Avoid Post Card Act Traps From Credit Card Companies

The Credit CARD Act of 2009 was created to reign in lenders and provide additional protections for credit card users from exorbitant penalties and interest rates. In response to the provisions, credit card companies are raising fees for their products, affecting consumers in different, but powerful ways. Nonetheless, you have the ultimate responsibility in borrowing wisely, and there are strategic practices that can keep the wolves at bay as lenders adjust policies to recoup their earnings at the consumers' expense.

Keep Using Your Cards. Now that lenders will levy charges on dormant accounts to earn money, you can fight back by using your credit cards for small, routine purchases to post transactions and stave off inactivity charges. Bank of America, Capital One Chase, and Discover Card are among the companies that so far have pledged not to levy inactivity charges.

Choose Lenders with Stable Rates. Prior to the February 2010 effective date of The Credit CARD Act, many credit card companies sent consumers notice of a change in terms and conditions, kidnapping low fixed-rate accounts into variable rates to make up new lender income. Banks that shifted policy prior to enactment will peg their interest to rising rates as the economy recovers, with cardholders paying the freight. If you have an excellent credit history, Currently Simmons Bank is still offering single-digit interest rates on a Visa card for qualified applicants.

Pay on Time! To protect consumers against late fees without adequate notice, the Credit CARD Act requires lenders to send due payment notices earlier in the month and to allow consumers to make same-day payments to avoid late fees. If you have a habit of waiting to the last minute or missing deadlines, you can expect to pay more as lenders raise penalty fees to $50 or more to offset their losses created by the provisions of the Act. Chase Blueprint is one program that allows same-day payments as well as options to split their balances across multiple deadlines.

Consider Traveler's Checks. If you do business or vacation overseas, you might have already noticed higher overseas transaction fees since the Act was passed. Lenders say their five percent transaction surcharges are on par with cash exchange services for overseas travel, but many consumers are thinking of other ways to pay while traveling. Capital One has so far vowed to offer foreign transactions without fees.

Look Out for Balance Transfers or Cash Advances. Both will begin to cost you more. The days of 'card surfing' may come to an end with policies banks have adopted in response to the Act. Free transfer fees will probably go the way of the so-called free lunch. Expect to pay at least five percent on your balance transfers, which may cost more in the long run than keeping the raised interest rates on your existing cards. Ouch. Also, you're going to see higher service fees at ATMs. Discover Card is currently offering a zero-fee rate for transfers during a promotion. It may not last. You may still pay a 3-5 percent processing fee.

Beware the Rising Fee Notice. Once you've received notice of a higher annual fee, you have 45 days to cancel your card and close your account. Before the ACT, notices slipped into your mailbox in rather innocuous looking envelopes that resembled junk mail. The idea was to dupe you into missing payments. Now your fee notices have to look like official mail from your lender. Blue from American Express currently offers consumers with good credit histories a card without annual fees.

Remember: Read the small print carefully on every mailing sent your way from your credit card company. Five minutes of your time can spare anguish when the next month's bill arrives!

Curtis Arnold, a nationally recognized consumer educator and advocate, has been educating consumers about credit cards since 1998. New! Curtis is the author of 'How You Can Profit from Credit Cards: Using Credit to Improve Your Financial Life and Bottom Line' (FT Press, 2008). He is also the co-author of the upcoming Complete Idiot's Guide to Person-to-Person Lending (Alpha Books/Pengiun Group USA, April 2009), a contributor to The Ultimate Allowance (InnerWealth Publishing, 2008) and is extensively featured in 42 RulesTM for Driving Success With Books (Super Star Press, January 2009).

Curtis is regularly interviewed and quoted by respected members of the national press regarding consumer credit issues.

How long did you not pay your chase credit card before they sent you the letter to appear in court?

I am behind on several cards and am receiving calls night and day from them
Hey...Thanks for all the answers...but right now payment arrangements won't work cause I have NO MONEY and NO INCOME...but I do intend to do a debt settlement eventually...I won't pay more than 50% of my balance...

Answer
Most CC companies write the debt off around 150 days or so. Then they sell the debt to collection agencies for pennies on the dollar, who then make the threats to take you to court. You have a better chance of settling the debt with the collection agencies, do not be afraid to make them an offer, try to settle for 50%. This is more than they paid for the debt, so they will most likely settle. Regardless of their threats, they can not garnish your wages unless they get a judgment from the courts. If you do receive notice to appear in court, make sure you show up. Have all your bills, etc with you.