As you may know, the Credit Card Accountability Responsibility and Disclosure (CARD) Act came into effect in May 2009. The Credit CARD Act was designed to protect consumers from predatory credit card issuers. (For new ways credit cards companies are attracting new people, read 5 New Ways Credit Card Companies Are Wooing New Card Holders.)

TUTORIAL: Credit Cards

The act has had many positive effects, but it also allowed the big banks other avenues to recoup lost revenues. If you adjust your credit card mindset, you can avoid most or all of these new or increased fees.

Here are some of the positives and the negatives regarding the legislation, and ideas to help you navigate the outcomes:

Advantages of the Credit CARD Act of 2009
The legislation was intended solely for the protection of the consumer. While it did open up a few loopholes for the big banks, the Credit CARD Act provides many benefits to credit cardholders, including:

Drop in Over-the-Limit Fees
In 2009, a shocking 80% of credit card holders had over-the-limit-fees charged to their accounts. After the Credit CARD Act went into effect, however, this number dropped to 11%.

Many credit cards no longer charge cardholders over-the-limit fees. If you still have a card that charges you an over-the-limit fee, find a fee-free option to replace your current credit card.

Decrease in Penalty Fees
In 2010, the average late credit card payment fee was $39. Since 2010, the average late payment fee has dropped to $25.

Pay bills on time to avoid late payment fees. Set up monthly calendar notifications or subscribe to email reminders from your credit card or bank to remember to pay credit card bills on time.

More Available Credit
Before the Credit CARD Act was introduced, some credit card issuers reduced credit card limits. Reduced credit limits hurt your credit score, mainly because the amount of credit you have available to you is a big factor in calculating your credit score.

In 2008, 47% of banks lowered credit card limits. In the first quarter of 2011, however, this number went down to just below 3%. If you have credit cards that you no longer use, don't close the accounts. Keep your available amount of credit high, to improve your credit score.

To prevent credit card companies from lowering your credit limits or closing your accounts, make sure to use these cards for small purchases at least once every few months. Pay the balance off on time and in full every month, and you can maintain your current level of available credit.

Disadvantages
Once this legislation went into effect, the banks worked overtime to maintain their revenue flow. They found new ways to charge you extra money, and additional ways to charge you more for using your credit cards and debit cards.

The Credit CARD Act negatively impacted many consumers in a number of ways, including:

More Credit Cards with Annual Fees
In 2010, only 14% of the credit cards had annual fees. This number jumped to 21% in 2011. In the past, you could easily find a credit card without an annual fee. It has now become more difficult to find these cards, but you should still strive to carry a credit card that doesn't have an annual fee.

Higher Out-of-Network ATM Fees
The government didn't address this loophole in the Credit CARD Act. The average fee for using an out-of-network ATM was $3 before this legislation took effect. Since then, this fee has increased to $5.

Plan ahead so you never need to use an ATM machine when you travel. Carry more cash, use traveler's checks, or eschew cash-only purchases and use your credit card instead. To avoid all ATM fees, try to break the habit of relying on ATMs to withdraw cash.

Skyrocketing Over-the-Limit Penalty Rate
Although the percentage of credit card issuers that charge an over-the-limit-fee has decreased, the penalty rate has skyrocketed for credit cards that still charge these fees. Before the legislation was passed, the average over-the-limit penalty rate was 21.9%. Since then, the penalty rate has increased to an average rate of 29.9%. Avoid this trap by finding a card that does not charge over-the-limit fees.

The Bottom Line
The credit card legislation may seem confusing and hard to grasp, but if you carefully manage your finances, none of these changes have to affect you at all. If you still carry credit card debt and pay penalty fees, re-visit your strategy regarding credit cards and debit cards. Then you will know that you, and not the big banks, win in the end.

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