Countdown to Credit Card Reform: What Now?
By: Brian O'Connell

If you’re like most Americans, Feb. 22 will be a lot like any other Monday. You’ll get up, maybe feed the kids and get them off to school, or just don your coat, grab your briefcase and trudge off to work.

But if you’re a higher-up at a major credit card company, Feb. 22 is D-Day — the day that credit card reform officially kicks in. The date was pegged by Congress in the CARD Act, passed in May 2009. For background on the bill, check here and here.

For a complete review of the CARD bill, visit the Federal Reserve Board Web site.

While most of the bill's key provisions take effect that day, most Americans don’t seem to realize it.

According to a new study by the Consumer Federation of America and Credit Union National Association, 65% of 1,000 respondents surveyed didn’t know the specifics of the CARD bill, and weren’t aware the new rules become the law of the land on Feb. 22.

Worse, many consumers seem to be misinformed about how the new law directly impacts their lives. The CFA/CUNA study reveals that 36% of credit card users think that the new law caps late fees at $35, while 31% believe it caps interest rates at 20%.

According to CFA Executive Director Stephen Brobeck, the new law does neither. “We are especially concerned that some consumers will base their future credit card use on protections that don’t exist,” says Brobeck.

Some other revealing tidbits from the study:

  • Just 44% knew the new law would require credit card companies to apply monthly payments first to the higher-interest debt.
  • Only 42% knew the law prohibits companies from charging fees when cardholders spend over their limits unless the consumer has authorized those penalties.
  • The good news is that, of the consumers involved in the study, 69% said they will cut their credit card usage, and 62% are working to pay their cards down faster.

More good news, this time in the form of advice by CFA and CUNA credit card analysts. To keep credit card companies at bay, make sure to:

  • Make monthly payments on time.
  • Pay down and pay off balances on all cards.
  • Think of a credit card as a “charge” card that has to be paid off in full every month.
  • Shift to a debit card, which zaps the money out of your bank account the moment you make a purchase.
  • Wait until after Feb. 22 to open a new credit card, if you need one. By law, new cards can’t include interest rate hikes for the first year.
  • Keep a close eye on any mail from credit card companies. Card issuers are apt to “hide” the new rules in envelopes and statements that look suspiciously like junk mail. For a good look at how card companies are doing that, sbup has you covered with a thorough take on card reform junk mail.

With less than two weeks away from the official kick-off of the CARD Act, it’s high time for credit card consumers to get their ducks in a row.

Because law or no law, card issuers aren’t about to make those new rules go down any easier.

—For more ways to save, spend, invest and borrow, visit

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