Credit card protections kick in today, but banks were ready

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Some new federal protections for credit card users kicked in today, part of the landmark credit card overhaul passed by Congress last spring.

But since that legislation was approved, many banks have been raising fees and interest rates to lock in revenue on a historically lucrative line of business. Specifically, plastic issuers have jacked up interest rates, switched accounts from fixed to variable rates and raised annual fees and penalties for late payments.

The average variable rate on new cards has risen steadily to 11.22% as of this week from 10.69% in April, according to Bankrate.com, a consumer finance website. This comes even though the prime rate, the index that card rates are generally pegged to, hasn’t moved during that period.

Some key provisions of the Credit Card Accountability, Responsibility and Disclosure Act that go into effect today:

-- Bills must be mailed 21 days before the due date;
-- Companies must warn customers 45 days before making significant changes in conditions;
-- Consumers can reject changes, close the account and pay off the balance at the existing rate within five years.

To read the full story by Don Lee and W.J. Hennigan, click here.