• Banks can’t raise interest rates on existing credit card balances unless a promotional rate ends, you’ve been late with a payment, or the card has a variable rate.
• Interest on new balances can only be increased after 12 months if the promotional rate ends or payments are 60 days late.
• You must have the right to “opt out” of major changes to your credit card terms. Opting out closes the account but you have five years to repay your debt at the current interest rate and terms.
• Banks can only sign up people under 21 for credit cards if they have an adult co-signer or can prove they have enough income to pay bills.
• You must receive your statement at least 21 days before payment is due.
• Credit card statements must clearly show the date and time your payment is due. The time must be no earlier than 5 p.m. on the due date.
• Statements must explain how long it would take to pay off your balance by making only the minimum payments.

Pay close attention to the fine print in credit card offers to become familiar with the terms and conditions. Also read your statements on existing accounts carefully to understand any changes; think twice before signing up for credit card offers, such as cash advances, related to existing accounts.

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CARD act

is impending, what are credit card companies doing to mitigate the losses that they will incur? An industry insider gives us a picture of what the future holds for credit card customers.

APR Increases

This is the most obvious one. Almost all credit card issuers are raising their APR rates, which hurts anyone who’s holding a balance on their card. The new credit card laws don’t take effect until February 2010, so for now the banks are raising their rates furiously. The new legislation limits when an APR can be changed, and requires that the rate drops after 6 months of timely payments.

By getting their rate increases in now, your new “regular” rate will be considered the “default” rate. For example, if you had a 9% APR and were late on a payment, your rate might have been hiked to 20%. In the future, expect 20% to be more the standard, with rates as high as 25 to 30%.

Fees On Balance Transfers

Fees on balance transfers will go up by a few percentage points.

Shorter Grace Periods

If you currently have a 25 or 28 day period, you’ll find your grace period reduced to 21 days, the new legal minimum.

Increased Minimum Payments

This is part of the CARD act, and while it does hurt a bit more every month, it ultimately will help you pay your balance off faster. So in the long run this is a good thing for consumers.

End of Rewards, Teasers, 0% Rates, Balance Transfers

Rewards programs will be removed for customers who are not profitable. We’ve already started to see that with many current credit cards. There will no longer be 0% intro rates or teaser rates. Balance transfers will be removed or there may be a fee attached.

Reducing Credit Lines

Companies are taking a look at your debt-to-income ratio and lowering credit lines across the board. For example, if you owe 50,000 on a card and your yearly income is only 65,000, it’s pretty unlikely that you’ll ever pay off the entire balance. As a result, it makes sense to drop your credit line so you can’t borrow any more from them. Before, card companies were more interested in collecting the interest on that 50,000. But with people defaulting on cards left and right, it no longer becomes profitable to collect interest on the 50,000 and lose the entire 50,000 when the customer defaults.

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Good credit is absolutely essential to be able to finance big purchases such as homes, cars, appliances, etc. In addition, some employers and landlords will also check your credit as well.

While some may claim that the best way is to cut up your cards, this is not neccessarily the case. Better credit management can help improve your credit score a lot faster than cutting your cards can. Here are five tips to help you improve your credit:

1. Pay your credit card bills on time! Pay as much as you are financially able to; the lower your balance the better.
2. Get a credit card from a major issuer (Discover, Mastercard, Visa, American Express) ; store cards aren’t as effective in building credit.
3. Spread your credit across multiple cards. Even if you are constantly paying off your entire balance, lenders take into consideration what % of your credit balance you are using. Try to keep your balances below 30% of your total available balances.
4. You must use your credit in order to build it. If you have 5 credit cards but you’ve cut them all, your score won’t increase. Lenders want to see that you are not a risky borrower, but in order to do that they need to see your credit history.
5. Try as hard as you can to avoid letting billing disputes go to collections!

Your credit score will not go up immediately – it will take a long time to rebuild credit, especially if you’ve defaulted loans or had a home foreclosed. But building your credit is a long term investment and that’s why it’s all the more important to start today.

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