What You Should Know About New Credit Card Protections

You’ll have more credit card protections effective August 22 as the third phase of the Credit Card Act of 2009 goes into effect. Here’s what changes you should expect from your credit card company, and three things you should watch out for:

 They can no longer charge “inactivity” fees.

 They can’t charge penalty fees that are greater than your minimum payment.

 They can’t charge more than one penalty fee based on a single late payment or other violation.

 They won’t be able to charge more than $25 if you pay late unless one of your last six payments was late (then your fee may be $35) or the company shows that the late-payment costs it incurs justify a higher fee.

 If they have increased rates since Jan. 1, 2009, they have to evaluate the reasons for the increase and, if appropriate, reduce the rate.

Be aware, however, that credit card companies aren’t totally limited. Read your mail carefully to see if they’re doing any of the following:

• Increasing your rates as long as they give you 45-days notice and you’ve had the card for more than a year.

• Reducing your credit limit and closing your account without advance notice. These actions can negatively affect your credit score.

• Raising other fees and adding new ones. Twenty-four percent of issuers are now charging annual fees. You’ll also see checking account fees, transfer balance fees, cash advance fees and foreign transaction fees.