With the President signing the new Credit Card Act of 2009 into law, how will your credit habits change – or will they? It is said that many users can now avoid the increase in rates on the existing balance and will find more time to pay on their monthly bills.

Let us take a look at the highlights of the new laws:

• Restrained hike in interest rates: The new law allows hikes in interest rate on existing balances only under limited conditions. This could come into play when a promotional rate ends or if a card holder makes a late payment. If there are new transactions, the interest rates on such transactions can increase only after the 1st year. For any significant change in terms of accounts must be made after a 45 days prior notice of the mentioned change.
• Billing practices: The due date for credit card payments will be same for all months and a notification of the bill must be made at least 21 days in advance of the due date. Payments made by customers will automatically go towards the highest interest rate balance first in order to pay it off faster.
• Time frame to pay off debt: Credit card companies will be using simple language on all materials related to a customer’s account and at periodic intervals display on the statements, the time customers would require to pay off the debt if they made only the minimum payment each month. The statement must also contain information on the interest charged each time the customer made a minimum payment on his dues.
• Opt for an overdraft program: According to the new law, customers will no longer be enrolled in to an overdraft program automatically, but will have to express the desire by opting to be enrolled in one. Hence, if any card holder exceeds the limit on their card, the card will be declined unlike in the old rule where the consumer could still transact in lieu of a fine.
• Laws for young customers: Individuals under the age of 21 looking for credit cards must show proof that they have the means of paying off on their cards or get a co signer before they can be given a card.
• Finance charges: The two-cycle or double-billing cycle model is being done away with. Finance charges will be computed based on purchases made in the current billing cycle instead of going back to the previous cycle in order to calculate the interest charges. This relief on double-billing-cycle should help debtors to pay off their debts on time.
• Subprime credit card relief: If you hold a subprime credit card, creditors can no longer charge more than 25% upfront fees on your available credit limit in the first year of the card. Some credit card issuers are thinking of charging high interest rates on these high risk accounts instead.

What credit card holders must remember here is that these laws do provide them some relief but do not protect them from every thing. Although creditors need to give customers a 45 days notice before increasing their rate, the new law has not put any cap on the percentage of hike that creditors can levy. So, no matter what the laws are, make sure you use your credit card wisely so that you don’t run up debts you cannot manage to pay back.