New Credit Card Rules Could Hurt Consumers

COLUMBUS, GA (WXTX) - "At the time, I did not have anything on the card, so I had a zero balance!"

However, that didn't stop Jeannie Smith's credit card company from raising her rate.

"I received a notice that my rate was going up and I noticed that it was almost tripled," says Smith.

Smith's interest rate went from a little over 3% to 11.99%.

"Why would you go up on somebody that has never been late with a bill," asks Smith?

It's a question many consumers have raised, and one that will hopefully be answered with a new bill signed into law that's supposed to protect consumers from abusive credit card practices.

One notable change, the legislation bans retroactive rate increases.

"Now, what that means is if you have a balance and a credit card company increases your rate, in the past, that increased rate applied to your existing balance, with the act, the increase in the rate will only apply to new purchases," says Dr. Norman Godwin, CPA and Director of the School of Accountancy at Auburn University.

The legislation also states a customer has to be 60 days late before penalties hit, and if you start to pay on time and in full, there's a chance you can get your old rate back.

Another positive, added disclosure.  Credit card companies have to make it plain.

A move some experts say gives consumers no excuses.

"I think if you see plainly how much a particular purchase, say a $200 purchase is costing you in interest and fees, you may think twice about purchasing that product or you may certainly pay it off faster," says Dr. Godwin.

That's the good.  Here's the bad, credit card companies could lose money with these changes, so who do you think they'll get it back from?

"I would imagine that the credit card companies would raise rates for all consumers just to recoup some of their ability to generate revenues, also some of the reward programs that they have may be scaled back," adds Dr. Godwin.

Smith is one of millions that's received a letter from her credit card company recently.  She says the new changes are a start, just too little too late for her.

"You know you think you're doing the right thing, and even still, your rates may go up too."

Some experts say the best way to get a lower interest rate from your credit card company, is to simply pick up the phone and call.  Negotiate for a better deal, especially if you have offers from other companies.