Posted: Wednesday, February 24, 2010 3:52 pm

Congressman Bart Gordon announced that new laws protecting credit card holders against unfair and predatory practices took effect this week.

The Credit CARD Act, which Gordon voted for last year, protects consumers by requiring credit card companies to be more transparent in their billing practices and limiting certain gimmicks frequently employed by companies to entrap vulnerable customers, such as teens and young adults.

"This new policy ensures cardholders have the information they need to make educated decisions about their finances,” Gordon said. “The law can now enforce commonsense limits on unfair business practices."

According to the Pew Charitable Trust, which tracks credit card issues, consumers will save at least $10 billion a year from curbs on interest rate increases alone. Beginning this week, credit card companies are prohibited from raising interest rates on existing balances unless the cardholder has not paid the minimum balance 60 days after the due date. Card companies also will not be able to raise interest rates in the first year after a card is issued unless specified in the contract, and card holders under the age of 21 will be required to have a cosigner and have restricted credit limits.

In August, other provisions took effect requiring companies to provide written notice to consumers at least 45 days in advance of any increases in the interest rate or other significant changes in the terms of a credit card account, requiring companies to inform consumers of their right to cancel the card before rate hikes go into effect, and requiring billing statements to be sent to consumers at least 21 days before the due date of any payments.

“These provisions will help American families keep the money they’ve earned,” said Gordon. “No family should find themselves deep in debt because a card company hid an unfair policy in the fine print of their contract.”

The new credit card restrictions are a result the Credit CARD Act, which was became law on May 22. The bill’s provisions were developed after the Federal Reserve examined common business practices employed by credit card companies and determined many were “unfair,” “deceptive,” and “anti-competitive.”