Many of us have been surprised when we’ve opened a credit card statement and found we have been paying unexpected fees on top of fees and interest on interest. Some of us may have thought that by paying monthly minimums we could get ahead of the debt and instead are falling farther behind. After many complaints and new recession-prompted moves by banks and credit card issuers, Congress stepped in with The Credit Card Accountability Responsibility and Disclosure Act, commonly referred to as the CARD Act (in effect as of February 22, 2010).

To help consumers, The National Foundation for Credit Counseling (NFCC) www.DebtAdvice.org explains five changes related to your credit card accounts as a result of the CARD Act, and tips to add to your smart money to-do list:

Review monthly billing statements, as they will look very different. Two new features will be added to the statements:

1. Issuers must now include a snapshot of how long it will take to pay off a balance if you only make the minimum payment each month.  This will be contrasted against becoming debt free in three years. Many of us are unaware of how deep a financial hole we’ve dug. This new reality check provides an opportunity to stop digging deeper and start digging out. 
2. Credit card issuers are now required to include a toll-free phone number on every statement telling you where you can credit counseling from legitimate nonprofit counseling agencies.

Pay attention to all mailings, statement stuffers and fine print. Under most circumstances, the issuers must now give consumers 45 days notice before they increase the interest rate, change fees or make other significant alterations to the terms of an account. If you read the fine print, you will have time to evaluate the revisions and decide if you want to apply for a different credit card with better rates and terms than the existing one.  

Inform the creditor whether or not you want to allow transactions that will take you over your credit limit. In recent years, credit card companies allowed users to go over their credit limits without warning them, then charged them without asking. No more. It’s now up to you to tell your credit card company if you want to allow approval of purchases over the current limit or allow the transaction to be turned down.  If a you do not opt-in to over-the-limit transactions and the credit card company allows one to go through, it cannot charge an over-the-limit fee.

Also, if you to opt-in to allowing transactions taking you over the credit limit, the credit card company can impose only one fee per billing cycle.  Think about this. Maybe you don’t want to opt in.  It may help you think twice before you overspend and keep additional fees from adding up.  If you need more credit and have a planned large purchase, you can call the company in advance and ask to up the limit, consider another credit card, or split the purchase on more than one.  But don’t forget to make a plan to pay it off!

Check your credit report for accuracy.   Card issuers are restricted from opening a new account or increasing credit lines unless the issuer first takes into consideration the consumer’s ability to repay under the terms of the agreement.  To satisfy this requirement, creditors will likely begin using income estimation models supplied by the credit bureaus.  These tools will review, among other things, data contained in the consumer’s credit bureau report. Since you are allowed one free credit report every 12 months from each of the three reporting bureaus, there is little reason for you not to review their credit report and correct any inaccuracies.  To receive your credit report free of charge, visit www.annualcreditreport.com. 

Pay your bills on time. Companies must now tell you when your payment is due, setting the same date each month; must give ample time to meet the due date with the bill mailed or delivered 21 days before; and not charge extra if payment is made by phone or electronically. These rules allow you to plan your payments, making it easier to stay current. 

Managing your credit is ultimately up to you, not the card companies. So add this to your financial to-do list: take time to become familiar with the provisions of the CARD Act. You will benefit from clearer terms and improved disclosures but only if you take time to understand them

If you want to understand more about how the CARD Act affects you, or if you have financial concerns, reach out to an NFCC Member Agency for assistance.  To find the location closest to you, call toll free to (800) 388-2227, or go online to www.DebtAdvice.org.  For help in Spanish, call (800) 682-9832.