New credit card rules start Thursday

LOS ANGELES The new rules are designed to help consumers by making the credit card contracts easier to understand. But that means consumers need to read those disclosures and make sure they know what they're getting into when they apply for a new credit card.

The credit card companies have to do a few things differently: They ave to give consumers 21 days notice when a payment is due, and 45 days notice before hiking up interest rate

Consumers have the option to decline a new, higher interest rate. They can close out the account and pay off the balance within five years.

These changes are ahead of regulations that take effect in February.

Many card holders are already getting letters in the mail about rate increases and fees. For example:

  • /*Citibank*/ will institute a $30 annual fee on some cards
  • /*American Express*/ will charge $19 on balances under $250 (that fee used to be under balances that were under $400)

Some customers say they don't want credit card companies to benefit, so they plan to pay their balance every month.

"We utilize our credit card to pay everything, from gasoline to groceries to any discretionary spending," said credit card customer Mike Weaver. "And then we pay our credit card every month to avoid the exorbitant fees and interest rates that they have on credit cards these days."

Credit card companies maintain that they are being responsive to the current economic environment and the higher cost of doing business. Many accounts have slipped into default as the unemployment rate climbs higher nationwide.

A recent survey of more than 400 credit cards have found rates have gone up an average of two percent since last December., which is tracking all of this, says about one-third of card holders are now paying 20 percent interest.

"They're taking advantage of people at a tough point in their lives, when they can't afford to give up their credit cards," said Judy Dugan from "And saying, 'Well, you can't pay off your balance, you're going to pay a lot more, you're going to pay 17 percent, 22 percent, 28 percent.' And this bill does nothing to change that."

People who think their banks aren't following the rules can file complaints with the Office of the Comptroller of the Currency, which regulates banks, at, or by calling (800) 613-6743.

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