Five tips for the new credit card era

While the Credit Card Accountability, Responsibility and Disclosure (CARD) Act's next phase of consumer protections goes into effect Feb. 22 (and the final phase on Aug. 22), loopholes are surfacing.

Here are a few ways to stay on top of your credit cards (Bankrate.com Feb. 2):

1. Beware the advance notification exceptions. On Aug. 20, 2009, a provision that requires 45 days' advance notification of "significant" terms changes took effect. It applies to fees and finance charges, as well as some rate increases. There are some exceptions. For instance, the law doesn't require 45 days' advance notification for credit limit decreases, or for rate hikes triggered by a 60-day late payment or expiration of a promotional rate. Read notices from your issuers, and verify the rate and credit limit each month when you get your statement.

2. Don't fall into retroactive rate-hike loopholes. Come Feb. 22, existing balances will be protected from a rate increase in most circumstances. If you miss the due date by two months or more, however, the annual percentage rate applied to that debt can skyrocket. And you can't control the index if you have a variable-rate card, but you can make sure your payment arrives on time. Consider setting up automatic payments.

3. Weigh the pros and cons of opting out. Along with any required advance notice of a change in terms, issuers must include an opt-out disclosure. Opting out closes the account, but issuers must provide a repayment method "no less beneficial" than either a payment plan that spans at least five years, or a new minimum payment percentage that is no more than twice the previous percentage.

4. Get permission to go over limit. Under the CARD Act, a purchase that exceeds the credit limit can't trigger an over limit fee unless you have opted in to allow over limit transactions. If you need to go over limit for whatever reason, you can switch on your over limit privileges at any time by making the request in writing, orally, or over the Internet.

5. Watch for annual fees. Even if your card doesn't carry an annual fee now, keep in mind that issuers only have to provide 45 days' advance notice before implementing one.

Overall, the best practice is to watch your monthly statements closely and carefully read any communications from your issuer. If you don't like the new terms on your current card, shop for a new one; credit union cards average one and a quarter percentage point better rates than bank cards.

Also a survey commissioned by the Consumer Federation of America and the Credit Union National Association revealed that 61% of consumers are aware there are new credit card protections, but most (65%) don't know they take effect later this month and don't understand the specific protections Congress approved last year.