New Credit Card Rules About To Take Effect

The Credit Card Act of 2009, which began its roll out last August, moves into phase two this month, bringing a number of changes for borrowers. Among the new rules is a restriction on creditors from raising interest rates on cards within the first 12 months that an account has been open. So-called double-cycle billing, in which interest is charged on debt already paid off, will also be outlawed.

"In the past, a credit card uses a balance from a previous billing cycle to calculate interest, and now going forward they're only going to be allowed to use balances on the current billing cycle," said Michole Mustard with Credit Karma, a San Francisco-based financial information company.
Mustard says these and several other provisions are great for consumers, but they also tend to handcuff lenders.
"The banks have lost that flexibility and in doing so, they've lost the ability to grant credit to consumers who are on the margin," said Mustard, who believes that in general, the changes will make accessing credit more difficult for consumers.
Phase two of the Credit Card Act becomes effective February 22.