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Amid positives of new credit card law, a few pitfalls for customers

CHICAGO — The new credit card law is receiving widespread kudos as a victory for cardholders over the lenders that impose “gotcha” fees and penalties with scant justification and little notice.

Indeed, an industry that has been virtually unregulated will now be reined in in many ways, to customers’ benefit. Interest rates no longer will be allowed to be raised retroactively if you pay your bills. Terms will be clearer, over-the-limit fees curtailed and rates fairer.

Still, there are pitfalls to the legislation passed by both houses of Congress and signed into law by President Obama on Friday, and some are likely to hurt consumers.

Here is a closer look at some unintended consequences of the new law that are likely to occur:

HIGHER RATES: Issuers are considered certain to bump up annual percentage rates soon to compensate for not being able to raise them on new customers for one year after the regulations take effect in February. Not only are introductory rates likely to rise, APRs on existing accounts may well go up too — especially if you do anything to show that you’re a greater credit risk.

ANNUAL FEES: The free ride is likely to end for many who use their credit cards as a convenience and pay off their balances in full every month. Squeezed by the economy and further by this law, banks will now target people who have avoided paying an interest charge or an annual fee — until now.

LOST GRACE PERIODS: Trying to make up for lost revenue, banks are considering charging interest from the date of a purchase instead of allowing a grace period, now typically 20 to 25 days.

OTHER FEES AND PENALTIES: The new regulations put no restrictions on fees for balance transfer, cash advance or late payment. All are likely to rise.

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