Will Fed Limit Credit Card Rate Increases?

This is a guest post by Bill Hardekopf, CEO of LowCards.com.

Senator Charles Schumer called on the Federal Reserve to immediately limit rate increases on existing credit card balances. Schumer said credit card companies are rushing to raise rates and fees ahead of the Credit Card Accountability Responsibility and Disclosure Act that will take effect in February 2010 and will limit rate increases and fees.

“This is what many of us feared about a law that didn’t take effect right away,” Schumer said. “Issuers are using the delay in the effective date to wring more dollars out of their customers. It is against the spirit of the law and it is just plain wrong.”

Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook, said it is doubtful that the Fed will act on Schumer’s request and that we have seen credit card issuers making substantial changes in rates and fees throughout this year, not just since the bill was signed into law. “The credit card reforms that just passed were not a surprise. Issuers have known some type of changes were coming, so they have been making numerous moves since the start of 2009 to make up for their expected shortfall in revenue. We are starting to see these changes happen even more quickly now. Issuers are going to increase rates and fees while they can. They are not philanthropic organizations; they are out to make as much profit as possible. We doubt the Fed will get involved and stop any of this, but we applaud Senator Schumer for at least calling them out to do something about it.”

In May, LowCards.com studied the legislation and made the following predictions about how issuers would respond to the new regulations to make up shortfall in their revenue:

• Expect more increases in credit card interest rates. When the new regulations take effect, issuers cannot raise rates on a new customer for one year. So these ongoing interest rates will likely be increased before February. But consumers are also likely to see interest increases in their existing accounts during this period.

“Issuers do not have any of these restrictions in place until February so we think they will continue to implement the policies that are currently in place. Expect issuers to quickly increase your APR if you do anything to show that you are a greater credit risk,” said Hardekopf. “They still have the ability to raise your interest rates at any time for any reason. If you miss a payment, are late on a payment, exceed your credit limit or even use too much of your credit limit, you could see an increase in your interest rate the very next billing period. Consumers need to get their credit card bills in early, pay more than the minimum amount and not use more than one-third of their credit limit.”

• A cutback in rewards and cash rebates. That has already been taking place since the start of 2009 and will likely continue through the year. Pay attention to your rewards by looking at the terms and conditions of your card. Issuers can make subtle changes in the reward program that are hard to spot, like changing a tier needed to reach a certain payout or requiring purchases over a longer period. Maximize the points you have and use them sooner rather than later because these could also be reduced. American Express notified cardholders that it is reducing its rewards for the Blue Cash card on spending over $6500 from 1.5% to 1.25%. (Note: see a number of changes made by credit card issuers in 2009 at http://www.lowcards.com/industry/recent-credit-card-changes.asp)

• More cards with annual fees. “Approximately 20% of the credit cards have an annual fee at this time, but we expect that number to go up in the next year,” says Hardekopf.

• An increase in fees. While the regulations address the over-the-limit fees assessed on credit cards, they do not put any restrictions on fees for balance transfer, cash advance or late payments. This is already taking place as Bank of America and Discover increased balance transfer fees from 3% to 4% on June 1. Yesterday, JPMorgan Chase & Co. announced an increase of the minimum payment on balances from 2 percent to 5 percent for some customers. It also plans to raise the balance transfer fees to 5 percent in August.

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LowCards.com simplifies the confusion of shopping for credit cards. It is a free, independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates. It also gives an unbiased ranking and review for each card. The LowCards.com Complete Credit Card Index is the most objective and comprehensive resource on the Internet which allows consumers to compare rates for all 1260 credit cards offered in this country. Created by Hampton & Associates, the company has been analyzing the credit card industry and supplying objective websites on various consumer expenses for eight years.

Subscribers and Followers

So, we all want people to check out our blogs. Hell! People have come up with a lot of ways to get other bloggers and people in general to follow them in some way, be it through their site feed(s), Twitter accounts, Technorati favs (didn’t that go out of style?), site listings in online mags…the list goes on. I, myself, was looking at a few ways to get people to notice my blog since it seems to be slowly dying and going unnoticed. I haven’t run out of shit to say!! There was a lot of things to try out on Mom Bloggers Club, so I started poking into it further.

Aside from my idea of offering free WordPress themes, I found groups where you post your FaceBook Network Blogs url, groups where you post your Twitter profile and get followed by other people, and groups where you can get your posts voted up on social media sites (omg more of those please!). Even the idea of when people post contests and giveaways, they list following them in some way or another as a way to enter. We’ve all seen those, I’m sure. Now, that’s all well and good, but at the end of the day, unless your a high profile blogger with a well set group of roadies, you got nothing really. Just a lot of clutter in your profiles.

You know what I noticed? And I don’t know if this has happened to others. I’ve run two giveaways on this blog, one of them being unsuccessful which sucks cause it was awesome. People subscribed, followed, commented as they were told to do to enter. But when the deal was done and the giveaway was over, I started getting emails saying this person unsubscribed from my feed and/or that person unfollowed me on Twitter. I don’t think I’m the only one this is happening to, but what was the point in asking them to do so if they were gonna undo it later? It kind of defeats the purpose and it makes my site (and me) sad that people don’t think I’m worth keeping up with. They’re probably right, but still!!

So, in conclusion, unless your already popular and have been around for a while and are known, I don’t think it’s worth trying to get up to your eyeballs into all of this social business. Granted, it takes time to build readership, but personally, I don’t think it’s working out for myself (being the comment whore I am) and a lot of other people I’ve seen having the same issues. I’m not saying I’m giving up though. ‘Cause I’m not! I shall own the internet one day, you watch. And I’ll be the super networker everyone wishes they were. Mwahahaha!!

Consumer Tips for Settling Your Credit Card Debt

This is a guest post by Bill Hardekopf, CEO of LowCards.com.

Credit card default rates are now above 10% for several major issuers. This means these banks don’t expect to be paid back on over 10% of their credit card loans. To cut their losses, issuers now appear to be more open to settling or negotiating a payment plan for your credit card debt.

“While settlement and payment plans may relieve a bit of the pain for issuers and cardholders, this is not an ideal solution. It is just a way out to avoid total loss. For cardholders, it means their financial situation is so difficult that they can’t pay anything on their loans. They probably already have a poor credit score and settling their debt could make it worse, but it does remove some of the weight from the burden of the debt. For issuers, they are losing money on loans, but at least it isn’t a total loss,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. “It is important for cardholders in this situation to be proactive and try to work out a solution. Their actions could help them avoid bigger financial problems.”

Bank of America, the nation’s largest bank, recently reported that its default rate jumped to 12.5% in May, up from 10.5% the month before. American Express said its default rate rose to 10.4% from 9.9%. Defaults will continue to climb as unemployment continues to rise and the financial crisis continues. This increase in defaults means billions of dollars per year in losses for banks.

Growth in delinquencies is a major problem for credit card issuers. They must write down a balance to zero once a person has been delinquent for six months. They will continue to try to collect the debt through a collection agency, but they have to show the loss on their books.

If you are having financial difficulties and can’t make your credit card payments, now is the time to contact your issuer, explain your situation and work out a payment plan. Issuers are not under stress and, in some cases, they may be more willing to work with cardholders to create a payment plan.

Where should consumers start?

Before you jump to debt settlement, start with your interest rates and fees. If you can make some monthly payment, ask your issuer to lower your rate and waive your fees. In many cases, a lower rate and reducing the interest payment will make a big difference in how much of your debt you can pay off.

If you are in danger of missing a payment, contact your creditors as soon as you realize you have a problem. The sooner you contact them, the more willing they may be to work with you.

If the first person you speak with can’t help lower your rate or make adjustments to your account, ask to speak with a supervisor. Persistence may be necessary to find the person who can or will help you. Explain that you are in debt, the steps you are taking to repay it, and what you can pay today. The adjustments could result in reducing the amount outstanding or working out a payment plan that could work for both sides. Document all conversations, including whom you spoke with, and the date, time, and the results.

If you are already in default and unsure of what to do as a first step, don’t ignore the problem and hope it goes away. A good place to start is “Help With My Credit,” a service started by financial institutions and credit card issuers to educate and assist cardholders who are struggling to make their credit card payments. “Help With My Credit” provides a toll-free telephone number (1-866-941-1030) for consumers to call with credit card and debt issues. Operators will provide information about contacting credit card issuers and accredited credit counseling agencies. Consumers can also get help and information through a website, HelpWithMyCredit.org.

If you are in danger of default and close to or over 90 days past due on your account with no hope of paying it off, you can also talk directly with your credit card issuer about debt settlement. They may be able to help you work out a settlement where the account is closed and you pay a portion of the amount that is due.

Keep in mind that there are negatives to arranging a settlement for debt. Closing an account due to settlement is bad for your credit score and will affect your score for several years. If the forgiven debt is more than $600, you must also pay income taxes on the amount that is forgiven by filing a Form 1099-C.

Do not respond to ads from debt settlement companies that promise to cut your debt in half. They charge high fees, much of it due up front, for services that you can sometimes do yourself with about the same success. In some cases, they can even make the situation worse.

A non-profit accredited counseling agency can help you get lower interest rates and develop a debt management plan. The National Foundation of Credit Counselors is a good place to start. Their Debt Management Plan is a systematic way to pay down your outstanding debt through monthly deposits to your credit counseling agency, which will then distribute the full amount of these funds to your creditors. It takes approximately 36-60 months to repay debts through a Debt Management Plan and when you are through, they will help you re-establish your credit. Fees include a $25 counseling fee and a $10-$25 monthly fee for the Debt Management Plan.

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LowCards.com simplifies the confusion of shopping for credit cards. It is a free, independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates. It also gives an unbiased ranking and review for each card. The LowCards.com Complete Credit Card Index is the most objective and comprehensive resource on the Internet which allows consumers to compare rates for all 1260 credit cards offered in this country. Created by Hampton & Associates, the company has been analyzing the credit card industry and supplying objective websites on various consumer expenses for eight years.

Protecting Yourself Against Credit Card Fraud

This is a guest post by Bill Hardekopf, CEO of LowCards.com.

Credit card fraud is widespread. Cards being stolen and used to purchase gas. Restaurant workers stealing credit card information to use for personal purchases. Phony bank emails urgently requiring you to send account information. PIN and account information skimmed at ATMs.

Daily news stories show that credit card fraud can occur in a variety of ways and can happen to anyone. The more you know about it, the better you can protect yourself.

Credit card fraud is theft that occurs anytime a credit card or a card’s information is stolen and used as a fraudulent means of payment in a transaction. It can happen without the cardholder ever realizing that the card information has been stolen. When a card is lost or stolen, it remains active and open until the cardholder notifies the issuer that the card has been lost or stolen. The thief can use the card until it has been reported and canceled.

According to the FTC, credit card fraud costs cardholders and issuers billions of dollars each year.

“While most issuers have technology to help identify fraudulent activity, it is the cardholder’s responsibility to frequently monitor the account for fraudulent charges. Also, review your credit reports to look for suspicious activity or accounts that were opened by someone else in your name,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook.

Credit card fraud has advanced beyond stealing and using real credit cards. Here are two common practices that are used to steal your credit information:

• Skimming. Skimmers are devices that can be used to swipe credit cards and collect the account numbers and information embedded in the magnetic strip. Anyone can buy a small, handheld skimmer. These can be used in restaurants. The waiter or cashier takes your card, charges your account, then swipes it a second time to steal the information. Skimmers can also be installed at ATMs to catch your PIN when you enter it. One way to detect these skimmers is to look for raised edges on the machine. If you are unsure about the ATM, use another one.

• Phishing. The most common form of phishing is the email that appears to be from your bank or credit card issuer with an urgent message about your account. These emails require you to reply with your account information or give you a number to call to supply your account information. Once you provide this, they can take money from your account or open new accounts in your name. Legitimate banks do not ask for information in this manner.

Here are some tips from the FTC and FBI to guard against fraud:

• Sign your cards as soon as they arrive.
• Carry your cards separately from your wallet in a zippered compartment, a business card holder, or another small pouch.
• Keep a record of your account numbers, their expiration dates, and the phone number and address of each company in a secure place.
• Keep an eye on your card during the transaction, and get it back as quickly as possible.
• Void incorrect receipts.
• Open bills promptly and reconcile accounts monthly, just as you would your checking account.
• Report any questionable charges promptly and in writing to the card issuer.
• Notify card companies in advance of a change in address.
• Be cautious when responding to special offers (especially through unsolicited e-mail).
• Be cautious when dealing with individuals and companies from outside the country.
• The safest way to purchase items via the Internet is by credit card because you can often dispute the charges if something is wrong. Make sure the site you are using is a secure site.
• If you bank online, don’t use the “automatic sign on” for bank or credit card sites.
• Never provide your credit card number or other personal information on the phone, unless you are able to verify that you are speaking with your trusted financial institution or a reputable merchant.
• Don’t give your account number to anyone who sends you an email or calls you on the phone.
• To make sure store or restaurant employees aren’t skimming your card, keep an eye on your card as they swipe your card for payment. The devices used for skimming are sometimes disguised to look like cell phones.
• After the purchase, check to make sure you were handed back the right card.
• If you are traveling to a foreign country or making a large purchase with your card, notify your credit card issuer in advance so your account won’t draw attention for possible fraud.
• Cover the keypad with your hand when entering your PIN at an ATM. There may be cameras or someone watching as you enter this information.
• Occasionally change your account number (one can change an account number without closing the account). Also change your PIN from time to time.

If fraud does occur, or your cards have been lost or stolen, immediately call your issuer. You are protected by law so that once you report the loss or theft, you will not be further responsible for unauthorized charges. Your maximum liability for credit cards is $50 per card. After you report the fraud, you will be sent a fraud affidavit to fill out and return.

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LowCards.com simplifies the confusion of shopping for credit cards. It is a free, independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates. It also gives an unbiased ranking and review for each card. The LowCards.com Complete Credit Card Index is the most objective and comprehensive resource on the Internet which allows consumers to compare rates for all 1260 credit cards offered in this country. Created by Hampton & Associates, the company has been analyzing the credit card industry and supplying objective websites on various consumer expenses for eight years.

Credit Card Trends: Far Less Solicitations, More Annual Fees

This is a guest post by Bill Hardekopf, CEO of LowCards.com.

There is good news and bad news for consumers when it comes to the latest credit card trends.

U.S. households are now receiving significantly fewer credit card offers by mail, but more of the offers they receive are for cards carrying an annual fee, according to Mail Monitor, the direct mail tracking service from Synovate.

During the first quarter of 2009, U.S. households received 372.4 million offers, representing a dramatic 67% drop from the 1,131.6 million offers received during the first quarter of 2008.

Twenty-seven percent of offers carried an annual fee during the first quarter of 2009, up from 18% from one year ago.

“The new credit card regulations will substantially reduce the revenue for issuers. Increasing the number of cards with annual fees is certainly one way to make up for this shortfall,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. “Consumers must pay attention to the offers they receive to see if the card has an annual fee. In addition, consumers need to look at the notices you receive in the mail or in your bill to see if your issuer has added, or even increased, an annual fee.”

According to Mail Monitor, the mean bankcard annual fee is $74.

“Issuers will find other ways to increase their revenue,” says Hardekopf. “We also expect interest rates to increase between now and February when this new law goes into effect.”

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LowCards.com simplifies the confusion of shopping for credit cards. It is a free, independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates. It also gives an unbiased ranking and review for each card. The LowCards.com Complete Credit Card Index is the most objective and comprehensive resource on the Internet which allows consumers to compare rates for all 1260 credit cards offered in this country. Created by Hampton & Associates, the company has been analyzing the credit card industry and supplying objective websites on various consumer expenses for eight years.

How Newlyweds Can Minimize Financial Stress

This is a guest post by Bill Hardekopf, CEO of LowCards.com.

It is the wedding season and many newlyweds are about to start their life together. While they have the same dreams and goals as newlyweds before them, many are going to find it much more difficult to get credit to finance those goals. New credit card regulations and the reaction by issuers are likely to have a big impact on those who are just staring out and applying for credit.

“This a difficult financial time where easy credit is no longer available to everyone. It is now more difficult to get loans for homes and credit cards. Your credit scores, history, even spending activities are now closely watched and you will have to prove to credit issuers that you are not a risk for defaulting on a loan. The sooner you start planning for this, the more prepared you will be. Your engagement period is a good time to start building a financial plan,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook.

Your spouse is your “business” partner as well as your life partner. Your credit, good name, and financial future will be tied to this person. Don’t assume that your spouse thinks the same way you do or shares the same beliefs about money. Their spending and saving habits may surprise you.

“Have an honest discussion about money,” says Hardekopf. “If your partner has difficulties managing debt or spending, it will not only affect your finances, but could also affect your credit score.”

Talking about money is difficult for anyone, but discussing finances before the wedding is a good way to test the relationship. If you can’t have an honest discussion about finances before the wedding, then this may not be the person you want to join together with for the rest of your life. Finances are one of the biggest causes of stress in a marriage. You will be better off if you can confide in each other and create a financial plan.

Here are tips for avoiding the stresses of marriage and debt:

• Before the wedding, show all of your cards. Tell your spouse about your income, debts, issues you have with money, how your parents raised you to handle money, your strengths and weaknesses with money, and admit if you are a spender or saver. A good place to start is to use a budget or bank statements from the past twelve months to show how you used your money. Your monthly debt, including your mortgage, should not exceed 35% of your gross income.

• Have a wedding that you can afford. This is not the time to start running up large credit card bills and still be paying for your wedding on your fifth anniversary.

• Each of you should get a copy of your credit reports. This will give you a clear picture of how you both handle money and it will help avoid any future surprises. Aim to get your score over 750 to receive the lowest interest rates for your first mortgage and other loans.

• Avoid credit card debt. The best rule of thumb is simply, “if you can’t pay for something with cash, you can’t afford it.” Don’t fall into the trap of buying something with a credit card with the intent of paying it off in just a few months.

• Get one or two credit cards and stick with them. Building a good payment history with one or two credit cards is a positive factor in your credit score.

• Each spouse should have a credit card in his or her own name to build your own credit score.

• If you have a balance, pay off as much as you can over the minimum each month. If you get gift money, tax refunds, etc., use this to pay off your debt. The faster you pay it off, the faster you can focus on saving and getting ahead. Reducing your debt-to-credit limit ratio also improves your credit score.

• Before the first bills come in, make a plan for how the bills will be paid and who will pay them. If you have separate accounts, know which account pays each bill.

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LowCards.com simplifies the confusion of shopping for credit cards. It is a free, independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates. It also gives an unbiased ranking and review for each card. The LowCards.com Complete Credit Card Index is the most objective and comprehensive resource on the Internet which allows consumers to compare rates for all 1260 credit cards offered in this country. Created by Hampton & Associates, the company has been analyzing the credit card industry and supplying objective websites on various consumer expenses for eight years.

Recovering From Identity Theft

Identity theft is a tragedy that affects countless people around the world every year. While many financial institutions and companies are dedicated to cracking down on identity theft and equipping their customers will the necessary information and tools to ward against their identity being stolen, there are still very limited resources available to the average person informing them of exactly what needs to be done on their part to recover from identity theft.

When your identity is stolen, it can potentially ruin your entire financial standing, which is why it is imperative to get all of the information available to help you recover when your identity is stolen and your good name is in jeopardy. Spend On Life is a company that is dedicated to providing that valuable and life-saving information and have created a personalized identity theft recovery kit.

Spend On Life’s kit provides you with everything you need to recover from identity theft as well as how to protect yourself from future threats on your identity. The package includes:

• A personalized checklist that suggests a path to recovery based on your unique situation.
• A resource guide giving you all of the important information, such as phone numbers, websites, and addresses right at your fingertips.
• Log sheets that help you stay organized by recording who you spoke to and when, important deadlines, and the progress made on your case.
• 13 essential tips to protect your privacy and prevent future identity theft.

Because Spend On Life is so committed to helping people recover from identity theft, they have made their personalized identity theft recovery kit free to download as a PDF document. If you have been affected by identity theft I encourage you to download the document to obtain the information you need to recover and if you have not been affected, the recovery kit will give you information you need to ensure that you will not become a victim of identity theft in the future.

Will New Law Solve Credit Card Problems for Young Adults?

This is a guest post by Bill Hardekopf, CEO of LowCards.com.

College students will be one of the groups most affected by the new credit card law. Currently, credit card offers are easy to find on any campus and available to almost every student. In nine months, it will be much more difficult for college students to get a credit card because restrictions will prohibit issuers from lending to anyone under 21 unless they can prove they can make the payments or get a parent or guardian to co-sign.

But will this restriction placed on issuers alleviate the credit card problems for these young adults?

“Absolutely not. It will help but it may be just delaying the problem. The responsibility to change this really falls on us, the parents,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. “We have failed to teach our children the proper way to handle money and the pitfalls of debt. We need to take time to tell them all about credit cards, talk them through your credit card bill. Explain the interest rate, minimum payment, grace period, and the painful finance charges. If you have had late fees or payment problems, use these as teaching examples.”

There is a serious credit card debt and usage problem among college students. A recent Sallie Mae survey showed:

• Average amount of debt carried by college cardholders is $3,173. This represents a 46% increase over the 2004 figure of $2,169.
• 73% of all families now carry a credit card (Federal Reserve Survey of Consumer Finances). That number is actually much higher among college students: 84% have at least one credit card. The average student has 4.6 credit cards.
• Seniors graduated with average credit card debt of more than $4,700, up from $2,900 in 2004.

“If you graduate with a $4,700 credit card balance, you not only have a big debt to pay, but you will likely have a lower credit score that could be very difficult to pull up. That low score may affect interest rates for any loan you have, and may even affect job offers if credit scores are part of the interview process,” says Hardekopf.

LowCards.com recommends a new ‘Charge Responsibly’ program be instituted by credit card issuers.

“Credit card issuers need to do something to show that they care about the financial well-being of their cardholders. This could be a good opportunity for credit card issuers to re-create their image with a ‘charge responsibly’ type of program that teaches college students and their parents how to responsibly use credit cards,” says Hardekopf.

In the Sallie Mae survey, eighty-four percent of undergraduates indicated they needed more education on financial management topics. One-third of the students rarely discussed credit cards with parents.

“Credit card issuers can take the lead to educate consumers about the responsible use of credit cards. Credit card regulations and the issuer’s changes that could follow will probably force all of us to charge responsibly.”

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LowCards.com simplifies the confusion of shopping for credit cards. It is a free, independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates. It also gives an unbiased ranking and review for each card. The LowCards.com Complete Credit Card Index is the most objective and comprehensive resource on the Internet which allows consumers to compare rates for all 1260 credit cards offered in this country. Created by Hampton & Associates, the company has been analyzing the credit card industry and supplying objective websites on various consumer expenses for eight years.

How Will Credit Card Issuers Respond to New Regulations?

This is a guest post by Bill Hardekopf, CEO of LowCards.com.

Major credit card reform is now making its way to President Obama’s desk for his signature. New regulations include putting restrictions on interest rate increases, giving greater notification about changes in your credit card, requiring payments be applied to the balance with the highest interest rates and curtailing the over-the-limit fees.

These regulations will dramatically reduce the ways banks and issuers earn revenue. But this law will not go into effect for nine months or the end of February 2010 at the earliest.

How will issuers respond to these new regulations to make up the shortfall in their revenue?

• Expect more increases in credit card interest rates. When the new regulations take effect, issuers cannot raise rates on a new customer for one year. So the introductory interest rates will likely be increased before February. But consumers are also likely to see interest increases in their existing accounts during this period.

“Issuers do not have any of these restrictions in place for nine months so we think they will continue to implement the policies that are currently in place. Expect issuers to quickly increase your APR if you do anything to show that you are a greater credit risk,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. “They still have the ability to raise your interest rates at any time for any reason. If you miss a payment, are late on a payment, exceed your credit limit or even use too much of your credit limit, you could see an increase in your interest rate the very next billing period. Consumers need to get their credit card bills in early, pay more than the minimum amount and not use more than one-third of their credit limit.”

• A cutback in rewards and cash rebates. That has already been taking place since the start of 2009 and will likely continue through the year. Pay attention to your rewards by looking at the terms and conditions of your card. Issuers can make subtle changes in the reward program that are hard to spot, like changing a tier needed to reach a certain payout or requiring purchases over a longer period. Maximize the points you have and use them sooner rather than later because these could also be reduced. American Express recently notified cardholders that it is reducing its rewards for the Blue Cash card on spending over $6500 from 1.5% to 1.25%. (Note: see a number of changes made by credit card issuers in 2009 here

• More cards with annual fees. “Approximately 20% of the credit cards have an annual fee at this time, but we expect that number to go up in the next year,” says Hardekopf.

• An increase in fees. While the regulations address the over-the-limit fees assessed on credit cards, they do not put any restrictions on fees for balance transfer, cash advance or late payments. This is already taking place as Bank of America and Discover announced that balance transfer fees will increase from 3% to 4% on June 1. Other issuers could follow.

All of these changes stress the importance for consumers to shop around for the best credit card.

“We do not expect all cards to assess an annual fee, cut back their rewards and increase their interest rate and fees. The competitive nature of the credit card industry will keep some of these changes in check. There will still be good credit cards out there. Consumers will need to be diligent in searching for a good card,” says Hardekopf.

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LowCards.com simplifies the confusion of shopping for credit cards. It is a free, independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates. It also gives an unbiased ranking and review for each card. The LowCards.com Complete Credit Card Index is the most objective and comprehensive resource on the Internet which allows consumers to compare rates for all 1260 credit cards offered in this country. Created by Hampton & Associates, the company has been analyzing the credit card industry and supplying objective websites on various consumer expenses for eight years.

Credit Card Reform One Step Closer to Reality

This is a guest post by Bill Hardekopf, CEO of LowCards.com.

The Senate has overwhelmingly passed its version of credit card reform, The Credit Card Accountability, Responsibility, and Disclosure Act (”The Credit CARD Act”). The vote was 90 to 5.

“We applaud the bill that passed the Senate today. Consumers are one step closer to credit card reform,” said Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. “But several steps still have to take place for this reform to become a reality.”

The Senate bill is different than the House’s Credit Cardholders’ Bill of Rights which passed 357-70 on April 30. The next step will be to merge the Senate and House bills together in a Conference Committee. Members from each house will form a Conference Committee to work out the differences. That compromised bill will then be sent to both houses for a vote. Once that bill is approved by each house, it is sent to the President for his signature. President Obama has already declared that he wants to sign a credit card reform bill. The new rules could take effect nine months after legislation becomes law.

“There is no doubt that this legislation will change the industry. Some of the changes are very needed and will benefit cardholders. However, these changes are going to cost the banks billions of dollars and they will try to find ways to make up this shortfall,” says Hardekopf. “You may see issuers assess an annual fee on more credit cards, raise the introductory interest rates, and lower the value of rewards from credit cards.”

Here are some features of The Credit CARD Act:

• Makes it much more difficult for issuers to change rates, a dramatic shift from the existing environment where issuers can raise rates “at any time, for any reason”. Prohibits issuers from increasing the interest rate during an account’s first year. After that first year, an issuer can increase the interest rate if the cardholder is 60 days late in making a payment. If they do increase the rate, legislation requires them to review the account every six months and lower the rate if the situation warrants it. This allows consumers to regain their older, lower interest rate if they pay their bills on time.

• Tightens regulations for marketing credit cards to younger consumers. Requires a parent or guardian co-sign for anyone under 21-years old, unless they can provide proof that they can repay the credit card loan.

• Requires issuers to use payments to pay off the portion of the balance with the highest interest rate first. Currently, issuers can apply the payment to the balance with the lowest interest rate.

• Bans double-cycle billing.

• Requires issuers to disclose how much interest will be paid as well as how much time it will take to pay off the balance if only the minimum monthly payment is made on an account.

• Bans over-the-limit fees unless a cardholder agrees to allow issuers to complete transactions that breach the credit limit.

• Prohibits issuers from charging fees to customers who pay their bills online or by phone.

• Bans gift card issuers from charging dormancy fees on cards redeemed too late. Also requires gift cards to be valid for five years.

• Requires issuers to mail their bills 21 days before the balance is due.

• Requires issuers to give customers 45 days notice (rather than 15 days) before increasing rates.

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LowCards.com simplifies the confusion of shopping for credit cards. It is a free, independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates. It also gives an unbiased ranking and review for each card. The LowCards.com Complete Credit Card Index is the most objective and comprehensive resource on the Internet which allows consumers to compare rates for all 1260 credit cards offered in this country. Created by Hampton & Associates, the company has been analyzing the credit card industry and supplying objective websites on various consumer expenses for eight years.

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