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New credit card regulations limit costly surprises

• If the card holder has more than one interest rate for different services or accounts with the same lender, any payments over the minimum due must be applied to the account that is incurring the highest interest rate.

• Over the Limit Opt-In: Card holders can no longer assume that charges made over their credit limit will be approved. Card holders must now activate the ability to exceed their credit limit, and subsequently may be charged an over-limit fee by the issuer.

• Card issuers must disclose in bill statements how long it will take cardholders to pay off their bill if they only pay the minimum monthly payment, as well as how much the card holder would need to pay every month to pay off the balance in 36 months.

• When calculating finance charges, card issuers can no longer employ two-cycle billing - a method that causes cardholders to pay interest on previously paid balances.

While the new law is loaded with benefits for consumers, the BBB warns that the new legislation is limited. Credit card card issuers can still raise interest rates on future card purchases and there is no limit on how high those rates can go.

Those who bills on time and in full each month will likely experience a reduction in benefits, the imposition of annual fees, and their credit lines cut.

Business and corporate credit cards are not covered. Many card issuers will likely seek to make up some revenue lost by creating new fees for these cardholders.

To learn more about the new consumer protections, Creditcards.com has details on the new federal Credit Card Act. For information on managing credit cards and debt, visit www.bbb.org.

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