New credit card reforms intended to level the playing field for consumers kicked into effect on February 22, 2010. With new limits on interest-rate hikes and prohibitions against “universal default,” protections for young consumers, and new disclosure requirements, the Credit Card Accountability, Responsibility, and Disclosure Act, P.L. 111-24. or the C.A.R.D. Act, as it is commonly known, is designed to drastically cut into the $7.5 billion dollars that the six largest credit card companies take in annually from credit-card penalty fees each year.

“The CARD Act’s reforms… usher in a new era of fairness and transparency in the market,” according to Congresswoman Carolyn Maloney, one of two sponsors of the Act.

The Act contains three separate implementation dates. As of August 20, 2009 card companies are required to give 45 days’ written notice to consumers before interest rate increases or other significant changes to the terms of a credit card account could may be made. Other changes that became effective on that date include the consumer’s right to cancel a card before a rate hike goes into effect without being declared in default, and the bank’s obligation to send statements to consumers at least 21 days before the due date of any payments.

In addition to prohibitions against universal default, and interest rate increases on existing balances, the C.A.R.D. Act limits over-limit fees to cardholders, requires payments in excess of the minimum to be applied to the credit card balance with the highest rate of interest first, and prohibits double-billing, or interest on charges that were paid on time.

Young consumers, too, are now finally protected from many of the marketing and billing practice abuses for which they had been targeted. No longer may the card companies offer t-shirts, baseball caps, or other give-aways in exchange for a young consumer’s agreement to use a card. Young consumers are defined as anyone under 21 years of age. Issuers are now required to obtain the signature of a parent or guardian or other individual who is financially responsible, or proof that the applicant has an independent means of repaying any credit extended, before a card may be issued. The Act also requires the card companies to disclose their relationships with schools and universities, as a means of aiding enforcement of these new protections.

Billing statements are now also be required to be more transparent in the wake of this new legislation. Statements will now not only include minimum payment and negative amortization warnings, but must show a hypothetical of how long it will take to pay off a card balance, and the total cost savings of paying off a balance with larger than the minimum payment. Statements will also now show toll free phone numbers for contacting credit counseling agencies.

Later this year, on August 22, 2010, provisions requiring card issuing companies to limit penalty fees to those that are reasonable or proportional and to review and reduce interest rate increases when appropriate will become effective.

For now, credit cardholders with complaints about compliance with the C.A.R.D. Act have to thread their way through the website of the Kansas City Federal Reserve Bank to file a complaint, since regulation and oversight of each card issuer is divided between several federal agencies, depending on the charter of the bank that issued the card. The creation of a Federal Consumer Protection Agency would add teeth to the enforcement of this much needed legislation.