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The credit card reforms President Obama signed into law this May are starting in February. This means your card company won’t be able to raise the interest rate on an existing balance. Payments will be applied first to the portion of your balance with the highest rate. Best of all if you miss a deadline for one card, the issuer of another can’t hold it against you. Great wins for you the consumers.
This doesn’t mean you won’t pay in other ways, Federal regulators recently estimated that the country’s largest banks will suffer a total of billion in credit card losses through 2010. The card companies are getting hit hard as a result of the recession. This has the institutions anxious to concoct new methods of creating revenue and limiting risk.
It also has them leaning heavily on some old standbys, the law doesn’t prevent banks from hiking rates on new purchases. They can still zap credit lines, or yank rewards until the bulk of provisions go into effect this winter, the newly outlawed practices will still be in play. You have to set your own rules, and not just rely on the government’ If you want to protect your plastic. A good place to start, your favorite card, understand that if you’ve got another idling in your wallet that you don’t use. Issuers are closing accounts because of inactivity,and this is happening to model cardholders as well. Not only are creditors canceling cards you don’t use, they’re also cutting limits on the ones you do. Issuers have been targeting customers based on, among other things, location, spending pattern, and debt-to-credit ratio. This last one — which refers to how much of your available credit you’re using — is easy to manage. You’ll especially want to keep it in check to avoid a vicious cycle: A high ratio results in a lowered credit score, which also triggers credit line cuts.As of this month, issuers must give you 45 days’ notice before changing the rate or other terms on your card (vs. 15 days before). Since the new terms will likely be less wallet-friendly, it’s crucial that you pay attention. This after all is Your Debt to Control or the credit card companies will.

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