Two of the act’s most important provisions require credit cards to:

• Provide 45 days notice before raising rates, and the new higher rate can’t be imposed on existing balances, just new purchases.
• Wait until customers are 60 days behind on their payments before imposing a higher penalty rate on their accounts.

But Citi mailed a change of terms letter to some customers before the act took effect telling them that they qualified for a special discount rate of 8.99% unless they pay late.

Miss a deadline by just a day or two and the rate soars to a stratospheric 29.99%.

Citi can do that because rates that are clearly labeled as part of a special or introductory deal aren’t covered by the new rules.

The 29.99% can also be imposed on existing balances because it was the full, non-discounted rate when the Credit CARD Act took effect.

Bottom line: These terms allow Citi to slap delinquent cardholders with penalty rates almost exactly as it did in the pre-Credit CARD Act world.

“The difference between people who could pay late by a day or an hour and people who are seriously delinquent is a huge difference,” says Heather McGhee, director of Demos, a non-partisan public policy research and advocacy organization.

“It’s so easy for working families to pay a bill late by a day or even by an hour. This practice is targeting those accidental late payers.”

If you have a Citi card, take a look at your most recent statement or any change of terms agreement the bank may have sent you earlier this year.

If you have a discount rate, you need to know that you’re still subject to abruptly higher charges despite the new federal regulations.

Bank of America will stop letting customers overdraw their checking accounts so it can zing them with overdraft fees.

Starting this summer, it will decline purchases that overdraw a customer’s checking account and inform them that they’ll have to pay an overdraft fee before allowing them to withdraw more money than they have in their account from an ATM.

That’s pretty much the way things were before banks realized they could make a fortune by penalizing customers who unwittingly overspend their accounts.

Overdraft and insufficient fund fees netted banks more than $38 billion in 2009.

Bank of America tried to stem growing public anger over the hidden charges last fall, when it agreed not to charge more than four overdraft fees a day, and waive any fees on accounts that were overdrawn by $10 or less.

But the Federal Reserve still stepped in and told the nation’s commercial banks that they could no longer automatically enroll customers in “overdraft protection.”

Starting July 1, banks must get customers to opt-in to those plans before they can be charged overdraft fees.

Some banks (Chase we’re talking to you) have already launched high-pressure marketing campaigns in an effort to enroll as many customers as they can.

But that effort flies in the face of every consumer survey we’ve seen.

When given a clear choice between paying overdraft fees or having a transaction refused, the huge majority of Americans say they want the purchase or cash withdrawal turned down.

Who wants to overdraw their account for a $5 sandwich and have a $35 overdraft fee tacked on by the bank?

While Bank of America will still allow its checking account customers to sign up for overdraft protection, it acknowledged the fact that it expects very few to do so.

“What our customers told us is that, if I don’t have the money, I don’t want to overdraft” with debit cards, Susan Faulkner, head of the bank’s deposits and card products business, told USA Today.

“We don’t think our customers would come in and opt in” to overdrafts and their associated fees.

With Citigroup already pursuing a similar policy, we can only hope other banks will get the message and follow suit.

It’s the least the financial industry can do after all of the abuse and shabby treatment their customers have endured over the past couple of years.

You send Chase a letter rejecting the increase and close the account so that you can repay your balance at the current, lower interest rate.

You’re done dealing with Chase, right?

Maybe not.

According a lawsuit recently filed in federal court, cardholder Barry Woldman of suburban Chicago rejected Chase’s “change of terms” and closed his account in March 2009.

But in August 2009, Chase sent him another change of terms, which Woldman did nothing about because he had already closed his account.

Chase allegedly took this to mean that he accepted the new terms and raised the interest rate on the balance of the closed card.

Now, who in their right mind would agree to a higher interest rate on a closed credit card account?

No one.

Woldman rejected a rate increase once. Why should he have to go to all of the trouble of rejecting it again?

And what if he had rejected it? Following Chase’s logic it could send him one change notice after another, as often as it wanted, until he finally missed one.

These are the kinds of deceptive credit card policies that have consumers hopping mad over how they’re being treated and vowing that there will never, ever, ever be another bank bailout.

We asked Chase if this is really what happened, but it declined to comment on pending litigation.

If the same thing happened to you, you can discuss joining the lawsuit by contacting attorney Adam Levitt of Wolf, Haldenstein, Alder, Freeman & Hertz.

But that aggravating snit fit is finally over.

Most of the Credit Card Accountability and Responsibility Act law’s most important new regulations take effect today.

Many of your credit cards most costly and infuriating practices — double-cycle billing, universal default, increasing rates on existing balances — are now prohibited.

(Click here for a rundown of the 8 good things the Credit CARD Act will do for consumers.)

Only a few final provisions — such as requiring cards to reduce interest rates for consumers with improving credit reports — remain to take effect Aug. 22.

Unfortunately, the banks are already hard at work on new and creative ways to make up the lost revenue.

(Click here to see our post Credit cards crank up abusive new fees.)

Among the new costs being foisted on credit card customers, and not covered by the new regulations, are:

• Annual fees. Banks are raising them on accounts that already have them and imposing them for the first time on accounts that don’t.
• Inactivity fees. Let a card sit for a year, and it may begin charging a $3 a month fee until you buy something with it.
• International transaction fees. The cost of making purchases in foreign currency is going up and the fee is being extended to items bought overseas even if the purchase was made in dollars.
• Balance-transfer and cash-advance fees. Minimum fees are going up and limits on much you could be charged (these fees are usually a percentage of amount transferred or borrowed) are being eliminated.

The future of credit cards is almost here.

The Citi Forward Visa is probably what it looks like. At least on a good day.

Everything changes on Feb. 22, when most of the Credit Card Accountability, Responsibility and Disclosure Act of 2009 takes effect.

It bans many of the industry’s most abusive practices, and card companies have been acting out ever since it was passed — jacking up rates, slashing credit limits, raising fees and imposing tough new repayment terms.

That has turned the Forward card, which was a good but not outstanding offer when it was introduced last spring, into one of the better deals of this brave new world.

Citi has risen to the top of the heap by simply leaving most of the Forward card’s terms unchanged over the past year.

It still has, for example, no annual fee. Most new credit cards come with one since the new laws don’t regulate annual fees.

Cardholders start out with seven months of 0% financing on purchases and balance transfers, which is a little better than the typical six-month no-interest offers these days. (Ignore the “0% APR for 6 months” on the Citi Forward homepage. It is seven months as stated on “terms and conditions.” We checked.)

When the introductory period ends, the card charges an adjustable rate that’s 14.24% APR (prime plus 10.99%). That was a little high last spring, but it’s quite competitive now.

If you stay under their credit limit and pay your bills on time for three straight months, Citi will lower your interest rate by 0.25%.

Do it again and Citi will whack another 0.25% off your rate up to eight times for a total reduction of 2 percentage points.

The card also allows you to earn points in Citi’s “Thank You Redemption Network” — 5 points for every $1 spent on dining, books, movies and music; and 1 point for other purchases.

The extra rewards for entertainment spending indicate that Citi wants to attract younger consumers to the Forward card. That’s good, because they’re the ones having the toughest time finding a good deal on credit cards right now.

You can get 6,000 bonus points for making a modest $250 in purchases in the first three months, and another 5,000 points if you sign up for paperless statements.

Points can be redeemed for cash, a credit on your statement or gift cards.

The redemption rate — 10,000 points for a $100 gift card — means you’re getting a run-of-the-mill rebate of 1% on most purchases, and 5% on your entertainment spending.

The major credit card companies have succumbed to public pressure and stopped taking a cut of some donations earmarked for Haiti disaster relief.

But they’re only waiving the usual 3% transaction fee for a few specific charities, and only for the next few weeks.

If you want to donate with your credit card, here’s where you can give fee-free:

Mastercard Worldwide: American Red Cross, AmeriCares, UNICEF, Save the Children and CARE USA.

American Express: Charities listed by the U.S. Agency for International Aid.

Visa: American Red Cross, AmeriCares, CARE USA, Direct Relief International, Habitat for Humanity, International Rescue Committee, Mercy Corps, Oxfam America, Save the Children, U.S. Fund for UNICEF, and World Vision. Visa will also donate all fees made on donations to other Haiti disaster relief programs to the American Red Cross.

Discover: American Red Cross. If you have over $20 in Discover Cash Back bonuses, you can donate those toward disaster relief, and Discover will match the first $1 million of those donations.

We think it’s way past time for the credit cards to permanently abolish this fee on donations to all legitimate relief organizations.

It’s shameful for financial companies to profit from money intended to help the sick, the injured, the hungry and the homeless.

Why does it take a monumental disaster such as Hurricane Katrina and the Haitian earthquake for the credit cards to (sort of) do the right thing?

I fell for the “free magazines” that Loehmann’s clothing stores are offering.

As I was checking out a cashier said I could sign-up for three free months of the magazines being promoted on a laminated place mat on the counter.

“It’s a really cool offer,” she said.

I like free, and it looked legit, so I signed up. The cashier recorded my choices by scanning the bar codes for the titles I chose.

Stupid me. A few months later, three mysterious $15 charges showed up on my account.

The cashier didn’t mention that those free trials led straight into paid subscriptions, charged to the card I used at Loehmann’s, unless I went online to cancel the deal.

This isn’t a one-time hit either. The subscriptions automatically renew each year until you demand they stop.

I blame myself for neglecting to read the fine print and grilling the cashier about just what I was buying.

But I also blame Loehmann’s for taking advantage of its customers, especially when you’ve got a bag of clothes, a list of errands and a line of waiting customers behind you.

But we were still surprised by a “change in terms” letter from the bank that provides cards for many stores, including Victoria’s Secret, Avenue, Limited, New York & Co., Abercrombie & Fitch, JCrew, Express, Pottery Barn and Restoration Hardware.

First of all, World Financial Network National Bank will impose a $1 fee for every paper statement customers receive.

While some banks have begun charging checking account customers who still want to receive statements in the mail, this is the first time we’ve heard of a bank imposing such a fee on credit card customers.

These cards have also been charging adjustable interest rates that ranged from 11.99% to 24.99% APR.

When the changes take effect everyone will pay the maximum 24.99% — 21.74% plus prime (which is currently 3.25%).

That’s much higher than the 13% to 18% APR you’ll pay on the typical adjustable-rate Visa and MasterCard.

Finally, the new agreement says cardholders must still waive their right to take billing disputes to court and settle all disagreements in arbitration.

This comes at a time most major credit cards are dropping mandatory arbitration because it’s so blatantly tilted against the consumer.

Of course you can opt out of these changes by sending World Financial a letter refusing to accept the changes, closing the account and paying off your balance under the old terms.

That certainly seems like the smart thing to do for credit cards with terms as bad as these.

But never knowing what might be eligible for that hefty rebate a few months down the road aggravated more than a few Discover More cardholders.

Now Discover is publishing a calendar of future offers on the Web page where you must sign-up in advance to qualify for each bonus.

Here’s where and when you can earn the 5% rebate during the first nine months of 2010:

January through March: Airlines, hotels, rental cars and cruises.

March: Grocery and drug stores.

April through June: Home improvement, department and clothing stores.

July through September: Gas stations, hotels, movie theaters and movie rentals.

Unfortunately, a significant restriction remains: Cardholders can only earn the 5% bonus on a limited amount of qualifying purchases.

For the current offer of grocery stores, restaurants and movie theaters, the spending limit is $400. For the travel rebate it will be $800.

Cardholders will also continue to earn a 0.25% rebate on all non-bonus purchases until they’ve charged $3,000 each year. Then the non-bonus rebate jumps up to 1%.

Rebates are redeemable in $20 increments for gift cards you can use to shop Discover’s online stores, for Discover Gift Cards or for charitable donations.

Once you’ve accumulated $50 worth of rebates you can have the money direct deposited into your bank account or credited to your Discover Card bill.

Yeah, it’s seems like a no-brainer to say “no” to that one.

When the Credit Card Accountability Responsibility and Disclosure Act takes full effect on Feb. 22, it will protect consumers from some of the industry’s worst abuses.

Penalties for exceeding your credit limit is one of them.

But we’ve heard of at least one bank that’s using a misleading sales pitch to see if it can get customers to accept this punitive fee.

Credit cards can simply decline any purchase that pushes customers over their credit limit.

But they’ve been more than willing to let cardholders overspend by a few hundreds dollars so that they could impose an over-the-limit fee every month until their balance was back in line.

The Credit CARD Act forbids credit cards from automatically allowing you to go over the credit limit and then hitting you with a big fee.

It requires issuers to contact each cardholder and ask them to “opt in” to the privilege of exceeding their credit limit — and paying a fee for doing so.

That involves so much work, and is such an obviously bad deal for cardholders, that American Express and Discover have already decided it isn’t worth the hassle.

They’re just dropping over-the-limit fees.

But it appears some banks are hitting the phones and asking their customers to “opt in” to over-the-limit fees.

Capital One, for example, is trying to get its sell opting-in as a money saver. If you say “yes,” it will drop the over-the-limit fee from $39 to $29.

In the sales pitch described to us by one unhappy cardholder, Capital One doesn’t promise to accept any over-the-limit charges you might make.

We asked Capital One if there would be any advantages for customers who opted-in to the fee. Would they be able to make more over-the-limit charges than customers who opt-out, for example?

The bank never called us back with an answer. We’ll take that to be a “no” until it does.

If you already opted-in, call Capital One back and opt out. The customer service reps will give you grief but you have the right to change your mind.