Credit card rules' first phase kicks in today

08.20.09
By Nicholas Storie

Are you ready for some changes that could affect how you pay off your credit card debt?

The initial stage of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 go into effect today.

These rules, signed by President Obama in May, contain a number of provisions designed to give consumers more rights and protections. The second - and more comprehensive - phase of the act will take effect in February.

From August 20, credit card companies are obligated to notify cardholders 45 days in advance about changes to their account, as well as mailing bills 21 days ahead of when they are due.

Experts say that these modifications will better help consumers avoid late fees and manage their credit card debt, particularly when it comes to responding to an interest rate hike.

Under the new rules, if you don't like the changes that have been made to your account you can reject them, cancel your card and pay off your balance at your existing rate over five years.

However, keep in mind that if you cancel one of your accounts, your credit score will likely take a hit, as your credit utilization ratio increases.

But the new rules will give people more time to plan how they would like to deal with any changes to their account.

"It's a positive first step," consumer advocate Adam Levin told CBS News. "But it's only the first step."

The rest of the provisions, which arrive in six months, include constraints on interest rate increases on existing credit card debt, how payments are applied and how issuers market cards to students.

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The new rules could help Americans with credit card debt.