New Credit Card Law May Be Costly

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It's safe to say that the credit card bill of rights represents a victory of consumers over banks. But the battle's not over yet. Three ways the new law could cost you.

According to some estimates, there are nearly 700 million credit cards in the United States: two for every man, woman and child. And nearly half of American households are carrying a balance.

So it was considered a great victory when Congress passed the Credit Card Accountability, Responsibility and Disclosure Act. Because this new law limits rate hikes and fees considered by many to be unfair.

This new law will sharply curtail the fee income banks were socking away from those credit card fees. But it also means they’re going to try to make up that income in other ways.

For example, now only about 20% of credit cards carry an annual fee. With income down from other sources, that number may increase.

If banks can’t make as much from other sources, one obvious way to make up the income is to raise rates: especially in the months remaining until the new law goes into effect.

And while the new law restricts some fees, it doesn’t affect others. For example, several big banks have already raised the cost of transferring your balance to another card from 3% to 4%.

Many of the new provisions won’t go into effect until February, so track changes in your cards by reading notices. Don’t like what you see? Go to any of dozens of websites that allow you to shop your cards in seconds. Compare credit cards at

Bottom line? The new credit card law is putting money in your pocket by taking it away from banks. They’re going to try to get some of it back. So between now and say the first part of next year, you do want to be vigilant, you don’t want to be afraid to shop around.

Stacy Johnson

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