New credit card rules offer good news and bad news.

Rules take effect on Feb 22nd, 2010.  Read your mail!

The single biggest benefit of the much-touted new rules for credit cards — prohibiting credit card companies from raising interest rates on existing balances — has already been circumvented in some cases.  They have  found a clever way to make YOU request a higher interest rate on your existing debt.  (See our entry on this story by clicking here: Banks make you ask for Higher Credit Card Rates ),  But that is just the beginning:  There are many other ways they can still get more money out of you.

While penalties have been limited, you have to be constantly vigilant and read everything they send you or you could be faced with major increases in charges before you even know it.  This is all legal under the new law.  Look for them to raise your interest rate on new balances, add annual fees and raise other fees.   Sometimes you can stop them by threatening to cancel the card– if you pay attention to all that fine print they send you in letters that look like junk mail.

Remember there is no limit on interest rates, except on old balances.  Usury laws have been eliminated.  Rates of 35% are not uncommon, giving loan sharks some serious competition.

All of these changes are going to make it harder and harder to compare the cost of different credit cards.  The requirement that each issuer offer a standard, plain vanilla credit card — which would make it easier  to compare rates and terms — was crushed by the industry whose lobbyists have been busier than yellow jacket hornets all over Capital Hill.

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