In this day and age, even top-notch financial advisor clients can experience problems with their credit cards.

Kathleen Campbell, a fee-only financial planner based in Fort Myers, Fla., is worrying about some of her own clients in particular at a time when card issuers are raising interest rates and minimum payments.

Two of her clients for example, a retired couple, had their home equity credit line slashed by a bank seeking to cut exposure in the area where they lived-even though the couple were making timely payments. They're continuing to pay every month, but something like a costly roof repair, for example, could easily derail their finances.

Another client will likely suffer a major hit to his credit report thanks to Chinese drywall, which has plagued homes built in 2006 and 2007. The widely used drywall is said to emit vapors that cause respiratory illness and corrode metals.

Campbell's client has so far obtained no relief from his home's builder or insurer, and he may soon default on his $2,000-some-odd monthly mortgage payment and move out for his family's safety. He is unable to sell the tainted home and does not wish to incur the financial burden of maintaining that home and renting another.

Unique problems such as these could soon become more complicated at a time when card issuers, in anticipation of new landmark credit card reforms, have been tightening their belts. Issuers have been closing credit card accounts and lowering credit limits-sometimes with no advance notice-even to their most creditworthy borrowers.

Credit card borrowers were supposed to have an easier life these days. After all, President Obama last May signed the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009, enacting far-reaching reform to counter sleazy credit card pricing practices.

But as of August 20, only three major provisions of the act had been implemented:
Cardholders must now have 45 days' notice if there will be any increase in their credit card interest rates or if there is another significant change in their terms. That's up from 15 days before.
Cardholders are required to get notice of their right to reject such changes and cancel the account, usually by calling a toll-free number. If they cancel, the minimum monthly payment on the outstanding balance may rise, but the issuer may not require the full balance at once.
Creditors must mail or deliver periodic statements-including those for home equity lines of credit-at least 21 days before the payment is due. That's up from 14 days.
Most of the other provisions of the legislation, including a general ban on the most retroactive interest rate increases, were slated to take effect next on February 22, 2010 (see the sidebar).

To get a jump on the new rules, large card issuers have already announced new credit card terms-which have triggered borrower complaints. And financial advisors should be the most concerned about this, according to John Ulzheimer, the president of consumer education for

"The reduction in credit limits is happening almost 2-to-1 with people who have very, very strong credit scores," he says.
Experts believe the new credit card act provisions really won't help. For one thing, most cards already have variable rates that are largely exempt from the act's notice requirements.

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