By Colleen Rothe

Anything labeled “Bill of Rights” should be a good thing, right?

Wrong.

The Credit Card Bill of Rights Legislation that just passed through Congress is supposed to protect consumers, and likely it will. But the ramifications mean that credit will be harder to come by, and even the credit you already hold may be deemed too risky. This week, you may find yourself like many Americans, opening letters from your credit card companies that say your card has been cancelled.

The new law lines up some pretty stiff protection, which will end credit as we know it. In some respects that will be good. In others it will be bad. If these laws existed when Donald Trump was getting his start, he’d not be where he is today.

The law provides for:

Existing balances: Issuers cannot retroactively change the rate on an existing balance unless the account is 60 days delinquent (this is where some folks got themselves in trouble when they hit their limits and went over and then the credit card company zapped them with over-limit fees and then enacted higher interest rates).

Payments: A consumer payment above the minimum applies first to the balance with the highest rate (if you ever took a cash advance from your credit card – you know this is a nice change).

Teaser rates: Issuers cannot raise rates for the first year after an account opened (so no more “0% interest for 90 days…and then it pops up to 22 percent). Promotional rates must last at least six months. (Then you will need to negotiate a rate, or close the card. So what’s the point?)

Bills: Issuers must send a bill 21 days before the due date (I love the credit card companies that send you a bill so you receive it 2 days before it’s due).

Over limit: Issuers cannot charge over-limit fees on credit cards unless the consumer has signed up to allow such transactions. (Read your fine print. Remember the scenario I detailed under Existing balance changes?)

Minors: For consumers under 21 years old, a company must get the signature of a parent or another to take responsibility for the debt, or it must obtain proof that the under-21 consumer can repay credit (this is really a no-brainer).

Disclosure: Cardholders must get 45 days notice of change in terms (if the card holder’s interest jumps or limits change – whatever, it’s a notification and then a response is necessary).

Fees: Issuers cannot charge fees to pay by mail, phone, and electronic transfer or online, except for expedited service. (You just sent me a bill two days ago and now you’re going to charge me to pay it online?)

Gift cards: All gift cards must have at least a five-year life. (I really wish this one had a retro-active action to it. I have a gift card from two years ago that was hard to use and then didn’t get used until I could find someone to take it. Then it was too late. Lame.)

So what does all this mean?

Most of it won’t be known completely until the dust settles, but it doesn’t take an MBA to look at the rules above and know that the credit card companies are going to tighten up their purse strings and find a work around.

Tightening of the purse strings will be that those with revolving credit balances will likely, and may have already, found their accounts closed. You’re not making them money anymore. It costs the credit card companies more to enact all these rules, so the borderline customers, as they look on paper, will be cut first.

It also means that if you’re lucky enough to get the credit card, it doesn’t mean an end to rate hikes. Also, be prepared for the annual fee to return for everyone, regardless of credit rating. If a company chooses to not have an annual fee, they may get more crafty with fees, because let’s be honest, it’s how they make their bread and butter. For instance, consumers will need to read the fine print to watch out for things like minimal amount of usage per month or some other sort of holding requirement.

Additionally, there will likely be a big push for people to use their card to cover their living expenses, and then pay off the balances each month. So if you want to be seen as less risky, you might want to start doing that now, if keeping a card is important to you.

The credit card companies may also look to make their money on the interchange fees – merchant to card issuers. So be prepared for your local coffee shop or other small business to stop letting you use a credit card. Debit cards may not be impacted, but since they run on the same system, there will be situations out there where it’s going to be cash and carry scenarios again, just like the pre-plastic days. Larger merchants who have a big consumer base – like say Wal-Mart – might decide to continue to offer credit cards as a way to pay for things, but will pass the interchange fee rates onto their customers. In short, your monthly Target run just got a bit more expensive, even if you don’t use your credit card.

Also, if you participate in a rewards program with your credit card company, cash it in now. Never has their buying power been lower and we will likely see an end to such programs very soon.

If you have existing balances, pay them off (I know, I know, we’re all trying to do exactly that!). If you can’t pay them off, consider moving the balances to cards offered by your local credit union or a small bank, which industry experts contend may be able to more easily offer better rates and terms.

Also, be aware that interest is going to climb before the new laws take effect. Some of the new items, like the 45-day notice, will not be in effect for 3 more months. Other items will take up to six months to take effect.

The entire effort of the bill was to help consumers avoid being in financial trouble because of credit cards. But, like everything else, it’s not going to mean a walk down Park Place for the consumer. Just like before our new bill of rights, a credit card should be used as a financial tool, not a crutch.