Credit Card Changes Announced

More and more Americans rely on their credit cards to make ends meet these days. Some 60-million households carry credit card debt, with the average debt exceeding 10 thousand dollars. Travis Plunkett with the Consumer Federation says, "There are 50-million households that aren't able to pay their credit card bills every month."

New rules would protect those Americans from increases in their interest rates. The regulations will allow credit-card companies to raise rates only on new credit cards and future purchases or advances, rather than on current balances. Montrice Yakimov with the Office of Thrift Supervisor adds, "If you're making your payments on time, you should have confidence that when you go out and buy that furniture, the rate that you had the time you made that purchase, is the rate that you're going have to pay off that furniture."

The rules also prohibit:

- Rate increases in the first year, if your account's up to date.

- Grace periods shorter than 21 days.

- Interest based on last month's balance.

Experts warn, even with the changes, consumers will still pay the price. "This is going to cost the banks and the credit card companies an estimated $10 billion. They're not going to let that go away. So they'll make it up in either larger charges if you're a day late; they'll change the dates that you pay, so you're late if you pay on the day you used to pay," said Kathy Boyle with the Chapin Hill Advisors.

The rules also require when you send in more than the minimum amount due, the money must be applied to the part of your balance with the highest interest rate, not solely to the part with the lowest.