New Credit Card Rules Start Taking Effect

Credit cards must provide at least 45 days notice before raising interest rates or making any other significant changes in the terms of your account.

That’s because the first part of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD) act, which is intended to protect consumers from the industry’s worst abuses, goes into effect today.

In the past, card providers were required to give just 15 days notice.

They also now have to let you know that you can cancel your credit card before the rate increase takes effect.

If you do, you’ll be able to pay off your current balance at your old rate — not the new, higher rate that the company is trying to give you.

Cards are also required to send bills at least 21 days before a payment is due, up from 14 days prior to the new law.

Most of the act’s other protections start in February, although a few — such as requiring cards to reduce interest rates for consumers with improving credit reports — won’t take effect until Aug. 22, 2010.

Once the CARD Act is fully implemented, many of the dubious practices that credit card companies have relied on for years — including double cycle billing, universal default and increasing rates on existing balances — will be prohibited.