February 22, 2010 is when the new credit card law takes effect (yes, that’s next Monday!). Congress passed the law last year and, sadly, gave the credit card companies ample time to prepare. Consequently, I’m sure many of you have gotten notices with your statement that the interest rate is going up, the billing cycle is changing or now there’s going to be an annual fee big enough to choke a horse. Here’s a few things to consider, suggested by Consumers Union, until then:
* If you’re thinking about getting a new credit card, wait until after the 22nd because new accounts are protected from interest rate increases for the first year. There may be some good deals out there
* Have a backup card or two in case one of your card issuers lowers your credit limit or closes your account (without notice) in the next week. This might be wise in case you need plastic for an emergency
* After February 22nd, young adults (like college students) will need a co-signer in order to get a credit card. So, get a credit card now while you can. (I would disagree with Consumers Union on this one. I think it’s a rare individual, under the age of 25, who is responsible with plastic)
* You might be able to do a balance transfer from a higher rate card to one with a lower annual percentage rate (APR) for the next year. A lot of card issuers will probably be offering “specials” to encourage such a transfer. Consider it carefully, however, because there will be a 3% – 4% charge on the amount transferred. Plus, after that first 365 days, the rate will go back up
* I know many of you are avoiding using your credit cards, but you may get whacked with an “inactivity fee”. (That reminds me of those inactivity fees that brokerage clients have to pay if they haven’t traded anything in their account for the last year. They’re both stupid fees.) If you charge something small every other month, you’ll be back in the “active” category. I’m guaranteed to be railing about this topic in the future. Stay tuned. In the meantime, I’d love to hear your credit card horror stories. Until next time, here’s to good planning!
This is seriously depressing.