Credit Clients Should be Mindful of Sound Advice Before CARD Act Takes Effect

Issuers and credit cardholders alike will have to be used to some changes brought about by the new credit card law which will take its full affect at the latter part of the month of February.

The Credit Card Accountability, Responsibility and Disclosure Act (CARD) will take full effect on February 22.

Since credit companies will have to contend with several restrictions with regard to rate hikes, extra fees, and disclosure requirements, clients have to know how they can capitalize on the benefits provided by this new legislation.

It would be wise for every consumer to maintain a good credit record and keep track of transactions. Credit guru, Leslie McFadden, has outlined 10 suggestions for consumers in managing their cards this year.

First, paying down outstanding balances can prevent negative changes and improve scores. Moreover, limit reductions can be mitigated by maintaining a lower balance.

Second, pay attention to card-related mail since this new law compels companies to send notices at least 45 days before significant changes are applied to an account.

Third, constantly monitor reports which ultimately determine the credit score. Credit reports can be attained free of charge online through bureaus which can provide new credit reports upon request. This is because Federal law allows clients to receive free copies of reports from each bureau once a year.

Fourth, work to improve scores since some companies may lower credit limits if credit scores go below a certain threshold. Prompt payments and reducing balances can help in improving credit ratings.

Fifth, using accounts which are approaching inactivity can prevent companies from charging dormancy fees. It would be safe to make use of the card once every three months.

Sixth, take advantage of existing reward points already accumulated since some issuers may cut rewards to compensate for eventual losses. Some issuers may resort to introducing an expiration date on rewards programs.

Seventh, searching for cards with lower rates through credit union offerings might be a viable alternative, although membership may be a necessary prerequisite.

Eighth, be on the lookout for offers that go “over the limit” since the CARD act restricts companies from charging over limit fees unless clients made a conscious decision to do so. Fees may be levied if the balance ends up over the limit.

Ninth, gather information on credit-limit increases since qualifying for such may be harder under this new law. The CARD Act allows an issuer to consider the ‘ability’ of a customer to comply with minimum required payments.

Lastly, free services and alerts which are usually offered online are cost-effective means to aid in credit score management.