NEW YORK (CBS 2) — The next time you open up your credit card statement you may notice a big surprise. New laws meant to protect consumers are having some unwanted side effects — higher interest rates.
Congressman John Hall (D-Dover Plains) and Congresswoman Nita Lowey (D-Greenburgh) announced sweeping changes to credit card issuers Monday. Those changes include prohibiting retroactive rate hikes on existing balances and requiring statements to be mailed 21 days in advance of the due date.
“Credit card companies can no longer use the fine print as a license to gouge customers,” Lowey said.
In addition, interest rate increases must be re-evaluated every 6 months and then possibly reduced, CBS 2’s Kirsten Cole reports. For students, anyone under 21 must show proof of income or get a co-signer.
Also under the changes, fees and minimum payments must be explained in bold print.
Credit card users welcomed the changes.
“They put it in the small letters… everything some people don’t understand,” Felix Baez told Cole.
Banks are also putting the squeeze on consumers by lowering their credit card limits which has many going out in search of new credit cards and that is where people are finding a nasty surprise.
“I don’t think we’ve seen anything like this in at least 22 years. We’re seeing a spread of almost 11.5 points between the prime rate and highest rate on interest cards, Adam Levin of Credit.com said.
In order to avoid high interest rates on new cards, experts urge paying bills on time, using as little of your credit as possible, and to avoid opening new store card accounts.
However, abuses can still happen.
“Credit limits can still be cut, fees can be raised, interest rates can and will be raised, Levin said.
While consumers welcome the changes, they’re still looking for more protections.
“You know how much mail you get on a regular basis,” Robin Teele asked, “you never get a chance to really review it and by the time you review it, you’ve been zinged already,” Robin Teele said.