How Consumers Should Prepare For New Credit Card Rules That Start February 22, 2010

An excellent article at Barnkrate.com lists five tips for consumers who use credit cards. You may remember that President Obama signed into law the Credit Card Accountability, Responsibility and Disclosure Act on May 22, 2009. Two provisions became effective last August, and more provisions become effective on Feb. 22, 2010. Here's what you need to know and do:

"1. Beware the advance notification exceptions. On Aug. 20, 2009, a provision that required 45 days' advance notification of "significant" terms changes took effect. It applies to fees and finance charges, as well as some rate increases. Loopholes in the law... the law doesn't require 45 days' advance notification for credit limit decreases.... Issuers also don't have to provide 45 days' advance notice of rate hikes triggered by a 60-day late payment, expiration of a promotional rate, termination or completion of a workout agreement, or shifts in a variable-indexed interest rate."

What you need to do:

"Read notices from your issuers, and verify the rate and credit limit each month when you get your monthly statement, especially before making a large purchase. Going near your credit limit can hammer your credit score."

Another important tip:

"2. Don't fall into retroactive rate-hike loopholes. Come Feb. 22, existing balances will be protected in most circumstances from a rate increase. If you miss the due date by two months or more, however, the APR applied to that debt can skyrocket. Owe a balance after a promotional rate expires and your rate can increase up to the regular APR."

Another important tip:

"4. Permission needed to go over-limit. Under the CARD Act, a purchase that exceeds the credit limit can't trigger an over-limit fee unless the cardholder has opted in to allow over-limit transactions. The consumer must be informed of the overlimit fee they will incur if they surpass their account limit."

What you need to do:

"The law doesn't prohibit approval of over-limit charges when the customer hasn't given permission for them, but does leave room for denial. If you need to go over-limit for whatever reason, you can switch on your over-limit privileges at any time, by making the request in writing, orally or over the Internet."

You have been warned. I encourage you to read the complete article and all five tips.