On December 18th, 2008, The Federal Reserve undertook what financial experts are referring to as the biggest overhaul of the credit card industry in the last three decades. These new rules, which go into effect in July 2010, target two practices that have long been a bone of contention on the part of consumers. The first is “rate-jacking,” that is when a credit card company issues a rate hike, usually with little or no warning. Going forward, a card company will only be allowed to raise rates on new cards and on future purchases on cards that have already been issued. That means that the increased rates won’t apply to existing balances. In addition, the company must give cardholders 45 days notice of its intent to increase rates.

The second reform has to do with late fees. Credit card companies won’t be permitted to charge a late fee without giving a delinquent cardholder at least 21 days to make the payment.

The central theme behind these changes is to save consumers from the escalating cost of fees associated with credit card use. Peter Pham, CEO of Billshrink.com, a free, personalized savings service for credit cards and cell phones, says that when the reforms finally take effect, consumers will also save from other regulations that require credit companies to apply your payment to the highest interest, and the end of double cycle billing.

However, before you go thinking the Federal Reserve is Santa Clause in disguise, keep in mind that these changes come with a price tag, and unfortunately, no one is really sure how high that sticker price will be. For example, will new credit card customers have to pay higher rates to make up for the loss in revenue for the credit card industry? Peter says that it’s unclear right now, but “one would assume that unless card companies change their overall cost structure of running the business, they will make up the revenue somewhere.”

What about qualifying for credit — will card companies scrutinize new applications with the same fine tooth comb that mortgage lenders have adopted? Peter says that some experts believe this will be the case, but the new scrutiny is probably more a function of the current credit crunch than the new guidelines.

The concept of “credit worthy” will also be in for a revamp. Peter noted that although it isn’t part of the new rules, card companies will invariably alter how they view someone as credit worthy because of their need to lower their risk and make up for lost revenue.

Believe it or not, there are credit card companies that have already made some of these changes part of their standard practice. Here’s a list Peter provided:

• No universal default (a credit card issuer’s right to raise the interest rate on a consumer’s credit card because of a late payment on another credit card) — most major card issuers, including American Express, Capital One, Chase, Citi, Discover, Wells Fargo, etc. are already meeting this requirement.
• Sufficient time to pay bills (25 days before due date) — Capital One, Discover, Wells Fargo, First Premier Bank.
• Proper and timely notification of rate increases (45 days notice) — Citi, Discover, Wells Fargo.
• Cardholder’s right to specify a fixed limit on your card so you can avoid over the limit fee — American Express, Capital One, Chase, Citi.
• No double cycle billing, where your finance charge is computed on a two month rolling average — Bank of America, Capital One, Chase, Citi, First National Bank of Omaha, First Premier Bank, Pulaski Bank, US Bank, Wells Fargo.
• Protection from due date gimmicks and giving until 5pm EST on due date — Bank of America, Capital One, Citi, Discovery, Citi, Orchard Bank, US Bank, Wells Fargo.

Billshrink.com has created an interactive Credit Card Bill of Rights where you can see which cards are complying and which are not. This page is continuously updated so you will know when cards are beginning to comply with the various changes in the regulations. It pays to log on periodically to see how long it takes your credit card company to get on board. If your card company drags its feet, you may want to consider if it’s a good idea to continue doing business with them.