The banks are all bleeding money due to record high credit card default rates.  Compounding their problems is the Credit CARD Act of 2009.  Once the bill takes effect in February, there will be restrictions on interest rate hikes for all credit card issuers, so between now and then, the banks are doing all that they can to shore up their books and this means ratcheting up interest rates.  It’s not fair to consumers, but there will be some correction to these practices once the law becomes active.  Unfortunately, there’s not much you can do.  If you have good credit, you can shop around for a card that has a lower interest rate, transfer or payoff your balance and then close your old account. Other than that your only option is to accept the new interest rate, even if it is only for the period of time it takes you to payoff and close out your account.

Before traveling overseas with your credit card, you should definitely call your credit card company for two important reasons:

The first reason is that  most credit card companies are going to assess you a 3 percent fee on all the transactions that you incur while using your credit card abroad. For example, if you end up charging $1,000 on your credit card, it is very likely that the credit card company will charge you $30 in fees (i.e. 3% of $1,000).
Our advice is that you call your credit card company and find out their policy around ‘foreign transaction fees’. There are definitely some credit card companies (Capital One being one of them) that do not charge this fee, so it pays to make a couple of phone calls to see if one of the cards in your wallet does not have the 3 percent fee.

Account set-up fees, program fees, internet access fees, and credit limit increase fees are uncommon but out there, so be careful. Most of the time, these fees are tied to the credit cards that are offered to people with bad or poor credit. Not every credit card offered to people with bad/poor credit includes these fees, but it is something you should be aware of.

• Account Set-Up fee: This is an excuse for the credit card company to charge you another fee. Usually this is a one-time fee assessed when you are approved for a credit card.
• Program fee: Another opportunity for the credit card company to charge you a fee. Usually this is a one-time fee assessed when you are approved for a credit card.
• Internet Access fee: Usually this is a one-time fee assessed when you sign up to access your credit card account over the internet.
• Credit Limit Increase Fee: The credit card company that assessed this fee explained it in the terms and conditions as follows: “Each time your Account is eligible and approved for an unsecured credit limit increase, a Credit Limit Increase Fee of $25 is imposed. This fee is automatically assessed upon approval of your credit limit increase”. Basically, they’re charging you to allow you to spend more money on their credit card. Wow!

A zero-percent Introductory APR on balance transfers sounds like a great deal, right? Unfortunately, there is often a fee associated with making a balance transfer from one card to another. The most common fee is 3 percent of the transferred balance.

You should interpret this percentage-based fee as an additional APR above your Introductory APR.

Payment allocation is the term used to describe how your credit card company uses your payments to pay down your debt. The Credit CARD Act, effective February 2010, has changed a lot of the rules regarding how your credit card company can distribute your payments across different APR balances. The new rules are aimed at protecting consumers from an unfair payment allocation system, but unfortunately these rules only apply to consumer credit cards, and not small business credit cards. Below you will find separate explanations of how payment allocation works for both types of credit cards.

Consumer Credit Cards:

If you don’t pay your credit card bill on time, or if you spend over your credit limit, generally your credit card company will hit you with a late fee or overlimit fee, respectively.

In most cases, you will be charged an overlimit fee if you are over your credit limit at any point during the billing cycle. That means that you will be charged an this fee even if you are back under your limit when your monthly statement arrives.

The Penalty (or Default) APR is the interest rate applied to a portion of your credit card balance when you do not follow the terms and conditions of your credit card agreement. The new credit card law (Credit CARD Act), effective February 2010, made changes to the rules for the Penalty APR and when it applies to different portions of your balance. More specifically, the Credit CARD Act states that the only way a credit card company can apply the Penalty APR to an existing balance (i.e. purchases you have already made) is if you are 60 days delinquent in making a minimum payment.

A re-pricing of your APR for any other reason can only affect future transactions, and cannot occur in the first 12 months of your agreement. Unfortunately, a rate increase that applies to future transactions does not have restrictions under the Credit CARD Act and can happen for any reason the credit card company wants (including missing one payment or going over your credit limit). If the credit card company changes your interest rate, it is required to send you a notice specifying the reason for the rate increase 45 days in advance, and the rate increase can only apply to purchases made 14 days after the notice was sent. It sounds complicated, but these rules are actually an improvement.