Some of the changes required of credit card companies through last spring’s credit card legislation begin to take effect this week.

Those changes force companies to give customers longer notice when changing the interest rate and to provide more time to pay their bill after it’s mailed. A new credit card market is beginning to take shape, based on companies’ reactions to the new regulation. The outcome will likely be something Congress didn’t expect.

Citigroup Inc. said it has raised its rates on some credit cards this year as it reviewed its risk exposure and its needs to counter rising business costs.

Citi has boosted rates on up to 15 million U.S. credit-card accounts cards it co-brands with retailers such as Sears Holdings Corp. (SHLD 78.68, +2.41, +3.16%) according to a report earlier Wednesday in the Financial Times newspaper.

Many card issuers are tinkering with rates now, to get in under the wire, leaving consumers struggling with how to respond properly.

Credit card holders who in ordinary years might have used their tax refunds to pay down their balances apparently spent the money elsewhere as the recession deepened in the first quarter.

The delinquency rate jumped to 1.32 percent this year, from 1.19 percent in the first three months of 2008, TransUnion said. The statistic measures the percentage of card holders who are three months or more past due on their payments for cards bearing MasterCard and Visa logos, along with American Express and Discover cards.

While the exact impact such a bill would have on financial markets is unknown, at least one major credit card firm watcher has started to close short positions on most of his major holdings in the sector. This is especially germane as this investor, John Jacquemin, has been in the money as he rode credit card firms south.

Back in December 2008, we pointed out that Jacquemin, the head of private investment firm Mooring Capital, had been short credit card firms for close to two years, and that he signaled out Capital One, American Express ( AXP – news – people ) and Discover as firms to sell.

Since then Capital One has fallen an additional 38% and Discover is down 17.5%. American Express has gone the other way, up 25.3%. The Standard & Poor’s 500 is up 3.6% in that time.

Still, despite the off call on Amex, try not to shed too many tears for Jacquemin, as over the past two years his Intrepid Opportunities Fund is up 222%, thanks to timely bets against financials.

The movement to reform credit card practices is gaining speed as the White House and Congress target punishing fee practices they say are contributing to a growing number of Americans’ financial distress.

Banks say that higher funding costs, along with surging loan delinquencies and defaults, have forced them to reassess credit card risk.

When banks change credit card rates, consumers are often given the option of opting out, meaning they can pay off the debt at the same interest rate as long as they don’t make any new purchases. But if the bank raises rates because of a late payment, the consumer generally doesn’t have the option of refusing the higher rate.

Just the knowledge that the Federal Reserve was getting ready to plow up to $1 trillion in cheap funding into the asset-backed securitization market has driven down spreads on these pooled credit-card and auto loans, a sign that investors are ready to buy into the central bank’s latest liquidity program.

Spreads on 3-year credit-card securitizations have fallen to about 400 basis points from 650 basis points over swap rates at the end of last year, according to Barclays Capital. Spreads on 3-year prime fixed auto loans have fallen to about 350 from 600 at year’s end and 850 at the end of November.

A payment processor responsible for handling about 100 million credit card transactions every month disclosed today that thieves had used malicious software in its network in 2008 to steal an unknown number of credit card numbers.

You scan your credit card statements, be on the lookout even for small charges, possibly even less than a dollar. Such charges can be a sign that thieves are testing the account to see if they can pass a fradulent charge, and may signal a much larger charge to come.