Start Reading Your Statements

President Obama recently signed credit card reforms into law, but credit card companies don't have to start playing by the rules until July, 2010. That means that these credit card companies have only the next year to get it while they can, and unfortunately, many of them are already looking for ways to make more money before the deadline. It might come as a shock to some, but these new fees and higher rates do NOT just apply to those with low credit scores. Anyone who carries a balance could see changes.

The new law is meant to combat some practices that are not exactly fair to the consumer. Things like:
Hiding fees
Raising rates for any or no reason
Balooning rates when you've missed a payment on another of your bills
Applying payments to the lowest rate balances first

While these new rules are meant to be more fair to the consumer, they are being slammed with fees and higher rates in the interim. The average rate on a credit card has ticked up more than 1.5% recently, and analysts expect that to rise an additional 1-2 points by the year end. The new law will restrict the practices of late and over-the-limit fees, so we will likely see many cards add an annual fee.

Credit limits have already been slashed, as many consumers now have access to less than half the credit they had just months ago. If you're a person who never uses their credit card, it wouldn't be a bad idea to use it once a month for gas, then pay it off. Doing this will make you somewhat less of a target for a limit decrease.

While no one should be surprised that subprime cards and those with instant approval are disappearing, it is disheartening to see your rewards program get watered down. Some cards will simply not be able to offer the rewards that they used to. Some banks are even talking about charging interest from the day you make the purchase, so even those who pay in full each month will have to fork over interest!

If you've never gotten in the practice of going over your credit card statement, now is the time to start. Those last 3 pages of small print? Read them! And if you start to see any of the changes discussed previously happening to you, don't be afraid to call and speak up!
-If you are fortunate enought to have good credit, you have some leverage.

By Amanda Bashore, CFP®