Local Expert Breaks Down New Credit Card Changes

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OMAHA (KPTM)- When President Barack Obama signed legislation this week solidifying credit card reform, it meant sweeping changes for those who use plastic.

One of the major changes will be getting rid of universal default practices.

"If you're a day late on your cell phone bill, all your credit card rates go up to 25 to 28 percent. Huge jumps," says Michaela Harper.

Harper is a program manager at Credit Advisors Foundation in Omaha.

She says those practices of universal default will be a thing of the past.

She also says consumers will find more help against changing interest rates.

"It's the unpredictability of the interest rates that really makes it difficult for people to plan to get out of debt," she says.

Card companies will now have to issue a 45-day notice of any interest or contract change to the cardholder.

Harper says there will be an opt-out clause for consumers too.

Promotional rates will also have to be in effect for at least six months after a card is issued.

Harper cautions, though, the changes don't mean consumers can start charging at will.

"It doesn't let them off the hook. They have to know who they owe money to, know where their interest rates are."

Another component of the new law will include card companies posting user agreements online.

Many card companies and banks say the new regulations will face them to lend less freely, and perhaps reintroduce more 'annual' type fees.