Credit Cards: How to Protect Yourself in 2011

The Credit Card Act of 2009 will continue to have an impact on consumers.

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Credit card issuers have had plenty of time to find ways around the restrictions imposed by the Credit CARD Act of 2009. What's next on the horizon as the Fed looks to close some of the existing loopholes? What can card issuers do next, and how can customers protect themselves?

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One easy answer? Save hundreds of dollars in interest charges by paying off a balance within the grace period. Stuart Miller of CESI Debt Solutions also advises paying more than the minimum due on your credit card—even if it's not a lot more. “As we come out of the credit crunch, larger credit card companies are going after customers who have been paying more than required even when things were hard,” he says.

Even just rounding up payments can save you money long-term, since interest rates for credit cards haven't dropped like savings account rates have. Low interest credit cards are still out there for prime credit applicants, but the rest of the market still faces double-digit rates. Miller says this is another side effect of the Credit CARD Act. “We're seeing fewer 0 percent teaser rates and more interest rates in the low-to-mid teens,” he says. Miller believes this interest rate hike won't last though. “Once the focus on the Act blows over, low rates will come back because consumers will be looking for bargains.”

Stay Educated About Your Credit Cards

In the meantime, stay ahead of card card policies by reading every notification you receive. Credit card issuers must give you 45 days notice before instituting a change, but a notice saying that your APR or late fees are increasing will not matter if you don't know what you were paying previously. Keep all credit card statements in a file or know where to find the information online. Read the fine print and always know what you're paying on each card.

Business Credit Cards: The Biggest Loophole

If you have a business credit card, you could still be subject to many of the fees prohibited by law on consumer credit cards, because the CARD Act does not cover business cards. Ethan Ewing, president of Bills.com, says, “Many card companies increased marketing of small business credit cards for personal use. Customers might unknowingly expose themselves to many of the same problems that have plagued consumer cards for years.”

The solution? Apply for a personal credit card in your business name. Just be sure to keep your personal and business credit lines separate.

Over-the-Limit Fees

Ewing warns of another marketing tactic used by credit card companies to collect more fees from consumers: “opt-in notices” for overdraft protection. Credit card companies use slick marketing language to covertly threaten users about embarrassing consequences, like having your transaction rejected if you don't “opt-in” to overdraft and over-limit “protection.” By opting in to these services, you're agreeing to fees when you go over your credit limit. If you want to be more in control of your credit, and avoid getting taken by mounting fees, do nothing and you'll remain “opted-out.”

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Annual Fees: The Next Target for Credit Card Companies

Annual fees remain one of the last profit refuges for credit card companies. But customers still have choices in cards, and there's only so much people will pay. Look for credit card companies to increase promotional bonuses on premium rewards cards while subtly hiking annual fees. No annual fee credit cards with meaningful rewards programs will no longer be the norm.

Inactivity fees have been outlawed, but credit card companies have found a way around this through annual fees. Ewing explains: “They have been able to effectively re-institute inactivity fees by raising annual fees, but waiving or reducing them if cardholders meet spending thresholds.”

The key, again, is education. Do the math when you compare fees. And read the fine print to see if there are conditions where the fee will be waived—this is one way customers can use the legislation to their advantage. And don’t hesitate to call your card company to complain if you get hit with a fee. Oftentimes they will be willing to negotiate or even refund the fee.

More good news? “I don't think there's anything new for the credit card companies to do at this point,” Miller concludes. That is, until further regulations are enacted and they feel the need to bob and weave again.

Tim Chen is the founder of NerdWallet.com, which helps consumers find the best credit card for them.