Six Tips for Navigating the Newly Reformed Credit Card Market
New federal credit card regulations will save consumers at least $10 billion a year, and that’s just counting two of the many provisions–a ban on retroactive rate increases and “hair-trigger” penalty interest rates–the Pew Safe Credit Cards Project says.
But you still need to be careful. Here are six tips for navigating the new credit card landscape.
1. Don’t Ignore Credit Card Notices
Don’t toss out credit card notices with the junk mail. That notice might contain important news about your account terms. Credit card companies must give you 45 days notice before changing any significant terms, such as the annual fee or interest rate, and the chance to opt out of the card.
2. Credit Card Debt 101: Study Your Statement
Credit card statements must provide information to help you understand how much you’re paying for credit, such as how long it would take to pay off the balance if you paid only the minimum due each month. Read your statement to learn how much credit card debt really costs.
3. Watch Your Credit Card Limit
Beware that some changes, such as a drop in the credit limit or even cancellation of your card, don’t require advance notice. If your credit limit is cut or your account is cancelled, Consumer’s Union says to ask the card issuer why and to pay down balances to protect your credit score.
4. Credit Card Limit Rules
Credit card companies must get your permission to let you exceed your credit limit and charge over-limit fees. Know your credit limit and watch your spending. Consumer Action recommends calling your company in advance if you need to go over your limit and to sign up for your issuer’s e-mail transaction alert service to let you know when you’re close to reaching your limit.
5. Understand Credit Card Rates
Credit card companies can’t retroactively hike fixed interest rates or the margin they charge on variable rates, but that doesn’t mean variable rates won’t go up. Variable rates are tied to an index, so your rate increases when that index rises.
6. Pay Your Credit Card Bill on Time
Your credit card company can jack up the interest rate if you’re more than 60 days late. The median late fee is $39, and the median penalty annual percentage rate is 28.99, according to the Pew Safe Credit Cards Project. Pay your bills on time to avoid killer hits to your pocketbook.
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