New credit card protections go into effect

CNN reported the new rules prohibit credit card companies from charging more than $25 for late payments, except in extreme circumstances such as repeated violations; and charging customers for not using their cards. The rules also require the companies to reconsider rate increases made since Jan. 1, the Federal Reserve said.

Banks will have to cut rates if the reasons for the increases no longer exist.
Consumers also no longer will face multiple penalty fees if the violation was based on a single late payment.

The new rules were announced in June. They join previous rules of the 2009 credit card law already in effect.

The Fed's rules, part of the most comprehensive overhaul of the credit card industry, could help lower interest rates for consumers, the CNN report said.

Congress has left it to the Fed to determine how to reduce fees.

Copyright 2010 United Press International, Inc. (UPI).