The CARD Act of 2009, which was signed into law last May, became effective Feb. 22.
On one hand, the new law places more restrictions on credit card companies, but the CARD Act also has helped send credit card rates up and credit lines down.
The bottom line is that your next credit card statement might provide a shock.
For instance, if you pay the minimum on a $3,000 card balance with a 14 percent interest rate, it could take 10 years to pay off.
"Jaws will drop," said David Robertson, publisher of the Nilson Report, a credit card industry newsletter. "I don’t doubt for a second that it’s going to give a lot of people a sinking feeling in their stomachs."
During the past nine months, credit card companies jacked up interest rates, created new fees and cut credit lines. They also closed down millions of accounts. So a law hailed as the most sweeping piece of consumer legislation in decades has helped make it more difficult for millions of Americans to get credit and made that credit more expensive.
Credit cardholders are advised to pay particularly close attention to the "term and conditions" section of their statement so they know exactly what they are being charged for, warn experts.
Though she’s a proponent of the CARD Act, Nancy Lottridge Anderson remains skeptical about the motives of the credit card industry. Anderson is president of New Perspectives, a Ridgeland financial counseling firm.
"I’ve been on record in saying I believe the credit card companies are the lowest form of life out there, " she said. "I do see a lot of good things in the provisions of the new law but so many credit card companies can and will find their way around them."
Anderson advises that consumers study their monthly statement closer and shop around to avoid financial traps.
"Pay attention to the statement – If you have good credit, you can get a good deal from different companies," she said. "The problem is for people with less than sterling credit – that’s who the credit card people target."
With two children in college, Frank Burgess sees a plus side to the law designed to help consumers better manage credit.
"For me, the best thing about it is that the (credit card) companies can’t solicit students under the legal age anymore," said Burgess, a Brandon resident. "I’ve had friends with kids in college over the years who have had to bail out their children financially after they got a card."
The new law strictly limits card marketing on campuses. Cards can only be granted to applicants who show they have the means to repay, or those who have a co-signer who can pay.
"Yes, for some students this is a good thing," said Dr. Walter Neely, professor of finance for the Else School of Management at Millsaps College. "For somebody who can’t control their spending, it leaves little chance to get out of control."
On a personal level, Neely is not pleased with some aspects of the new law.
"I’ve been a responsible cardholder for years and was getting better deals prior to the law," he said. "A lot of the ‘goodies’, such as cash back and airline miles rewards, have been scaled back.
"But maybe the (CARD Act) will encourage people to have a more clearer understanding of credit cards."