The year 2010 marks a new decade, as well as a new era for credit cards in the United States. On February 22, the Credit Card Accountability Responsibility and Disclosure (CARD) Act went into effect. This law permanently changed what credit card companies can and cannot get away with.

Let’s take a look at these changes and how they will be affecting you:

Payments go towards the higher rate balances

In the past, credit card payments would only be applied to balances with the lower rates first (such as 0% balance transfers and other promotional offers). For the cardholder, this would trap them in a perpetual debt cycle; their balances with APRs of 15 to 20% would never get paid off, since the payments would be going towards their balance transfers instead. “This is perhaps the most important change. In times like these, it’s really going to help consumers.” says Sheila Gibson, assistant editor at CreditCardForum.com, which is a portal for credit card reviews. “There are tons of members on our credit card forum rejoicing over this change.”

There will be a minimum grace period

Issuers will be required to have a minimum grace period of at least 21 days after each billing cycle closes. That means consumers will have 3 full weeks to pay their balance off, before any interest is accrued.

The end of double cycle billing

This was a questionable practice where interest was calculated based on the balance over two billing cycles. That means if there was a balance one month, but not the other, it’s possible the cardholder may still have to pay interest for the second month. The biggest bank doing this practice was probably Discover. They would apply this practice to three of their most popular cards; the Discover More Card, Discover Open Road, and Discover Motiva. Fortunately, these cards will no longer be able to levy double cycle billing on their customers.

It will be harder for banks to raise your rate

In the past, credit card companies had the ability to raise a cardholders interest rate whenever they want, for whatever reason they want. Now, there will be a number of tighter restrictions in place which will make it much more difficult to raise rates. For example, rate hikes during the first year a card is opened will be extremely hard to pull off and banks will be required to give you a notice of at least 45 days before your APR is changed. This was a big problem for consumers when they were looking at credit card reviews, because a bank would not always honor the offer after it issued the card.

In addition to the above provisions, there are a number of other important changes which will be taking effect.

Limited interest rate hikes:

Interest rate hikes on existing balances would be allowed only under limited conditions, such as when a promotional rate ends, there is a variable rate or if the cardholder makes a late payment. Interest rates on new transactions can increase only after the first year. Significant changes in terms on accounts cannot occur without 45 days' advance notice of the change.

Limited universal default:

"Universal default," the practice of raising interest rates on customers based on their payment records with other unrelated credit issuers (such as utility companies and other creditors), would end for existing credit card balances. Card issuers would still be allowed to use universal default on future credit card balances if they give at least 45 days' advance notice of the change.

The right to opt out:

Consumers now have the right to opt out of or reject certain significant changes in terms on their accounts. Opting out means cardholders agree to close their accounts and pay off the balance under the old terms. They have at least five years to pay the balance.

More time to pay monthly bills:

Under the credit card law, issuers would have to give card account holders "a reasonable amount of time" to make payments on monthly bills. That means payments would be due at least 21 days after they are mailed or delivered. Consumers have complained about due dates that change without notice or are moved up, giving them less time to pay their bills and increasing the likelihood of late fees.

Clearer due dates and times:

Credit card issuers would no longer be able to set early morning or other arbitrary deadlines for payments. Cut off times set before 5 p.m. on the payment due dates would be illegal under the new credit card law. Payments due at those times or on weekends, holidays or when the card issuer is closed for business will not be subject to late fees.

Highest interest balances paid first:

When consumers have accounts that carry different interest rates for different types of purchases (i.e., cash advances, regular purchases, balance transfers or ATM withdrawals), payments in excess of the minimum amount due must go to balances with higher interest rates first. Current industry practice is to apply all amounts over the minimum monthly payments to the lowest interest balances first thus extending the time it takes to pay off higher interest rate balances.

Limits on over limit fees:

Consumers must "opt in" to over limit fees. Those who opt out would have their transactions rejected if they exceed their credit limits, thus avoiding over limit fees. Fees charged for going over the limit must be reasonable.

Subprime credit cards for people with bad credit:

People who get subprime credit cards and are charged account opening fees that eat up their available balances would get some relief under the new credit card law. These upfront fees cannot exceed 25 percent of the available credit limit in the first year of the card. Instead of charging high upfront fees, some issuers are considering high interest rates on these high credit risk accounts.

Minimum payments:

Credit card issuers must disclose to cardholders the consequences of making only minimum payments each month, namely how long it would take to pay off the entire balance if users only made the minimum monthly payment. Issuers must also provide information on how much users must pay each month if they want to pay off their balances in 36 months, including the amount of interest.

The New Law doesn't cover everything:

Consumers should take note: Although the reforms are the most dramatic changes in credit card laws in decades, they do not protect card users from everything. Issuers can still raise interest rates on future card purchases and there is no cap on how high interest rates can go. Business and corporate credit cards also are not covered by the protections in the CARD Act. If credit card accounts are based on variable APRs (as the majority now are), interest rates can increase as the prime rate goes up. Credit card companies can also continue to close accounts and slash credit limits abruptly, without giving cardholders advance warning. Many banks are already finding ways around the law and launching new fees not specifically banned by the credit card reform law.