·       Interest Rates: Card companies may no longer raise the interest rate on your existing balance so long as you are not late on your payments. Card companies can raise your rates on future purchases, however, and must give you at least 45 days notice before doing so. Consumers may choose to reject the new rate during the 45-day period, but must stop using the card. NOTE: If you accidentally use the card (or allow an automatic payment to be charged to it) before the account is officially closed, this will count as acceptance of the new rate, your account will stay open, and interest will accrue at the new rate.

·       “Universal Default”: Before passage ofthe CARD Act, credit card companies could punish you with an increased interest rate if you were late on payments made to a different company, say a home or car loan payment, even if you were current on your credit card payments. Under the CARD Act, you can only be penalized by a card company if you are late on your payments to that company. NOTE: Any default or late payment will still affect your credit score, and could negatively impact your ability to qualify for credit in the future so it’s critical to stay on top of all of your payments.

·       Grace Period: Card companies may no longer shift due dates forward or delay sending your bill in an attempt to garner late fees. The new law establishes a 21-day grace period in which to pay your bill and requires your due date to be on the same date of every month. This means that your bill may come earlier than before, giving you more time to pay. NOTE: Be careful to make at least a minimum payment on time each month. To offset the increase of consumers who will pay on time due to this change, many card companies have increased their late fees for those that don’t.

·       Statement Disclosures: Under the CARD Act, monthly credit card statements must now indicate how many months it will take for you to pay off your account if you only make the minimum payment and how much you need to pay each month in order to pay off the balance within 3 years.

·       Double Cycle Billing: Credit card companies may now only charge you interest on the balance in your current billing cycle. For example, prior to passage of the CARD Act, if you charged $1,200 in a single cycle but paid off $1,000 in the same cycle, “double cycle billing” allowed the company to charge you interest on the full $1,200 instead of just on the remaining $200 you still owed. This was a way for card companies to squeeze more money out of consumers who carried a balance on their cards from month to month.

·       Service Fees: Before passage ofthe CARD Act, there was no limit to what card companies could charge for arbitrary “service” fees, including activation fees and annual fees. In one particularly nasty practice, some card companies attracted consumers who had bad credit by promising low interest rates but then charged annual and other service fees so high that they exceeded the card’s annual credit limit—essentially putting consumers in debt before they ever bought anything. This type of predatory lending has been curtailed by the CARD Act— card companies may now only charge up to 25 percent of the annual credit limit in fees for the first year. (After the first year, there is no limit to service fees.) NOTE: This limit does not apply to penalty fees, such as late fees.

·       Student Credit Offers: Card companies may no longer issue credit cards to individuals under age 21 unless the applicant has a co-signer or can show independent means to repay the debt. This provision is meant to decrease the flood of offers to college freshmen who may not fully understand the contracts they are entering when signing up for a card.

Even though some of the more nefarious credit practices are now outlawed by the CARD Act, credit card companies have been hard at work developing new strategies to exploit consumers. Here are some new loopholes that you should watch out for in the future:

·       Rewards Program Changes: Credit card companies may curtail their rewards programs on existing members in order to save money. In order to stay on top of any possible changes, carefully read any notices from your card issuer about changes to your rewards or loyalty programs.

·       Variable Rate Cards: Many credit cards now carry a variable interest rate which adjusts automatically with the prime rate set by the Federal Reserve. Your interest rate is likely to be a margin above the prime rate. In other words, if the prime interest rate is 3.5 percent and your card company has a margin of 22 percent, then your actual interest rate is 25.5 percent. The CARD Act requirement that card companies give you 45 days notice before changing your rate applies to fixed rates or to the margin on your variable rate (if, say, your card company increases your margin from 22 percent to 27 percent it must notify you). The card company is not required to notify you every time the prime rate changes.  Thus, you could see increased interest rates without warning from your card company. If you have a variable rate card then it is up to you to know the prime interest rate—and to carefully consider prior to accepting any credit card offer if your needs would be better served by a fixed or variable rate card. (As before, card companies will not have to notify you if your introductory interest rate expires.) NOTE: Some variable rate cards are not as simple as margin-above-prime. These so-called “pick a rate” plans allow card companies to pick which prime rate they want to use. For instance, card companies can choose to use the prime rate on the last day of the billing cycle or the average prime rate over the last 90 days. Card companies must always disclose to you what the actual tie to the prime rate is—so read your contract carefully before signing up for a new card.

·       Penalty Interest Rates: If you are more than 60 days past due on your card, then card companies may charge a higher penalty interest rate for 6 months without giving you 45 days notice. If you make all your payments on time for 6 months at the increased penalty rate, then your rate must be lowered to its original number. However, if you continue to be late on your payments, the card company may make the penalty rate permanent, and the law places no limit on the penalty rate. The best way to avoid this is to ensure that you never allow your minimum payments to fall 60 days past due (even if you can’t pay by the due date).

·       Fees: Fees account for a large and growing percentage of card companies’ revenue. In the last year, many card companies have added new fees, including membership fees, inactivity fees, monthly “service” fees, and currency-exchange fees. It is important to compare credit card offers for a card with minimal fees, stay on top of your payments, and opt out of fees for going over your credit limit. On existing accounts, keep track of the “Terms and Conditions” section of your statement and note any changes to the fees laid out there.

·       Business: The CARD Act does not cover business credit cards. Business owners should carefully scrutinize their contracts and statements and report any abuses to the Federal Reserve.

·       Read all the fine print. When applying for a new card, make sure you understand whether the interest rate is fixed or variable, introductory, or subject to other conditions. Know what this means for you and find a card that will best fit your spending habits. Also, keep track of fees on your contract and on your statement. 

·       Set Up an Automatic Payment from Your Checking Account. By setting up an automatic monthly payment from your checking account online, you can avoid most fees and ensure that your accounts do not become past due. 

·       Stay Informed. Know How to Deal with Your Creditors. Credit card companies profit most from consumers who are uninformed or intimidated by dealing with them. Know your rights and obligations and before you pick up the phone have a clear idea of what you wish to get out of the negotiation.

·       Report Any and All Abuse. By filing complaints on abusive practices, consumers are vital to monitoring and regulating lenders. Card companies are subject to the law just like you. By holding them accountable and holding them to the letter of the law, you can help federal watchdogs put a stop to abusive and predatory lending practices.  Contact the Federal Reserve at http://www.federalreserve.gov/feedback.cfm