New Credit Card Rules May Not Curb All Lenders' Abuse

City resident Marina Danilina considers herself a model credit card holder.
"First of all, we never miss any payments. Second, we always pay over minimum, like 10 times over the minimum," she says.
Given her impeccable credit past, Danilina is used to getting letters from her lenders announcing they have increased her credit line or offering her low rates on balance transfers. Yet that changed over the past few months.
"Recently we start receiving strange letters, 'Your interest rate is up.' And it started again with American Express when I started seeing 15.74 [percent interest rate]," she says. "I said, 'Are you kidding me, 15.74 [percent]? We've been such good customers."
What is happening is that credit card companies are facing big changes in the way they do business. The Credit Card Accountability, Responsibility and Disclosure Act was passed last May, but many of the key components were delayed, giving lenders a chance to make all the moves that will soon be restricted.
"They've been dragged, kicking and screaming, into this change. We've seen months and months of rates being raised, fees being raised, accounts being closed, limits being cut," says Credit.com co-founder Adam Levin.
Those things can still happen after the bill takes full effect on February 22, but only under a specific set of circumstances. For instance, interest rates can still be raised, but not as quickly and not without reason.
"In the past, if you were even a day behind on your bill, they could actually increase the rates to the default rates, which are typically 30 percent and higher," says GreenPath certified consumer credit counselor Chris Dlugozima. "Now you have to be more than 60 days behind before that can happen."
However, experts warn that while this new grace period will be helpful, it is not a silver bullet. Interest rates may not go up for 60 days, but other consequences can kick in a lot sooner.
"They could charge you a late fee and they could report you to the credit reporting agencies, which would impact your credit score," says Levin. "[That would] ultimately would give them the ability, if they wanted to -- even if they didn't raise the rate on an existing balance -- they sure could raise the rate on future purchases as long as you have your card for one year."
One silver lining is even if credit card holders fall behind and see interest rates spike, the rates can still get back on track by making sure all payments are on time for the next six months. At that point, the lender will have to lower rates as a reward for good borrower behavior.