AEM Mortgage Minute with Deanna Daughhetee

Credit Card Tips for the New Year

Friday, January 22, 2010

The recently enacted CARD Act will provide significant changes to the credit card industry, with many of the new regulations put in place to protect the consumer. Being aware of the changes can help you get the most out of your credit cards.

Always open credit card mail, especially now.
The CARD Act will require credit card companies to allow you the chance to opt out of any changes to your terms. Companies must allow you at least 45 days before the terms can change and allow you to reject the changes and cancel the account. Significant hikes in your APR are just one of the many changes that could be enacted, even if you have outstanding credit.

Start using inactive accounts.
Occasionally credit card companies will close accounts without advance notice if there has not been activity in some time, since an empty account provides no profit to the company. Making small purchases, and then immediately paying them off, can keep those companies from closing accounts that you wish to keep open.

Use rewards points.
Credit card companies have recently scaled back rewards programs to make up for lost profits in 2009. They will likely continue to do so in 2010. Keep an eye on the terms on your rewards programs and spend your points if it becomes sensible to do so.

Keep an eye open for better terms.
Don’t forget, you can often secure a new credit card with better terms, whether it be a lower APR or better rewards, and transfer your old balance to that new card.

Watch out for over limit fee proposals.
Card members must now opt-in to programs which charge over limit fees under the new CARD Act. Watch out for proposals disguised as a good thing; credit card companies will try to have you accept their new program which will charge $29 for every over limit fee. Under the current scenario, your card would be declined if you would be over the credit limit.