The bulk of the Credit CARD Act has finally gone live, though, credit card companies being what they are, that does not mean things are going to get easier for credit card holders here on out. In fact, the new credit card legislation seems to be introducing quite a lot of headaches for consumers with its consumer protection regulations.

One of the biggest issues that the new credit card legislation is addressing is the problem of arbitrary interest rate hikes. In the past, credit card companies had the power to introduce rate hikes whenever they want to. With the new law, they are prohibited from raising the interest rates of new credit card accounts for 12 months. To get around that, credit card companies simply hiked their APRs before the date of activation of the Credit CARD Act. Thus, at the moment, the average advertised annual percentage rate of credit cards is at 13.46%. Consider that, just six months ago, that figure was at 12.11% and, one year ago, the rate was at 11.51%.

To make up for the inevitable losses that the new credit card regulations will cause, credit card companies have also turned to fees. Thus, consumers are now facing more fees at higher levels among virtually all credit card products. Annual fees, on the wane during the past few years, have made a come back and are ubiquitous nowadays. Balance transfer fees have increased considerably, some by as high as 2% from the previous rates. Credit card companies have even introduced inactivity fees – fees that are charged to credit card holders if they don’t use their credit cards or if they don’t reach a certain usage quote for a certain period of time.

Consumers hunting for credit cards may also notice that fixed rate credit cards are on the wane. A large number of those with existing credit card accounts that used to have fixed interest rates have also been moved to variable rate credit cards. That is largely due to the new regulation which restricts APR increases only for fixed rate credit cards, not for variable rate ones. Thus, most credit card holders are now carrying interest rates tied to the prime rate. At the moment, this has little impact as the government is keeping a tight reign on the prime rate. Once it lets it go however – which it plans to do soon – that rate is going to go up and the rates of variable rate credit cards will also go up with it.

Charge cards are making a comeback as American Express (AmEx) re-introduces them as an option for consumers who want to pay with plastic without losing control of their credit debt. Currently, AmEx is the main issuer of charge cards.

Unlike credit cards, charge cards require holders to fully pay off their credit balances every month. Thus, there is no risk of incurring interest penalties which is why charge cards carry no interest rates. Charge cards therefore present a perfect opportunity for AmEx to exploit the discontent of consumers disillusioned by credit card debt. As intriguing as charge cards are, they are not for everyone.

Not just anyone can qualify for a charge card. AmEx has stayed mum on their approval standards for charge cards, but it is safe to say that consumers will need an impressive credit standing to qualify. Thus, those who are still trying to pull up their credit scores will have to give charge cards a pass.

Charge card holders will also have to pay annual fees. AmEx charge cards carry annual fees starting at $25 and going up to $450. The amount of the fee depends on perks that the card holder decides upon. The company’s Zync card carries the lowest fee which is $25. Zync cards are targeted to consumers between 20 and 30 years old. Zync card additional perks will be an extra $20.

Whether the annual fees of charge cards are worth it or not depends greatly on how a consumer spends. Ideally, consumers should see if their spending habits allow them to earn enough reward points to balance out its annual fee.

Another concern is the impact that charge cards will have on credit scores. In terms of credit history, charge cards are treated as revolving credit, same as credit cards. However, there is a possible problem with credit utilization reporting. Credit utilization reports is the ratio of how much available credit a consumer has and how much debt he carries. It makes up for 30% of a consumer’s score.

The problem is that charge cards do not publish their spending limits. An old scoring model solves the problem by using the highest balance that the card has seen and using that amount as the limit. Consumers who charge generally the same amount every month would seem to be utilizing 100% of their credit. This practice is, however, not the rule among credit reporting organizations. Notably, FICO, the company which makes the most commonly used credit scores, said that charge card utilization is not a factor in their new scoring models.

It is quite common for Americans to run out of cash even before their next payday comes. This makes payday advance loan shops popular, pushing their number up to 22,000 all over the United States. While payday loans could provide some financial solution, experts say they are not good for one’s financial health. Consumers are instead advised to keep some of their money on a savings account so they will have something to shelter them when the rainy days come.

According to the Community Financial Services Association, thousands of Americans go to payday loan shops each week, racking up a total of $40 billion in short term credit. These loans could be helpful at times, but they are quite costly. Experts calculate that their annual interest rate percentage could go as high as 400 percent. If consumers compute the interest using their principal and their previously paid interest, they could be paying thousands of interest rate percentage each year.

In more solid terms, a consumer who borrows $300 on a payday loan could be paying $250 in interest rates and other fees in just three moths. On the other hand, if a consumer incurs a $300 debt in a credit card that carries an interest rate of 19.9 percent, he will be paying $15 in interest over the same period. However, financial planners make it clear to consumers that they do not suggest racking up credit card debts that can be quite difficult to pay. Instead, they advise consumers to plan their spending carefully and to find ways to save.

Specialists emphasize the importance of having a budget plan that will account for all the income and expenses during a specific period. They advise consumers to plan expenses in every category and to make sure they do not spend more. They also advise consumers to put a portion of their weekly budget into a savings account.

Consumers who do not have a savings account yet are advised to make one with their local bank. Savings accounts do not have high returns unlike stock market investments, but are ideal for keeping extra income safe.

Experts explained that if consumers keep a lot of cash in their house, it is quite likely that they would not be able to keep themselves from spending every cent of it. Aside from making sure that they put something into their savings account, experts likewise tell consumers to avoid payday loan rollovers. This happens when a person borrows the same loan over again instead of repaying it. Three rollovers on a $100 loan could cost $60, the Federal Trade Commission estimates.

American consumers, fed up with their credit cards, have been moving to debit cards in the past few months. This drop in popularity of credit cards has primarily been caused by recent changes credit card companies have been making in their credit card terms to get ahead of the new credit legislation. The result: interest rate hikes, higher fees, new fees and paired down credit. The credit industry has become very consumer-unfriendly, it seems.

Consumers are also very wary with credit cards especially since a lot of them got bit by credit card debt. The biggest concern is the threat of high interest rates which can make credit card debt balloon even with only one missed payment cycle. Debit cards do not have this risk which is why they are getting attention from consumers.

Debit card use among American consumers shot up last year, overtaking credit cards. Consumers considered them to be safer because they did not carry the threat of interest rates. However, consumers soon found out that debit cards carried their own traps as well. A major concern with debit cards is that they are not covered by this new credit legislation which promises extensive consumer protection. This is exactly why card issuers are pushing debit cards instead of credit cards these days.

Debit cards also have overdraft protection. This means that debit card holders can overcharge their cards accidentally and get hit with large overdraft fees. Aside from that, debit cards have lesser fraud protection than credit cards and also offer fewer rewards as well.

Consumers, however, have a third choice. They can go for the new charge card which, at the moment, is mainly being issued by American Express.

Charge cards are quite different from debit and credit cards. The main distinction of charge cards is that card holders are required to pay off balances fully every month. The card also carries no interest rate and has no set spending limits. It is an intriguing proposition for consumers, especially those who are looking for a way to control their credit debt while still maintaining a bit of credit flexibility. However, consumers need to realize that charge cards carry their own headaches as well.

For starters, applying for a charge card at the moment is not very easy. Consumers with low to moderate credit ratings will have to give charge cards a pass. Charge cards also carry annual fees which can range anywhere from $25 to $450. The fee already includes rewards program membership and consumers can pick the perks they want on their charge card which, of course brings the annual fees up.

The job of credit bureaus is to come up with credit reports of consumers, with the intention of making these as accurate as possible. However, there are times when people working for these credit bureaus make mistakes here and there – mistakes that can be costly on credit scores of consumers. It is because of this that the federal government developed FCRA or the Fair Credit Reporting Act. Implemented on April 25, 1971, the purpose of this act is to protect credit cardholders against development and plotting of inaccurate, obsolete, and even misleading information on their credit reports. This way, the equitable and responsible operation of these organizations would be ensured.

As a cardholder, take initiative in knowing your rights, especially since there just might come a time when your report would contain inaccurate information. Just like there is an art to complaining, there is also an art to dealing with these inaccuracies and the first step is to know your rights and the procedures involved towards clearing negative remarks on your report. By understanding your rights as a cardholder, you can use the law to your benefit, effectively wiping off late payments, judgments, charge-offs, collection accounts, and even bankruptcy.

The first thing to do then is ask for copies of credit reports from all major credit bureaus. If you do not know the contact information of your local bureau, then look it up in the yellow pages or even online. If you were denied credit within 60 days prior, then it would be easier for you to get a free copy of this report. All you have to do is attach a copy of the denial letter you received with your request for a credit report. However, if you have not been denied credit within this period, then you might have to pay for a credit report.

You can also review it in person by making an appointment with the bureau. What you are asking for is not out of bounds in any way because this is well within your right and means. There is a charge for physical perusal of your credit report, though this can be minimal compared to the benefit of reviewing your report in person.

Should you have any disputes regarding inaccuracies, make sure to file such in a formal manner. Your local bureau should then respond within a reasonable time, usually a period of 30 days. If the bureau does not respond within that period, send another letter to follow up your request. Make sure to tell them you will resort to legal action if they still refuse to comply. If you still do not hear from them, then ask for legal assistance from your lawyer.

If you are one of thousands who are currently employed, do not fret just yet. There is still hope for the unemployed, especially when it comes to utilizing cash and credits the most. Do not beat yourself up, no matter how tempting this might be. There are a lot of people going through the same rough patch that you are currently facing, and this does not mean there is no hope for everyone during this tough time.

Now that this unfortunate event of recession has hit you, try to look at the savings you have established over time, as well as your available credit lines. These are two tools that will help you get through this rough patch. By using an effective combination of cash and credit, you can come up with an action plan that should include finding a new job, as well as a budget that works for you while you are in the process of securing that new job.

Most of the time, prospective employers pull up credit reports of their applicants – this is a huge part of today’s employment procedures already. To maximize your chances of landing that new job, make sure to come up with the best possible credit standing that you can have.

One thing to do is to steer clear of cash advances. This is just the easy way out because there are additional costs entailed just to spend the money that you are advancing. More importantly, this cost could be higher than when you just use your credit card to pay for whatever amount. Cash advances always come at an extra charge and more often than not, they would have higher interest rates as well. This would just further degrade your credit limit.

Another thing to do is to outline priorities when it comes to using your card. Remember that you still do not have a steady means of income so you need to make some changes here. Back then, you might have used your card to pay for larger purchases – the kind that is quite heavy to pay just at one time. This, however, should no longer be your priority.

Do not rely on unemployment benefits or the severance package that you received from your old company. These funds would not last and there are even cases when funds would not last as long as the period of unemployment. Thus, make sure to use credit just for basics, as well as for job-hunting expenses. Learn to control expenses and stick to the allotted budget consistently. Follow these tips and you will surely extend your financial means even up until you get that new and more stable job.

New federal regulations have been adopted to protect money market funds against upheavals from the financial market.

The Securities and Exchange Commission laid down salient policies to make money market investments more liquid, enhance credit quality of portfolios, promote transparency, and review portfolios against market risks and vulnerabilities.

These new SEC directives were rooted from the September 2008 fall of Reserve Primary Fund when its net asset value plunged to below $1 per share. This became the first-ever retail money market fund loss.

Reserve’s feebleness, which became evident amid its credit exposure in the defunct Lehman Bros., reflected the woes of the entire money market business and became the SEC’s clarion call to examine such funds and see how they operate.

New regulations mandate funds to keep a small percentage of assets in highly liquid securities that are easily convertible to cash and redeemed by shareholders. In this case, taxable money market funds must maintain at least 10 percent of its assets in cash, treasury securities or other highly liquid securities that are cash convertible within one day.

Money market funds must also maintain 30 percent of its assets in cash, treasury or other government securities that are set to mature in less than 60 days, for conversion to cash in one week.

The rules also state that the money market funds can only hold on to five percent of ‘illiquid’ securities, or those that cannot be sold within the week at its carrying value.

Limits have been likewise set for funds to own lower-quality securities. Funds can no longer own more than three percent of its assets in Second-Tier securities. They are also not allowed to have more than 0.5 percent of its assets in Second-Tier securities issued by a single entity. These Second-Tier securities should also mature in 45 days.

New restrictions have also been imposed on a specific portfolio’s average maturity in order to prevent unnecessary exposure in unforeseen interest rate fluctuations. As such, a portfolio’s maximum weighted average is now cut down to 60 days from 90 days. Because of this, funds cannot pour investments into long-term floating rate securities.

New regulations now require funds to disclose “mark-to-market” net asset value each month on a delay of 60 days. Such “shadow” NAV’s are currently disclosed every six months with a lag of 60 days.

Stress tests are also mandated to ensure the fund’s capacity to keep a stable NAV per share and disclose holdings in its website.

The SEC also allowed funds to freeze subscriber redemptions as the NAV goes below $1 per share and order portfolio liquidation. Previously, funds had to request the SEC to freeze redemptions.

Net inflows for long-term mutual funds were reported for the 45th week, or close to a year, on the sustained strength of bond funds as more money entered stock funds, the Investment Company Institute revealed in its latest figures.

Inflows for these long-term mutual funds were estimated at $13.18 billion in the week ending January 20. The whole 45-week streak now totals about $454 billion.  The inflows started during March last year when equity markets slumped. But even as money kept on flowing into stock funds, the bigger share of investments actually went to bond funds last year.

Inflows of $3.95 billion went into stock funds last week, dropping from $5.77 billion in the previous week. Despite a recent trend of outflows, equities saw two straight weeks of inflows, with $1.27 billion reported last week. Foreign funds, meanwhile, added $2.68 billion.

Bond funds received $7.96 billion last week, climbing slightly from $7.36 billion the week before, ICI said. In addition, taxable funds took in $6.73 billion while municipal funds got $1.23 billion. Yields from taxable and municipal funds stayed at an all-time low of 0.02 percent for the third straight week.

On the other hand, investors were upbeat on hybrid funds, putting in $1.27 billion, which is up from $7.36 billion the previous week. Hybrid funds are those that invest in a combination of stocks and fixed-income assets.

However, money market fund assets plunged $13.75 billion last week amid outflows from the government and prime funds, iMoneyNet said.

Taxable money market funds’ seven-day yields were held at a record low of 0.03 percent. This yield had been declining amid Fed moves to keep federal-fund rates to near zero. The Fed further affirmed this last Wednesday saying it will keep these rates low until high unemployment remains a hurdle in the US economic recovery.

Total assets of money-market funds reflected this overall trend, plummeting to $3.191 trillion as of Tuesday.

Taxable money market funds slid to $2.8 trillion, a fall of $11.11 billion from the previous week, after institutional investors took out $5.33 billion and individual investors withdrew $5.78 billion. Prime fund assets dropped $4.22 billion while government funds had outflows of $6.89 billion, iMoneyNet added.

Outflows were likewise posted on tax-free funds–a total of $2.65 billion—amid seven-day yields at 0.02 percent and 30-day yields at 0.03 percent.

Some economists, however, are forecasting a Fed interest rate increase later this year. This could help ease the burden for fund companies currently waiving fees just to maintain investments.

The credit industry is abuzz with the upcoming activation of the Credit CARD Act. Going live this month, the Credit CARD Act actually got signed into law last year, in May. The law is meant to protect credit card holders from credit card company unfair practices. Unfortunately, credit card companies are not going to give up easily on the resulting financial losses resulting from such protection. Also, the Credit CARD Act itself is rife with loopholes which threatens to take away what slim advantage credit card holders gain from it.

One example of this is credit card protections applicable only to fixed rate credit cards, not to variable rate ones. The law prohibits interest rate hikes on new credit cards and makes it mandatory for credit card companies to give advance notice to card holders when their credit card terms are changed. However, these rules are only applicable to fixed rate credit cards. Variable rate credit cards are not eligible to these protections and credit card companies have taken advantage of this and have moved many of their fixed rate credit cards to variable rate ones. Credit card holders who are lucky enough to find a fixed rate credit card would do well to stick with them. The bad news is that fixed rate credit cards are becoming rare and what cards there are will usually carry very restrictive terms.

Credit card holders ought to be careful with the rewards programs that credit card companies are offering nowadays. With the loss in revenue that credit card companies are seeing caused primarily by the new rules in the Credit CARD Act, they are now looking for ways to generate additional revenues. One of the most likely avenues that they will explore will be in their rewards program fees. Credit card holders should scrutinize very well their credit card rewards programs to make sure that they do not pose any financial risks.

Consumers who want to get rid of credit cards in light of any new credit card term changes that they do not agree with should consider their choice carefully. Without a doubt, it is a good idea to get rid of credit cards that have become risks instead of assets, but consumers must consider the resulting drop in their credit scores which may pose a bigger problem down the road. Still, credit scores are really of utmost concern if the consumer is planning to apply for a new loan or wants to renegotiate the terms of any debts that they have. For consumers who do not have to worry about either, getting rid of their unwanted credit cards is probably the best move to make.

The economic crisis and the credit card crunch left a lot of consumers with damaged credit scores. With the economic downturn still continuing and the employment rate still up, a low credit score can be a big problem for consumers.

A low credit score will make it difficult for consumers to secure a loan or credit. Consumers carrying debts will also be unable to negotiate for better terms if their credit scores are too low. Credit card holders are understandably eager to build up their credit scores and methods for building up credit scores have become a premium nowadays.

A novel way to build up credit scores is to build it up with gas. A number of gas stations offer their own, private label credit cards which can actually help consumers build a positive credit payment history and help their credit scores go up. What is even more interesting is that, unlike traditional credit cards, private label gas credit cards are relatively easier to get a hold of. They usually carry underwriting terms that are easier for consumers. If a consumer is also able to keep up with the monthly payments of the gas credit card for a minimum of one year, he or she will also have a high chance of getting approved for a regular credit card line.

Usually, gas companies offer their private label gas credit cards without any annual fees – which is a relief for consumers who are now getting deluged with annual fees with their regular credit card lines. The downside is that private label gas credit cards also usually have higher interest rates compared to regular credit cards. The average rate for gas credit cards is close to 20%, higher than regular credit cards whose rates average at around 14% nationwide.

For private label gas credit cards to actually help in building up the credit score of consumers, it is important that they keep up with their monthly payments. If they are unable to do so, they might just end up making things worse for themselves.

Aside from being relatively easy to get and helping credit card holders with credit score problems recover, private label gas credit cards are also usually offered with very interesting promotional offers. These include free fuel for a limited amount of time and rewards points that can be redeemed in the form of billing statement deductions, airline flight payments and others.

Private label gas credit cards are usually offered by gas companies through major credit card companies such as Citibank and GE Capital.

Even as credit card companies and other lenders continue to get hit by bad payment trends as consumers continue to struggle with their finances and with the unemployment rate that is hovering at 10%, there is now some hope that the worst of the credit card crisis may already be behind them. With delinquency figures showing marked signs of improvement, credit card defaults may be fewer in the coming months. This, even as the net charge-off rates went up to 10.5% for the month of January.

August of 2009 saw the highest charge off rate; 10.8%. January’s charge off rate is not so far off. However, delinquency rates dropped to 5.8% along with the delinquency dollar amount. Credit card companies predict future payment defaults according to the present delinquency rates and, with the rates dropping significantly, there may be fewer charge offs for credit card companies ahead.

Regarding these developments, Donald Fandetti, analyst for Citigroup wrote that they expect “an industry cycle peak” as long as the unemployment rate stays relatively stable and there are no spikes in bankruptcy. Citigroup, says Fandetti, is maintaining a positive view on card issuer stocks. The company recently did a buy on Capital One Financial and American Express stocks. The constructive view being maintained by Citibank leans heavily on the latest delinquency data.

Bank of America, the country’s biggest lender, reported a decline in both their delinquency and net charge-off rates. Late payments for the company dropped to their lowest level within a year in January; 7.4%. Uncollectible loan write offs also declined to 13.3% from the previous figure of 13.5%.

Taking second place in the top spot for credit card companies seeing improved delinquency and charge off rates, Discover Financial reported a decrease in their defaults but a small increase in their 30-day delinquency rates, rising to 5.6% from the previous 5.5%.

Capital One Financial takes third place behind Bank of America and Discover Financial in the trend of dropping defaults for January. The company’s uncollectible loan write offs went up by 10.4% in January, an increase from the 10.1% rate seen by the company last December. According to Fandetti, the pressure being brought on the loan balance of Capital One by the new Credit Card Accountability, Responsibility and Disclosure Act is cause for concern.

The continued worries over the ability of Capital One to weather the blow of the Credit CARD act resulted in the company losing some points during trading even as Bank of America and discover saw some gains.

Consumer recovery from the economic crisis is still a far ways off. A lot of consumers are still struggling with keeping up with their debts while setting enough money aside for essentials. With the economy still not recovering and the continuing high unemployment rate, consumers will have to gear up for a long stretch of financial struggles.

Because a lot of consumers are overstretched financially, surviving an emergency such as an accident can be problematic. In the past, credit cards and loans were the safety net of many consumers. Now, with many consumers facing ruined credit scores, those two are no longer that easy to get. Credit scores dictate how easily a consumer can get a loan or credit and how benign the terms that they get. With a ruined credit score, getting a loan or credit is near to impossible and, even in cases when the consumer does secure a loan or credit, the terms are apt to be quite steep.

One of the major priorities of consumers who want to get back on track financially will be to pull up their credit scores. That is a tough task considering how tight credit card companies are at the moment when it comes to issuing credit cards. Traditionally, credit cards offer the quickest and most effective way for consumers to bring up their credit scores. With credit so tight at the moment, traditional credit cards are not much of an option for consumers with bad credit scores hoping to rebuild them. Fortunately there are secured credit cards.

Unlike traditional credit cards, secured credit cards are much more attainable for consumers with bad credit scores. That’s a good thing considering that, if these same consumers were to force the issue with traditional credit cards, they would end up with credit cards carrying high interest rates and very low credit limits. That is just asking for trouble down the road.

A lot of secured credit cards are also offered at low or comparable rates to regular credit cards. That is to say credit card companies will not penalize consumers carrying low credit scores with high interest rates if they get secured credit cards.

To be eligible for a secured credit card, consumers have to have a form of collateral, however. This is usually in the form of a savings account. Usually, the credit limit of a secured credit card corresponds to the amount contained in the savings account used as a collateral. One thing that secured credit cards and regular credit cards have in common however is that consumers who do not pay off their debts regularly are courting trouble.

The credit card industry saw some signs of hope last month when major credit card companies Discover, Bank of America and Capital One posted charge off and delinquency rates that were better than what industry watchers expected. This has lead to an upsurge of hope in the credit card industry that the crisis the industry has been struggling with may soon be ending.

Of the three major players in the country’s credit card industry, Bank of America showed the best developments, posting a slight drop in charge off rates and delinquent loans – loans behind 30 days in payment – in January. While Capital One and Discover did report an increase in charge off and delinquency rates, the increase was lesser than what a few analysts expected.

Barclays Capital analyst, Bruce Harting, says that delinquencies seem to be stabilizing and he expects delinquencies and charge offs to see a peak during this quarter.

Consumers are also helping to fuel the recovery of credit card issuers by focusing more on paying off their credit cards even at the cost of defaulting on their home loans. This unusual behavior among home owners runs contrary to the usual pattern where consumers would prioritize their home loan payments at the cost of credit card loan payments. Credit reporting bureau, TransUnion, reported that 6.6% of consumers have kept up with their credit card payments while being delinquent with their mortgage payments during the third quarter of the previous year, 2009. This is an increase over the figures taken during 2008 which only had 4.3% of consumers paying credit card debts while sacrificing mortgage payments.

As consumers focus more on paying off their credit card debts, they are also busy cutting down credit card spending. The outstanding credit card debt right now is approximately $855 billion. In 2008, the outstanding credit card debt was $980 billion. That is a considerable different which is sure to have a huge impact on credit card operations in the country. What is even more troubling for credit card companies is that industry analysts are predicting that the figure will drop by $80 billion more this year. As Moshe Orenbuch of Credit Suisse puts it, “Things are stabilizing, not improving materially”.

The slight improvement in the delinquency and charge off numbers of the banks proved to be good news enough to cause the shares of Bank of America, Discover and Capital One to pick up. Furthermore, it is still unclear whether the increase that Capital One and Discover saw was caused by seasonal behavior. Charge offs traditionally go up early in the year as people try to keep up with the debts from holiday shopping. Analysts say that the worst of the problems credit card companies have been dealing with regarding bad debts may finally be behind them.

The Credit CARD Act of 2009 has been getting a lot of mileage in the media lately. That is no surprise considering the huge impact that this particular set of legislation will bring to the credit industry. The law is also targeting a particularly sensitive area in consumer affairs making it a very high profile law. Still, that does not mean everyone is keeping track of it. In fact, a startling number of consumers are still unaware of what the act is and, much more worrying, what it aims to do.

According to Survey Sampling International, based in Shelton, less than half of the consumers in the United States know about the Credit CARD Act, much less that it is about to take effect on February 22 this year. The survey took a poll of 1,000 online respondents who were 18 years of age or above. According to the survey, only 48% of of the respondents said that they knew about the credit card protection legislation that Congress passed in May of 2009.

The numbers are worrying considering that the main reason the Credit CARD Act was created was to protect the interests of consumers who had been severely abused and taken advantage of by credit card companies. If these same consumers are not aware of the Credit CARD Act, there is a high possibility that they are not aware either of what highly questionable activities the credit card companies have been doing to earn profits from them.

One of the major regulations that the Credit CARD Act carries requires credit card companies to give advance notice to consumers if they plan to change any of their credit card rate terms. This regulation is very useful as it will keep consumers informed of any term changes with their credit cards and help them respond accordingly to these changes. In fact, the regulation also ensures that consumers have the option to opt out of any changes, though this will usually mean that they have to give up their credit cards.

However, the regulation will only work for consumers who actually keep an eye on their credit cards. Consumers have to read their credit card’s notices, usually coming in through the mail, to take advantage of what the regulation offers. Unfortunately, it is often the case that consumers skip reading their credit card mail when they arrive. This particularly bad practice is doubly devastating now when credit card companies will be introducing numerous changes to keep up with the new regulations. Credit card holders cannot expect these changes to be consumer friendly either, just because of the new Credit CARD Act.

There is a scam going around where credit card holders get called up by someone claiming to be able to lower their interest rates for a fee. Since a lot of people are desperate to get their rates whittled down, considering the economy, a lot of people are getting scammed by this. What is even more despicable is that negotiating for a better rate is actually something any credit card holder can do for him or herself without any cost whatsoever.

A lot of credit card holders are not aware of it, but if they are unsatisfied with their current credit card interest rate, they can actually call up their company and have it adjusted. The success of such an endeavor is however highly dependent on how good of a debtor a credit card holder is. If he or she has maintained a good score, has a low balance and has no late payments, then chances that his or her credit card rate can be lowered is quite high.

Even financial experts say that a holder should always take a chance and call up his or her company to arrange a lower rate. While there is no guarantee that a rate drop will happen, possible benefits are worth the effort.

To call up and ask for better rates, consumers need to prepare a few details such as a copy of their credit report to know their score. A score which is higher than 720 to 730 points would mean a card holder can qualify for the best interest rates if he or she applied for a new card. It is also helpful to know a few of the options that they can get with a lower interest rate.

Once the card holder is prepared, he or she can then call up the issuer of the credit card, tell them that they have been looking for better rates, mention his or her score, refer to a few of the cards with lower rates they have researched and then say that he or she would rather stay with a card issuer if they could offer better rates.

Usually, during such calls, a holder will be connected to a representative of the company. If the call does not seem to be getting anywhere, it is better to just disconnect and call later, more attentive representatives will handle the call. It is also important to remember that representatives would usually withhold their best offers during the first few rounds of negotiation. Finally, if a card holder is still not getting anywhere, he or she can ask to speak to a supervisor who usually has greater authority to make changes to credit card accounts.

Credit cards often get called charge cards, probably because when card holders use their credit cards, they call it “charging” the purchase to their credit card. That may have been well and good during the past, when charge cards were quite rare. Now, however, charge cards are making a comeback and consumers had better be aware of the difference between charge cards and credit cards, lest they get the wrong kind of card.

Most consumers know what a credit card is. Few, however, know what a charge card actually is. In terms of paying at the cashier, there is not that much of a difference between the two. The main difference between the two cards is basically on how card holders pay for their charges and on the credit limits that they offer.

With charge cards, the card holder has to pay off his or her balance completely after every month. Unlike credit cards, charge cards do not allow carrying balances across statements every month. With no balances carried over after each month, charge cards have no use for interest rates or minimum monthly payments. If a holder is unable to pay his or her balance at the end of the month, penalties such as late fees will be charged on them. There are, however, a few issuers who offer revolving debts, though they allow only a portion of the debt to be revolved. American Express, for instance has a charge card which allows holders to pay a few select transactions over a period of time. These revolved balances do incur finance charges, though.

Charge cards also do not have a preset limit. With charge cards, purchases a card holder makes is approved according to his or her payment and spending history, credit records and financial resources.

Charge cards are making a comeback these days because credit card companies are now less willing to risk their credit and would prefer to see debts paid as soon as possible. For consumers, charge cards are a great way to build their credit history while still avoiding getting into serious debt. Charge card purchases get reported to credit tracking companies in largely the same way as credit cards do and since the balance has to be paid every month, consumers need not worry about incurring interest charges and other late fees. Charge cards also have rewards similar to credit cards which, unfortunately, are balanced with the fact that card holders will also have to deal with annual fees if they carry charge cards.

The credit industry is preparing for the massive changes that this new Credit CARD Act will bring. For those who are not aware of it, this new legislation is aimed at keeping credit card companies from profiting too much from their customers. This Act introduces a number of regulations which will block the abusive and predatory tactics credit card companies have used on card holders during the past few years. This law is, however, not without its loopholes and credit card companies have been very willing to exploit them.

In general, this new legislation does bring a lot of benefits to consumers. However, there are a lot of details that could lead to unpleasant surprises if consumers are not aware of them.

One of the major areas that this new credit card legislation focuses on is how credit card companies handle credit card interest rates. The act puts a lot of effort to contain this ability of credit card companies to arbitrarily raise their interest rates. However, this law has some flaws. For instance, there is no limit placed just on how high credit card interest rates can go. While the law only allows interest rate of existing balances to go up only if the card holder is 60 days late on his or her payment, credit card companies may still raise interest rates on future purchases whenever and for whatever reason they want. They do have to inform card holders of their intentions to do so, however, and inform them that they, the card holders, can opt out of this change. That notice will most likely be sent through an envelope meant to look like junk mail, though. Consumers had better be careful with what they throw out.

Another area where the Credit CARD Act seems to have dropped the ball is in limiting what fees companies can charge. There are some regulations on severity of penalty fees that card companies can impose on holders, but the act does not have regulations on just how many fees or what type of fees they can charge. Companies are therefore free to make up whatever fee they want to charge and how much they want to charge for it. In fact, they are already busy doing this. Card holders are already seeing annual fees for credit cards that do not even need them. There are even charges coming out for statements printed on paper and for credit cards that remain inactive for a certain period of time.

Experts say consumers can expect to see more of these in the future and the best that consumers can do is to keep a tight watch on any mail they get from credit card companies.

A lot of credit card holders are probably excited to see regulators finally paying attention to them with this new Credit Card Act of 2009. What they will not be excited to hear is that this new law has enough flaws in it that they will have to pay extra attention on their card terms to catch unpleasant new changes in their policies.

Card companies are notorious for maximizing their profits, no matter how warm hearted their advertising campaigns may be. It should come as no surprise to anyone that credit card companies have been busy finding and exploiting loopholes in this new law during the long grace period given to them between signing of the law and its activation – another contentious issue among consumers and consumer advocates.

One loophole that almost all credit card companies and firms are taking advantage of is the fixed rate loophole. This new credit law does not allow card companies and firms to raise the interest rates of credit card holders on their existing balances. That regulation, however, only applies to cards with fixed rate interests. Credit cards with variable interest rates are exempt to this rule. This is the main reason why credit card companies have been switching a portion of their clients’ accounts from fixed rate interests to variable rates just as fast as they can.

At the moment, credit card holders may not notice the difference or may actually think that variable rate credit cards are cheaper than compared to having fixed rate ones. Currently, credit cards with variable rates have similar or even lower rates compared to fixed rate credit cards. That is because variable rate credit cards are tied to the prime rate – which justifies the word “variable.”

As of the moment, the prime rate is at a historic low since the government is doing its best to keep interest rates as low as they can. That is not going to last, however. The Federal Reserve will be raising interest rates soon enough. Experts believe that the Federal Reserve will do so in one year, more or less, so as to prevent inflation.  Once this prime rate goes up, credit cards with variable interest rates will go up as well which may catch a lot of card holders unawares.

With this new credit card law in place, credit card holders will have to make sure to pay close attention to their card terms as well as policies. Missing the small details in bills, statements or mails could mean large fees later on.

Four people have seen themselves indicted after being accused of stealing debit and credit card numbers from unsuspecting credit card holders and subsequently using the collected information to buy gift cards worth hundreds of thousand dollars.

The accused are Timur Harris, Cassie St. Cyr, Crystal Lee and Diamond Alexander, Jr. All four pleaded not guilty to the accusation of six counts of bank fraud. According to federal prosecutors, the ring leaders of the group were Alexander and Lee, who is Alexander’s wife. These two were responsible for recruiting a number of people who were the ones who did the stealing of card numbers and purchasing of gift cards for them.

This indictment showed that Alexander and Lee used insiders to harvest large numbers of credit and debit card account numbers in exchange for a fee. One insider was an employee in a Seattle Municipal Court. Another was an employee of the Des Moines Jack in the Box restaurant.

According to federal agents, the Seattle Municipal Court employee worked in a customer service position which often had to deal with citizens who were paying fines from infractions that were traffic related. The employee was able to print out several account numbers by accessing the computer data of the court. These were given to Alexander and Lee in exchange for a fee, the employee confessed to detectives. This unnamed employee has been removed from the position and was not indicted.

Another insider was Timur Harris, a former employee of the Jack in the Box in Des Moines. She worked as a cashier in the drive-up window of this fast food restaurant. An in-store surveillance camera caught Harris in August of 2009 using a palm card reader to slide customer credit cards through hidden from view of customers. Harris admitted when interviewed by investigators that she was skimming the credit cards of customers using a device given to her by Alexander who she met as a customer several months earlier. Alexander gave her instructions to slide the credit cards of customers through the skimmer and give it back to him later, she said.

Alexander and Lee, investigators said, used the account numbers they harvested to “clone” illegitimate credit cards, transferring the stolen numbers on to the credit card’s magnetic strips. These cards held either their names or the name of Cassie St. Cyr, an accomplice. These cards were used to buy gift cards of large dominations from Wal-Mart stores in Bonney Lake and Everett.

The number of credit card holders affected by this scheme is still unknown. U.S. attorneys, however, say that Alexander, Lee and their accomplices used the stolen card numbers to charge and/or attempt to charge gift cards and other merchandise worth more than $300,000.

Credit card holders know that credit card mail rarely brings good news. Therefore, it is going to be very pleasing for a lot of them to see the new notices coming in their mail about their credit cards. Due to the upcoming Credit CARD Act of 2009, the one that activates on February 22, credit card holders are going to see some very welcome changes in their policies.

Companies are going to be spreading information about the new credit card terms they will be implementing to conform with the requirements of this new law. A majority of these rules are activating on February though some already went live last year. Consumers will want to be informed of these changes as it makes a lot of impact on their payments and penalties.

One of the major changes in credit card terms that consumers can expect from the mail is a longer notice for any interest rate changes. Previously, consumers were given a 15 day notice of any interest rate changes. That has now been changed to 45 days. What’s more, consumers must now be informed of their right to waive any changes, though waiving an interest rate hike could mean that the card will be canceled.

The way companies hike interest rates is going to change dramatically as well. It will no longer be as arbitrary as before. With this new law, consumers will soon receive notices that credit card companies can only hike interest rates if the holder is behind in his or her payments by 60 days. What is even more encouraging is that companies are required to return the interest rate to the previous, lower value, if the card holder makes payments regularly for six consecutive months.

Those risky shortened grace periods are also going to go away. Credit card companies will give holders a fixed, 21 day grace period from the date the bill is mailed. The due date for credit card bills are also going to be the same every month to keep it predictable for card holders. Payments made during non business days must also be considered and not marked as late.

The new rules are going to provide opportunities for companies to make a number of changes in their policies, a few of which may be beneficial to consumers. An example is Bank of America’s announcement that cardholders who are late in their payment for a few days only will not get penalized by late fees and interest rate hikes. However, payments later than that small window of several days will mean fees will be assessed.

Charity donations going to victims of the Haiti earthquake given to relief organizations through credit card transactions are not going to be arriving to their destinations a hundred percent complete. Banks and credit card companies skim off a percentage off these donations as part of their so called “transaction costs.”

Whenever a donation is made through a credit card, only 97% of that donation actually gets to the relief organization. About 3% of the amount is skimmed off by banks and credit card companies. Known as transaction costs, credit card companies and banks in America make huge profits out of charitable donations that people make every year. According to an analysis made by the Huffington Post, that profit is estimated at around $250 million every year. In years where there have been major disasters, these profits rise sharply. Major humanitarian relief organizations such as Operation USA and Oxfam get more than 85% of their donations from credit card transactions and credit card providers have generally refused to waive transaction fees.

According to CEO of Operation USA, Richard Walden, only once has a credit card company agreed to waive transaction fees for the sake of charity. This was for the 2004 tsunami disaster. Walden says,”After the tsunami, we had thousands of donations, and American Express and I think one other company temporarily waived their fees. So if this thing ramps up, we’ll try to get in touch with these banks and see if they’ll waive the fee again for us.”

There is only one bank in America that offers a better solution for charities and those who want to donate through their credit cards: Capital One. The bank waives transaction costs for those with MasterCard or Visa credit cards through their “No Hassle Giving Site.” Through their site, donations go through their transactions 100% unskimmed. In contrast, banks in the United Kingdom bowed to public pressure after the 2004 tsunami and “waived interchange fees for all cross-charity and disaster or emergency appeals” according to the website of the UK Card Association.

The transaction fees that credit card companies and banks tack on donations are also far more than what is needed to cover cost of the transactions. Thus, companies such as American Express, Visa and MasterCard can generate considerably profits from each donation transaction.

Non-profit organizations have been reserved in their criticisms of credit card companies because they provide a very important service for them. They also have no other lower-cost options available and the four major credit card companies in the country actually maintain a small monopoly on the industry.

Ever since the Credit CARD Act was signed into law last May of 2009, credit card companies have been racing to introduce a number of credit card term changes before the act expressly prevents them from doing so. A lot of these changes have been grossly unfair to consumers and actually defeat the intent of this new credit legislation.

Massachusetts Secretary of Commonwealth, William Galvin, recently sent out letters to some of the largest credit card issuers in the nation, asking for information on adjustments they made in interest rates during the last few months. Galvin is well known for being a tough regulator and he has given seven companies that he requested information from up to January 26 to send replies.

The companies that have been contacted by William Galvin are Charles Schwab, Fidelity Investments, Morgan Stanley, Citigroup, Bank of America, Citizen’s Bank and American Express. These seven companies have all received Galvin’s three page letter requesting them to identify the rate changes that they have introduced since last May of 2009. Galvin specifically wants to know if these companies have moved their fixed rate credit cards to variable interest rates and how much of a rate increase they are imposing on consumers who carry their credit cards.

Galvin’s concern is the surge in credit card interest rate hikes that have been the norm in the credit industry since passage of this new credit card bill. In a statement, he voiced his concern that increases in frequency of fee and interest rate hikes before activation of this new credit card law come February “goes against the intent of the Congressional act.” Galvin also wrote that, “When the credit cards, and the abusive new practices being put in place, are tied to securities broker-dealers, there is a question whether they are acting under the high standards of commercial honor and the just and equitable principles of trade.”

The information that Galvin hopes to get from selected credit card companies may just be more confirmation of what is already apparent. According to a research done by an independent, nonprofit organization, The Pew Charitable Trusts, the median interest rate advertised by credit card companies last July of 2009 was already 13% to 23% higher compared to interest rates available in December of 2008.

So far, few of the banks asked by Galvin have responded to his request. A spokesman from Fidelity Investments said that his company will respond to the Secretary’s request, noting that his company does not directly issue credit cards. The company Morgan Stanley declined to comment on the issue. Spokespersons from Bank of America, American Express, Citibank, Citizen’s Bank and Charles Schwab were not available to comment on the matter.

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.

Mastercard and Visa will soon compel payment mechanisms at gasoline pumps to accept only cards with a personal identity number and an “embedded microchip” before a transaction can be completed.

This new way of payment will be introduced to mitigate the use of fake credit cards to purchase gasoline. Older cards which use magnetic strips can easily be copied by criminals.

Several gasoline distributors are against the new technological change in payment innovation, even if this may increase anti-fraud efforts. Currently, gas stations owners are placed in a spot where they have no choice, but to comply otherwise they would be more susceptible to fraud.

Wilson Fuel Co. Ltd. vice-president, Dave Collins, said that it may cost their company as much as $5,000 per pump to change their payment mechanism.

The major credit giants gave an October 1 ultimatum this year or else the losses caused by any fraud-related transaction after the date will be absorbed by the merchant.

Although the changes have already been introduced in several cities in Canada and soon in the United States, there may be a noticeable ‘harsh effect’ in places where gasoline prices are regulated and where there is a lack of mechanisms to effectively provide enough financial logistics to cover the cost of technological adjustments.

Collins said that governments should have a willingness to be sensitive to cases such as these since it involves a crucial utility.

Incidentally, both Mastercard and Visa have been criticized for also increasing their transaction fees by as much as 30%.

Wilson Fuel Co. Ltd. has not converted any of their pumps yet as of press time. Collins explained that this is because the technology “doesn’t exist” and neither are there installers capable of getting the job done. However, he did admit that it may take about a year until all gasoline stations adjust to the new payment scheme.

Collins said that some dealers may compromise convenience and resort to going back to the traditional means of asking customers to pay in cash instead.

Canada-based Suncor, a big player in the gas industry, may opt out of collecting payments through credit cards in their stations which may force others to follow suit.

Collins explained that there should be more cooperation from banks and credit companies to work together with merchants to make this new scheme workable.
Since fraud is also a common enemy to both the bank and gas industry, he said that their company would be willing to pitch in as long as there would be mutual financial cooperation.

Despite expectations of most analysts, JPMorgan Chase recently announced a fourth quarter profit amounting to $3.3 billion. That translates to $0.74 per share. A year earlier, the company posted fourth quarter profits of $702 billion which amounted to $0.06 per share.

The company posted a net income of $11.7 billion for the year 2009 on record revenue amounting to $108.6 billion. The 2009 net income of the company amounts to $2.26 a share.

However, this impressive earning performance of JPMorgan Chase was not enough to impress investors. JPMorgan Chase shares showed a drop during the early trading period. Investors are expressing concern over the mortgage and commercial loan division’s losses that the bank has weathered. They are also worried about this continuing problem of credit card delinquencies which may mean a precarious climate for the bank in 2010, despite JPMorgan Chase being among the better managed bank in the U.S.

Jamie Dimon, CEO of JPMorgan Chase said, “Though these results showed improvement, we acknowledge that they fell short of both an adequate return on capital and the firm’s earnings potential”. He also said that JPMorgan Chase was benefited by its diverse leading franchises. The bank is seeing strong earnings from its Retail Banking, Commercial Banking, Investment Bank and Asset Management franchises.

While earnings from its other divisions were impressive, JPMorgan Chase’s credit card and mortgage business got hit hard, seeing huge losses which were, however offset by the company’s record revenue from investment banking. Credit losses provision for the company was $4.2 billion. This increased from the previous year by $653 million and previous quarter by $241 million. Included in this provision is an additional allowance of $1.5 billion for loan losses. During the previous year, addition for loan losses was $1.9 billion and, for the previous quarter, it was $1.4 billion.

The company blames weak economic conditions and a decline in the price of housing for the higher estimated losses for their home equity and mortgage portfolios.

For its commercial banking unit, the company’s loan losses went up to $494 million from $190 million. Charge offs for prime mortgage went up to $568 million, equivalent to an increase of 3.81%. During the previous year, the company’s prime mortgage net charge off was $195 million, equivalent to 1.2%. Credit card branch sales for JPMorgan Chase also dropped by 31% compared to the previous year and 6% compared to the previous quarter.

Dimon said that, although the company is seeing delinquencies begin to stabilize, costs of consumer credit still remains high. Employment is also weak and home prices continue as they were before. The company therefore remains cautious, he said.

The popularity of credit card companies and banks seem to be at an all time low these days. The latest public image drop they experienced centers around charity donations American citizens are sending to Haiti after a devastating earthquake hit the country.

Many Americans are sending donations to their preferred charities in order to give support to the victims of the earthquake in Haiti. A lot of consumers are sending donations through credit cards and according to a recent report from The Huffington Post, credit card companies were taking profits from every credit card donation that passed their way.

Consumers were understandably upset over this situation. Already, consumers have been criticizing credit card companies and banks for the interest rate hikes and new fees that they have been imposing in past few months, well ahead of the new credit legislation taking effect next month. The knowledge that credit card companies were making profits on donations to Haiti, not to mention other, non-related donations as well, just adds more fuel to the fire.

In response to this public backlash, a lot of credit card companies have backed down and are moving to a more charitable stance concerning donation transactions for Haiti. This move not only dampens the fires of discontent among consumers a bit, but it may also deflect possible backlash that they are going to get when they announce their controversial bonus pools which should be happening anytime soon.

Major credit card companies who have decided to assist in the Haiti relief assistance – which coming from all over the world – include Visa, Discover, MasterCard and Discover. These companies have announced that they would be waiving transaction fees for charitable donation transactions or they would be donating profits that they see from the aforementioned transactions to charity organizations helping in the Haiti crisis such as the American Red Cross.

Most of the relief assistance announcements made by credit card companies came after media outlets started pointing out that credit card companies would be seeing millions in profits from charitable donation credit card transaction fees. Even with transaction fees costing only $0.05 per transaction, considering the number of transactions that credit card companies see, the sum total is quite a considerable amount. An amount that should be put towards helping Haiti earthquake victims instead, Senator Dodd pointed out.

The outgoing Senate Banking Committee chairman recently issued a statement urging the waiving of transaction fees for donations to Haiti. He said that, as Americans send their hard earned money to Haiti, their donations would do much more good if credit card companies were not “skimming off the top” of these donations.