For beleaguered credit card users, help has arrived. The Credit CARD Act (officially, the Credit Card Accountability, Responsibility, and Disclosure Act), signed into law in May 2009, is being phased in, and major new rules went into effect in February 2010. Banks and other card issuers must now give you 45 days notice before a change to your card agreement can take effect, they can no longer raise interest rates on existing balances unless you’re more than 60 days late with a payment, and they aren’t allowed to hike the rate on a new card during the first year.
 But these changes come at a tough time for banks. The recession has pushed millions of consumers to the brink of bankruptcy, and credit card losses are soaring. In advance of the new rules, credit card issuers have raised rates, slashed credit limits, and demanded higher minimum payments. To avoid paying punitive fees and rates, consider these tactics.
Don’t be late. If your payment arrives even a day after it’s due, you’ll likely be hit with a steep fee and a harsh interest rate increase—in some cases to annual rates exceeding 30%. On a $10,000 balance, that comes to more than $250 a month. The simplest way to avoid being hit with these extra charges is to be vigilant about paying up, perhaps by arranging for automatic payments. And if there’s no time to mail a check, pay by phone or online. Even if there’s a small fee, you’ll come out ahead. Read your mail. Card companies can’t make changes without notifying you in writing—but that’s what fine print is for. Don’t throw away inserts that come with your bill or delete email notifications without reading them. If you don’t want to accept a higher interest rate or a lower credit limit, write back to say you’re closing the account. Ask for a better deal. Banks have the right to raise rates and fees arbitrarily. But you have leverage, too, and simply requesting more favorable terms may pay off. Suppose, for example, you’re a long-time customer with a good payment record. If you mislaid a bill or you’re having trouble meeting your monthly minimum, a call to customer service to explain your situation could win you a reprieve. Faced with the prospect of a defaulted account, credit card companies fairly routinely cut rates and extend repayment periods for responsible cardholders. Try some legal muscle. Sometimes card issuers are just wrong. They may charge late fees for payments that arrived on time—and then penalize you for exceeding your credit limit. If you dispute a bank action and aren’t getting anywhere, ask to speak to a supervisor, threaten to hire an attorney, even consider hiring an attorney to write a strongly worded letter on your behalf. Lawyers’ fees aren’t cheap, but here, too, a successful resolution could be well worth the cost. |