FOX 5 Money: Credit Card Changes

When President Obama signed sweeping credit card reforms into law this May, banks and consumer advocates said credit would become less available, and more expensive.

Now those predictions are coming true. Matt Ellis got a letter from American Express, saying interest rates and late penalties are going up.

"The letter explained that they're a business, too, and they have to make money, so I guess I'll just have to deal with it," said Ellis.

It's not just one card. Consumer website BillShrink.com looked at cards offered by 12 companies, and found interest rates on purchases are up nearly 20 percent from January 2009.

"Some of this would have happened regardless of the legislation," says BillShrink.com's Samir Kothari.

The weakened economy, and tougher bank requirements for capital has lenders reducing their exposure to risk. That's one reason consumers are seeing their credit lines reduced, or their cards -- even if unused -- cancelled.

But Ed Mierswinski of the U.S. Public Interest Research Group sees another force at work, too.

"They're trying to amass cash and make as much money as they can before they can't," says Mierzwinski.

The first wave of credit card reforms begins Thursday. Card issuers will have to give 21 days notice before a bill is due, and 45 days notice to change an interest rate.

Consumers also will have the right to cancel before the new rate goes into effect.

Eleven more restrictions take effect in February 2010, including a ban on fees to pay by mail, phone, electronic transfer or online, limits on overdraft fees, and limits on cards to underage consumers.

The new rules have fundamentally changed the credit card business, says the American Bankers' Association. That, plus the tanking economy, has caused some card issuers to reduce credit limits and reward programs, or cancel cards altogether.

It's an acceptable trade off, says Mierswinski.

"Losing some fixed rate card offers, but on the other hand gaining an enormous number of consumer protections is, I think, a net win-win for consumers," said Mierswinski.

ABA says consumers can expect to see a lot of changes as lenders experiment with different products.

Tameka Robison doesn't worry about it. She is credit card and carefree.

"It's not as hard as some people think it is-- if you know how to budget, you'll be fine," she encourages.

For the rest of us who need our plastic, even as a safety net, there are some things we can do. First, pay your bills early, and if you can't pay the balance, at least pay more than the minimum, advises Mierzswinski. And if your interest rate gets hiked, see if you qualify for a better deal.

There are still some decent offers out there, says Kothari. "If you have excellent credit, you will still see rates in the sub-10 percent range, which is pretty good in this market."

The days of 3 percent and 4 percent credit card interest rates may be gone forever.