NEW YORK — New rules for credit-card companies will clamp down on when they can hike interest rates and force them to spell out their terms in plain English. But opening your monthly statement could still be a dizzying experience.
The wide variety of fees that card issuers charge — balance-transfer fees, foreign-transaction fees, annual fees — will probably keep climbing as banks try to make up for lost revenue, analysts say.
“Banks are very creative,” said Philipp Schnabl, an assistant finance professor at New York University’s Stern School of Business. “They need to make money.”
Among other changes, the rules, expected to be signed into law today by President Barack Obama, will force card issuers to wait until customers are 60 days behind on payments before raising their interest rates.
Lenders would be required to restore the lower rate if cardholders paid their minimum balances on time for six months. The rules will also make it more difficult for people under 21 to get cards.
In the wake of the new rules, “the reliance on ‘gotcha’ practices is coming to an end,” said Greg McBride, senior financial analyst at . “Issuers will need to make better credit decisions and be better lenders. Those that do will be very profitable. Those that can’t will be behind the curve.”
