Credit card laws going into effect this month are good news for consumers trying to manage credit. As part of President Obama’s Credit CARD Act of 2009, on Feb. 22 changes begin that can help avoid surprises.

A big change is in how the interest rate is charged. Before, a credit card company could increase its rate and apply it to existing balances. Now, rate changes will only apply to new charges. The credit card companies also cannot raise rates in the first year of a new account. This could help a card holder develop an accurate calculation of how much to pay each month to pay off any balances.  Someone with a higher rate elsewhere could apply for a new card and make a balance transfer if the new card has a lower rate. Keep in mind, however, the fee to do a balance transfer to make sure it is worth it.

Also changing:

• Any fees the card charges, such as an annual fee or application fee, cannot be more than 25 percent of the credit limit granted. This is aimed at protecting the consumer from high charges to get a card, even if the card has a low limit. Fees will also have new caps for when a card holder goes over a credit limit.
• The payment due date will be the same day each month. This helps know exactly what day funds need to be available. It’s easier to remember when a payment is due on the same day each month. It also helps to know when the credit card ends its current billing cycle if a card holder wants to wait until after the current cycle before making another charge, possibly avoiding going over the limit.
• In an effort to protect young adults from falling into credit holes, a restriction begins on issuing a card to anyone under 21. From now on, a parent or adult over 21 must co-sign and the young adult may be required to show evidence of income to pay the card.

The remaining changes in the law will take place in August. Those include rules that require card companies to evaluate rate hikes by taking into consideration the card holder’s credit rating – another reason to maintain good credit.

Card holders likely have already received mail explaining changes to their account. Read them carefully to better understand how to manage the card. Some letters may require action to keep the card. Card issuers have started to be more active in closing inactive accounts (make a charge occasionally if you want to keep a card) or adding other fees, including changing rates from fixed to tied to a variable rate, which would make rates more volatile and planning harder.