The long-awaited credit card reforms went into effect yesterday. Here’s a breakdown on how they might affect your wallet: They prohibit universal default Consumers had long complained about credit card companies raising the interest rates on one card for being late or missing a payment on a separate account, even if they had remained current on the first card. The new law not only bans this practice — known as universal default — but also prohibits card companies from raising interest rates on outstanding balances, as long as you pay the bill on time. But beware: Issuers can still change the rate on new charges as long as they give you proper notice.
They put time limits on some interest rates

The law requires promotional interest rates to last at least six months. For new credit card accounts, issuers cannot raise interest rates for the first year.
They restrict some fees

Credit card companies will no longer be able to charge a fee if you go over your credit limit, though consumers who want the choice of paying a fee to go over their limit can opt in to the program. In addition, card companies cannot charge a fee for any routine method of payment, including mail, phone or electronic transfer.
They set ground rules for processing payments

Let’s say you have a credit card with multiple balances at different interest rates. And let’s say you pay more than the minimum each month. That extra money will go toward the balance with the higher interest first, helping you pay down the debt faster.
Billing statements

Your new statement will have to disclose the penalty for any late payments and warn you that they could result in higher interest rates. It also includes a warning about the dangers of making only the minimum payment required.
They restrict access

Underage consumers will no longer be able to open a credit card account without a co-signer or proof that they have independent income. Card companies also won’t be able to raise the credit limits for underage consumers without the co-signer’s approval.

For more information, visit federalreserve.gov/creditcard. Star Ledger