How will new credit card rules affect you?

HOUSTON Most people don't know about the changes, which include more days to pay and more time to figure out if your interest rate is going up. The new rules are designed to help consumers, but some credit card users have seen big changes they do not like, with many even saying they are cutting up their cards.

Kids across the Houston area are learning firsthand how credit cards work thanks to a recent addition to the Houston Children's Museum, but it turns out adults have a thing or two to learn as well now that rules have changed.

"I have heard that there are new rules, but I do not know what they are," credit card user Jennifer Scheel said.

The first change gives consumers more time to pay. Credit card companies must give customers 21 days to make a payment, whereas in the past the billing cycle could be as short as 14 days. Also, the credit card companies must give users 45 days' notice that interest rates are going up or other significant changes. In the past it was just 15 days.

Many credit card users have already seen big changes to their accounts prior to the new rules, with everything from lower limits to higher interest rates. In some cases, consumers say they're ready to close accounts they've had for years, but doing so could lower your overall credit score.

"If you close your account and it is an old account that has been in good standing for some time, that account probably is helping your credit score, so by closing it you could possibly see your score drop," Consumer Credit Counseling Service spokeswoman Tanisha Warner said.

Warner says a better option may be to pay down the balance and leave the account active. If the account is recent, closing it may not have a big impact, depending on your available credit overall.

"If you have tons of other accounts in great standing that you have had for a long time, then closing one account may not do much at all," she said. "It depends, but it is good to know that it will impact your score."

Don't forget that your credit score takes into account how much credit you have versus how much you are using, so closing an account will cut your available credit. If you want to close the account anyway, experts say that you should pay it off before closing it, because if you have a balance and close the account it looks like you are using all of your available credit on that card.

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