Credit card reform could protect your credit score

By Jena Johnson - bio | email

LUFKIN, TX (KTRE) - Parts of the credit card reform kick off Thursday. Congress passed the reforms in May in response to thousands of consumers complaing over outrageous fees and the sometimes mysterious interest-rate hike.

Bethanie French likes to shop, sometimes on a credit card. "I have a 30 percent interest rate," said French, credit card user.

French said her interest rate took a steep hike after she was late on a payment. "If I'm one day late, they [collectors] call me like 50 times a day and I'm like okay, I'll make the payment tomorrow, sorry," said French.

Bankruptcy attorney Stephen Zayler said thousands of Americans are faced with similar problems right now. "The credit card companies are raising their rates and trying to collect as many fees as they can before the law goes into effect," he said.

Zaler said before you sort out what you think might be junk mail, take a second look, it could protect your credit score.

"You're going to get some sort of a statement from the credit card company, but you also get other types of information from them, like they just changed your credit card agreement," said Zayler. "You need to read those things and understand them."

Starting Thursday, credit card companies will need to give 45 days notice before changing key terms and allow customers at least 21 days to make payments without penalty.

"The credit card rates are going to be somewhat restricted," he said. "Many credit card companies are saying they're going to start charging annual fees."

With so many unknowns, French knows spending is easy, it's the paying it back part that's challenging. "It's technically not my money until I pay it back," she said.

This week's reforms are just the first few waves of the law. Other changes, including a tighter control on credit card companies soaring consumer's interest rates, will take effect February 2010.

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