be facing tougher regulation.
However, if these fees on merchants do get regulated, it'll likely impact consumers' costs when they use plastic. That's what happened in Australia.
6. Compare Cards/Best Terms
The New York Times' Ron Lieber offers advice if you're interested in changing credit cards in these tough times. And a good site for comparing benefits, particularly for reward cards, is fatwallet.com.
7. More Changes Are Coming and There Will Be Winners and Losers
Meanwhile, the landscape for the consumer has fundamentally changed -- it's simply harder to get a loan of any kind and consumers are being called on to be more responsible in making financial decisions.
As for the banks, experts like Shailesh Mehta, who as CEO of Providian helped turn the card business into a multibillion-dollar bonanza, believes banks will always figure out how to comply with the new rules and yet still outsmart the regulators.