According to wedding industry research company The Wedding Report, the average cost of an engagement ring in 2011 was just more than $3,200. Fortunately, if you haven’t been able to sock away enough cash, there are several ways to make the cost and payments manageable.

1. Get a store credit card.
The advantage of this option is that many stores offer to defer interest (often for six to 18 months) and may offer an off-the-top discount on the total price of the ring.

The key here is the word “defer,” says Bill Druliner, Midwest regional manager of GreenPath Debt Solutions. Interest is building up in the background as the months go by, and if you don’t pay every bit of the ring off by the date specified, you will get zapped with that interest retroactively — often close to 25 percent — on the balance you had accrued each month.

The offers at major chain stores are similar. For instance, Kay Jewelers offers a plan with its Kay Card for no interest if you put 20 percent down on a minimum purchase of $500. If you don’t pay it off in 12 months or are late with a minimum payment, an annual percentage rate (APR) of 24.99 percent (lower in some states) will be charged from the date of purchase. Jared offers similar terms with a minimum purchase of $1,000.

Keep in mind that getting a store credit card could ding your credit report. Opening another account will count as an inquiry, which can lower your score. The new account can also lower the average longevity of your credit accounts, which also lowers your credit score. If your only other credit account is 10 years old, for instance, you just cut your average to five years.

Another drawback with a store credit card is that, in many cases, the store gives you a line of credit in the exact amount of the purchase. That means you’ll be maxing out your available credit, which can hurt your credit score, says personal finance expert and bride-to-be Farnoosh Torabi, host of “Financially Fit” on Yahoo! Finance.

“Your credit utilization is an aggregate, so if you have open lines of credit you’re not using, it’s going to be in the mix of that,” Torabi says. “If [a store card] is your lone line of credit, it could really make an impact.”

2. Use a regular credit card.
If you’re going to pay off the ring in one or two months, using a regular credit card is a great idea, Druliner says. This buys you some breathing time and allows you to rack up some rewards points. Some credit cards will offer protection if something happens to the ring. Be sure to read the terms that came with your credit card agreement.

One advantage to paying with a regular card as opposed to a store card is that you wouldn’t have the deferred interest problem.

“It’s a little less risky in that you won’t see the interest blow up on you at the end of a year,” Druliner says.

But you should still have a plan to pay the ring off to avoid regular interest charges each month.

3. Take out an installment loan.
An installment loan requires regular, predetermined payments until the debt is paid off– like a car loan. These types of loans generally come with interest rates in the teens, according to Druliner.

“On the one hand, that can be good because credit card debt can lull you to sleep with the minimum payments,” Druliner says. “… whereas an installment loan will force you to pay it off within a fixed period of time.”

Of course, if something comes up and you can’t make a payment to the bank or credit union, there’s less flexibility. If a payment is more than 30 days late, it can show up on your credit report, Druliner notes.

4. Shop around.
Another consideration is whether to go to a national chain store in a mall or seek out independent jewelers.

Mall jewelers are more likely to offer financing deals and their own brands of credit, says Antoinette Matlins, gemologist and author of books including  “Jewelry and Gems: The Buying Guide.”

The bad news about major retailers, she says, is that the markup can be as much as 300 to 400 percent.

“You may find that [an independently owned store’s] regular price, no sale, is less than the 50 or 60 percent sale price at one of these other places for the same quality diamond,” Matlins says.

Even after you’ve chosen the seller, there are ways to keep the cost down and have manageable payments. Although “the average salesperson is not about to tell you how to get a ring that ‘looks just like this one’ for half the price,” according to Matlins, there are techniques for getting a good deal.

Take flaws in the diamond, for example. There are 11 grades on the flaw scale, according to Matlins.

“You can come down seven grades and see absolutely no difference with the naked eye between your diamond and one that’s flawless,” Matlins says. “But the cost difference is dramatic.”

Of the “four C’s” (cut, color, clarity and carat weight), Matlins recommends focusing on the clarity grade.

“It will give you more flexibility in your budget and have absolutely zero impact on the beauty of the diamond,” she says. “Even a diamond at the worst clarity grade is still 97 percent clean or clear.”

You can find out what to look for at the Gemological Institute of America site.  Often, people pay more for what they think will make the most sparkle — but won’t, Matlins says.

“People associate the sparkling quality of a diamond with the clarity grade and … that’s absolutely not correct.”

Instead, the sparkle has everything to do with how it’s cut, according to Matlins.

If you’re buying a diamond of at least three-quarters of a carat, Matlins advises shopping for the diamond before choosing the setting. That way, you can place the diamonds side by side and see for yourself how the stone in your budget compares to others.

5. Think twice about starting marriage with ring debt.
That word “budget” is important, even in the throes of romance. Despite discounts and financing deals, the best option for this kind of purchase is cash, Torabi says, even if that means removing the element of surprise.

In other words, don’t deplete your savings for a ring the bride may not be thrilled with, especially in this economy. Modern couples don’t have to follow all the traditions.

“I’m hearing about brides and grooms dividing the costs of the ring,” Torabi says. “Couples in their late 20s may have student loans and may not have full-time jobs. To throw [the cost of a ring] into the mix could really shake things up.”

Besides, your future life partner should be the last person who wants you to go into debt.

“If it’s going to be something that’s going to get you into a loan situation or a credit card situation, I don’t think any bride would want that,” Torabi says.

“A mortgage or a car payment is understandable as they may be necessities for many,” says Nancy Anderson, a certified financial planner and think tank director of Financial Finesse, a leading workplace financial education firm. “However, carrying credit card debt into retirement is a symptom of poor cash management. If you aren’t able to live on your income while you are working, how are you going to live on your income in retirement?”

Retirement is supposed to be a time to put financial worries behind you and enjoy life. Yet many boomers are finding themselves carrying their financial burdens into their golden years.

Tough economy means tough retirement
The economic downturn and extreme volatility of the stock market has taken its toll on all demographics in society. But, for many baby boomers nearing retirement, it poses a particular challenge.

“Baby boomers have more challenges than their parents did in preparing for retirement,” Anderson says.

Unlike their parents, Anderson explains, boomers can’t rely on traditional pension plans, but are on their own to fund their retirement.

“They have to do so in a tough environment,” says Anderson in an email. “Boomers faced the ‘lost decade’ of the 2000s with little stock market growth and the financial crisis negatively affecting the real estate market.”

According to a recent survey by CESI Debt Solutions, a national nonprofit credit counseling organization, 59 percent of people recently retired had saved less than $50,000 toward retirement. And a little more than one out of three still carried credit card debt when they retired.

While some may decide to simply work longer to better position themselves for retirement, this may be easier said than done. First of all, in uncertain economic times, it can be difficult to find or keep work. Further, the older you get, the greater the risk that health issues could leave you unable to work as long as you had planned.

Moreover, thinking that you can “just” work longer can be a way of avoiding the issue at hand — the fact that you’re not living within your means.

“The problem is that the issue not only doesn’t go away, but it gets bigger,” Anderson says. “The root cause of the problem is never addressed, so debt may continue to accrue.”

Tips for weathering the storm
To avoid getting tripped up by debt and credit issues in retirement, experts advise taking the following steps:

1. Get a handle on your cash flow. If you are nearing retirement and still are accumulating credit card debt, you have a cash management issue. To put it plainly, you are living beyond your means. Begin tracking what comes in and how it is spent. Then create a budget, matching income to expenditures.

“Getting a strong handle on cash flow before retirement is critical,” Anderson says. “Not only does it help you pay off debt, learning how to live within your means will help to make retirement income last a lifetime.”

2. Stop using credit cards. The first step in getting rid of credit card debt is to stop spending money you don’t have, says Mike Sulllivan, director of education for Take Charge America.

“Any balance carried month to month is debt that the consumer couldn’t afford to pay off,” Sullivan says. “And consumers that can’t afford a debt sure can’t afford the extra cost of paying 19.99 percent interest or higher.”

3. Start an emergency fund. For most people, credit card debt accumulates not so much because of frivolous spending, but because they don’t have money set aside to deal with unexpected expenses. This includes medical expenses, one of the most common budget busters for people nearing or in retirement. Set up automatic monthly payments into a savings plan for an emergency fund, so that you won’t get tripped up by unexpected expenses.

4. Set up a plan for paying off credit card debt. Paying off credit card debt takes a lot longer than most people realize. Use this calculator to determine how much you’d have to pay off each month to be free of credit card debt by the time you retire (or earlier, if possible). Then put a plan in place for paying off not just credit card debt, but your car loan and other personal debts, so you don’t have that drain on your budget when you retire.

For individualized recommendations, Anderson recommends working with a financial planner or checking out your company’s Employee Assistance Program. More and more companies are offering financial wellness benefits in addition to other types of wellness programs.

Another option is to work out a plan with a nonprofit credit counseling agency tailored to your unique situation. A credit counselor or professional financial adviser can help you get a bird’s-eye view of your situation, set up and plan and support you in carrying it out. This may involve making sacrifices in the short term, but once you enter retirement, you’ll reap the benefits many times over.

Payday loans are small cash advances with triple-digit interest rates lent for a short term to people who agree to pay off the loan with their next paycheck. You see payday loan businesses in stand-alone storefronts and strip malls, and some major banks even offer a version called deposit advances. Because of their hefty interest rates, lack of federal oversight and rapid industry growth, the loans have been a priority target for the CFPB.

The agency had been without a director since its debut in July 2011 until President Obama this month appointed Richard Cordray, setting in motion an ambitious agenda. First stop: a public hearing in Birmingham, Ala., which in December 2011 passed a six-month moratorium on new payday licensees, because the numbers were growing so rapidly. Alabama has one of the highest concentrations of payday lenders in the U.S.

Payday loan advocates say they offer lifeline
In Birmingham last week, industry advocates argued that payday loans offer a lifeline for millions of people who depend on that quick infusion of cash. According to the Community Financial Services Association of America, which sets industry standards for payday loans, storefront lenders made 110 million loans to nearly 20 million families in the U.S. last year.

Jamie Fulmer, vice president at payday lender Advance America, Cash Advance Centers, Inc., in Spartanburg, S.C., says consumers have to consider the costs of not getting the money — defaulting on bills and racking up fees. He argues that, if consumers add up the cost of defaulting on rent, getting utilities shut off and reconnected, and paying overdraft fees and banks’ and merchants’ bounced check fees, payday loans are far less expensive in comparison.

“When they look at the landscape of options … they will see that the payday loan product that we offer is a rational, cost-competitive alternative in that broader marketplace,” Fulmer says.

Consumer advocates call them predatory
Consumer advocates, meanwhile, used the Birmingham hearing to argue that lenders prey on the poor and shackle them with debt. The Center for Responsible Lending reports the average annual percentage rate (APR) for a 10-day loan is 417 percent. The average payday borrower takes out nine loans a year.

Shay Farley, legal director of Alabama Appleseed, a nonprofit legal advocacy group, says the industry needs regulation and change.

“We should call [payday loans] what they are,” she says. “It’s usury, it’s repulsive, it’s immoral and we should be offended at the practice. It is so destructive to our fundamental core values and yet we allow this practice to continue.”

One of critics’ main complaints about payday loans is that borrowers often end up rolling the loans over, meaning that, because they accumulate interest and fees, they have to take out another loan to pay off the first loan, feeding a continuous cycle of debt.

Farley says better alternatives include using credit cards, even if the person has to pay higher rates, or borrowing from family or friends.

Oversight is a challenge
Despite the financial risks payday loans pose to consumers, keeping an eye on lenders is difficult. Part of the problem with oversight is that each state has its own rules and regulations. Even within states, there’s often no central data bank that keeps track of how many of these loans are given.

In Alabama, Farley says, there are 1,069 licensed payday stores. There are seven databases for these loans alone, and it falls to a handful of people to regulate them as well as banks, mortgages, mortgage originators and title/pawn shops.

“There’s no way for me to tell you how many loans are given in Alabama, for how much at what rate and how many per person,” Farley says.

Another problem, Farley says, is the lack of three words — “in the aggregate” — in the state law governing small loans. Alabama law limits a lender to giving $500. But, because there’s no centralized database to check a customer’s collective (aggregate) loaning history, a customer can get $500 from a lender — and then $500 from another.

“And it’s not that they’re greedy, and it’s not because they want $1,000,” Farley says. “It’s because in two weeks they can’t pay off that other $500, and they have to go get more money to rob Peter to pay Paul.”

Advocates propose 36 percent cap
Stephen Stetson, policy analyst with the Arise Citizens’ Policy Project in Montgomery, Ala., says the best solution is to put a 36 percent rate cap on all small-dollar loans, which is modeled on the rate cap Congress established in 2007 for lending to members of the military. That’s a far cry from the current rate cap in Alabama, for instance, which is 456 percent for a $250 loan, according to the Consumer Federation of America.

Fulmer, of Advance America, says he’s heard that proposal repeatedly.

“Consumer advocates understand what that 36 percent means,” Fulmer says. “It’s effectively prohibition. … Applying a 36 annual percentage rate to a two-week $100 loan would mean that Advance America would only be allowed to charge $1.38 for that two-week period. That breaks down to less than 10 cents a day that we could charge for that $100 loan. It’s simply impossible.”

Stetson says any business that can’t operate on a 36 percent APR has a flawed business model. He says there is a place for federal regulation of these loans because a lot of the big national banks that are the money behind payday loans are already regulated by the Office of the Comptroller of the Currency.

“This is not a question of a few bad actors,” Stetson says. “This is a question of a faulty product.”

Educating consumers about the pros and cons of payday loans isn’t a viable strategy for solving this problem, Stetson says.

“There’s a time and place for financial literacy. You’re not going to out-advertise the industry,” Stetson says. “They stay open 24 hours. They give you a free turkey at Christmas. They have commercials with people throwing money at the camera. You’re not going to convince the public to go sit down in a credit union waiting room and apply for a small-dollar loan with a loan officer. You’re fighting a losing battle there, so this has got to be a regulatory thing.”

Meanwhile, both sides wait to see how the CFPB will move ahead.

Cordray said at the Birmingham hearing that the agency will work toward regulation that keeps the emergency loan option, but with more protections.

“I want to be clear about one thing: We recognize the need for emergency credit. At the same time, it is important that these products actually help consumers, rather than harm them,” he said.

The traditional formula generally goes something like this: pay down the debt with the highest interest rate first. Once that is paid off, proceed to the debt with the next highest interest rate and so on. However, that’s not the way most people go about paying off debt.

Picking battles
According to a recent study headed by Israeli marketing professor Moty Amar and Duke University’s Dan Ariely, when it comes to paying down debt, we often don’t act logically. If we are saddled with multiple debts, we tend to prioritize paring back the total number of loans, rather than reducing the total debt. In other words, we’ll tackle smaller debts first so that we have the peace of mind that comes with checking them off the list — even if it means paying more in interest charges in the long run.

The study’s researchers use the term “debt account aversion” to describe the phenomenon of doing what makes the most the most sense emotionally rather than opting for the lowest-cost strategy.

“When it comes to paying off debt, 90 percent of people pay off on emotion,” says Chad Gentry, executive director of the Colorado-based Community Credit Counseling Services. “There are so many emotions to [paying off] that small balance, and it is those emotions that ultimately drive decisions.”

According to Cynthia Cryder, an assistant professor of marketing at Washington University in St. Louis and one of the study’s authors, there are likely multiple reasons why we tend to shy away from tackling the largest credit card balances first, even though it would save us money.

“It is extremely satisfying to close a debt account and relatively less satisfying to simply pay one down,” said Cryder in an email. “Another critical factor that we know exists is that people have difficulty understanding interest rates.”

If interest charges are expressed in terms of dollars instead of percentages, Cryder notes, debt account aversion becomes much less prevalent, and people tend to opt for saving money by paring back high-interest debt first.

Choosing tactics
Not everyone agrees that starting with the debt with the highest interest rate is necessarily the best way to go. Author and financial guru Dave Ramsey advocates a “snowball method.” Focus on paying down the debts with the smallest balance first. Once that debt is paid off, apply the money freed up to concentrate on getting rid of the next (now) smallest debt balance and so on. Only worry about interest rates if two debts are of similar size — then, obviously, tackle the one with the highest interest rate first.

The reason?

“You need some quick wins in order to stay pumped up about getting out of debt,” Ramsey explains on his website. “Paying off debt is not always about math. It’s about motivation.”

Cryder acknowledges that working with debt account aversion rather than denying it might make the most sense in some cases.

“If a consumer feels that paying toward a smaller debt will motivate them to allocate more money from spending toward debt repayment, then, by all means, use the snowball method to keep up motivation,” she notes.

However, if you’re already maxing out the amount you can allocate toward debt repayment and don’t need the extra boost of motivation, Cryder says that prioritizing accounts with high interest rates will yield the best financial outcome overall.

Other weaknesses
Paying back debt is not the only area where our feelings might sabotage our financial well-being. When it comes to making purchase decisions and taking on debt in the first place, we may be even more irrational.

“When it comes to making purchase decisions, people go on emotion first and logic second or third — or not at all,” Gentry says.

The same holds true for Americans’ long-lived love affair with debt, Gentry says. Consumer credit card debt peaked at $976 billion in 2008, according to the Federal Reserve. In the wake of the financial crisis that ensued, Americans paid down credit card and other debt balances with gusto. Now, however, even as the economy continues to limp along, consumer debt is heading back up.

In November, U.S. consumer borrowing jumped by 10 percent, the largest percentage increase since October of 2001, according to the Wall Street Journal. The surge was driven in part by an increase in credit card borrowing, which was up by 8.5 percent.

“People went right back to their old credit behavior pattern as soon as they got a little more comfortable,” Gentry says. “In fact, 2008 might have been the only year in history that we paid off our credit card debt as a whole. That is kind of scary when you think about it.”

Researchers at global computer security firm Trusteer have found that the latest version of SpyEye’s malware toolkit can help criminals sneak into bank accounts, use the information to commit fraud and then cover up their tracks so there’s no evidence of tampering when the account holder logs back on.

Trusteer’s chief technology officer Amit Klein says this new version, which is targeting banks in the U.S. and U.K., works like this:

SpyEye lurks as the user starts to log in to the banking site. While that’s happening, the malware injects fake prompts into the login page to ask for information such as debit card numbers, PINs and expiration dates.

“The user suspects the bank is just asking for this information as part of the login process,” Klein says.

The padlock symbol at the bottom right of the screen is still there, as is the “https” in the URL, which usually indicates a secure connection. Yet the personal information the user enters goes to a SpyEye server, and the criminal starts using the stolen information for transactions online or over the phone.

The next time the user logs in, SpyEye, which has kept a record of all the fraudster’s transactions, removes all evidence of the fraud. Everything looks normal. That is, until the user gets a balance on an ATM, gets a monthly paper statement or checks the balance on a non-infected computer.

Experts expect more attacks
Klein says that SpyEye and similar “man-in-the-browser” agents (like Trojan horse-type agents) are becoming a more serious threat.

“We see them improving their configurations and platforms and see them going after targets they have not targeted before, both financial and non-financial,” Klein says.

New financial targets include higher-yield accounts instead of just the smaller banks that had been less protected and easier to attack. New non-financial targets include businesses such as payroll processors, Klein says.

The immediate victim in such attacks is the consumer or a corporate user who accesses a bank account. But, in many cases, the bank reimburses victims for any losses incurred, provided they have shown an effort to protect their accounts’ privacy.

“At the end of the day, the losses are eaten by the banks,” Klein says.

SpyEye’s new plan of attack presents an even greater challenge for businesses like network security solutions firm Damballa, which has been tracking SpyEye for years.

Sean Bodmer, senior threat intelligence analyst for Damballa, says that Damballa Labs is currently tracking 17 SpyEye botnets, all run by different criminal groups. A botnet is a network of infected computers that’s being controlled by a criminal to infect others. Each botnet, according to Bodmer, ranges in size from 15,000 victims up to 274,000 victims across the globe.

The SpyEye Botkit was one of the Top 10 crimeware kits used throughout 2011, and its criminal use continues in 2012, Bodmer says. Hackers can now buy a base kit for the current SpyEye version for $2,000 and a fully loaded package for up to $10,000.

SpyEye has similarities to the better-known Zeus malware platform. Rob Rachwald, director of security strategy for data security firm Imperva, says his company is seeing increased movement into the mobile phone market for both SpyEye and Zeus.

“Now there’s something called Zitmo (Zeus in the mobile) and Spitmo (SpyEye in the mobile),” Rachwald says. “So, in other words, they’re developing mobile versions for Android, for example. The question is how big will those footprints grow?”

How can consumers protect themselves?
There is no foolproof way to avoid a SpyEye attack. In fact, even anti-virus software can only block one-third or fewer of the viruses out there, because viruses morph so quickly, Rachwald says.

But there are a few precautions consumers can take.

First, be skeptical about what questions you are being asked, even if you are sure you are on a secure banking site. If you get suspicious, call the bank to make sure the questions you are being asked are legitimate.

“If consumers want to bank online and be very, very sure of their security, simply buy a cheap new laptop that you only use for online banking,” Rachwald says. “Use your regular other computer for general web surfing.”

Short of that, make sure you have updated your computer’s anti-virus protection and have downloaded the latest versions of your browser.

“Although almost any anti-virus engine can be circumvented by an armored version of SpyEye, it is always wise to keep your (anti-virus protections) up to date,” Bodmer says.

He also recommends backing up any system. That way, in the event of an infection, you can revert back to a not-too-distant image of your system.

However, despite the new protections, card issuers have been quick to come up with new traps for unsuspecting consumers. Here are some of the sneakiest tricks to watch out for when applying for or using your card.

Ambiguous disclosures: Uncertain terms take on a new face
Previously, when consumers applied for a credit card, the most important terms of the new credit account were typically buried deep in pages of fine print.

However, the Credit CARD Act of 2009 requires card issuers to clearly disclose the terms and conditions for new and existing credit card accounts, making it easier for consumers to know exactly what they’re on the hook for if they apply for a new card.

But despite the more transparent disclosures, consumers still face significant hurdles trying to figure out exactly what interest rate they will have to pay after they receive a new credit card.

Most card applications these days disclose a range of possible APRs on new cards, making it tough to figure out exactly what you’ll be charged. For example, a card’s APR may be disclosed as a range of 9.99 percent — for those with excellent credit — to 22.99 percent for those with less than perfect scores.

If those ranges have you scratching your head wondering what interest rate you’ll actually get, you’re not alone. Even those with excellent credit have no way of knowing whether they will get the teaser 9.99 percent rate or a less desirable rate that falls somewhere in between.

“Those kinds of disclosures are pretty meaningless,” says Josh Frank, senior researcher at the Center for Responsible Lending. “You want to know what the credit is going to cost, but there’s just no way of knowing that … Uncertain terms remain a big problem, even after the Act.”

It’s also impossible to tell how many people actually get the lowest interest rate on an offer, notes Frank, so you can’t tell how likely you are to get a certain rate based on your credit score.

“Card issuers can easily advertise the low rate and give it to hardly anybody,” notes Frank. “The time when people shop for rates is when they get an offer. However, you just can’t do that, because there’s no way of knowing which rate you’ll end up with.”

Your best move: If you have excellent credit and don’t like the rate you get on a new credit card, you don’t have to open the account, even if approved. Instead, consider applying for another card, recommends Ruth Susswein, Deputy Director at Consumer Action, a nonprofit consumer group.

“If you’re an appealing candidate, you should be getting a good rate, so sometimes it makes sense to apply for another card,” says Susswein. “But you should do it pretty quickly, so you don’t look like you’re applying for a lot of credit.”

Credit card penalty rates: Weaker, but they’ve still got bite
The Credit CARD Act successfully curbed card issuer’s ability to apply steep retroactive default rates of 29.99 percent or more to cardholders’ balances if they made even one misstep, such as paying late on a card.

However, the 29.99 percent default rates of yore have been replaced with the 29.99 percent penalty rates of today. The same mistakes that would trigger default rates in the past, such as paying your bill late, going over your credit limit, paying with insufficient funds or doing any of the above on another account with the same bank could result in 29.99 penalty rates on future purchases.

The good news is that today’s penalty rates don’t have the same sharp teeth as yesterday’s default rates. Thanks to the Credit CARD Act, card issuers have to give cardholders 45-days notice of the rate increase and the penalty rate can only apply to new charges, not to existing balances, unless the cardholder is 60 days late with a payment.

“It was much, much worse when default rates were triggered on existing balances without any notice,” says Frank. “However, it’s a problem that there still are no limits on what kind of hair-triggers or universal defaults card issuers can use. And, the size of rate increases is still a problem; there is no guarantee that the rate increase is in proportion to the amount of violation that happened.”

Your best move: Your best bet if you end up with a penalty rate, says Susswein, is to simply put the card in a drawer.

“Remember that the penalty rate cannot apply to your balance unless you’re 60 days late,” she says. “If you have access to another line of credit, use that for future purchases and pay off the balance on the other card. That’s one good reason to have at least two cards available to you.”

Thanks to the Credit CARD Act of 2009, that’s no longer allowed. However, another sky-high interest rate has taken old default rates’ place: Credit card penalty APRs on new balances — which can also run as high as 29.99 percent or higher.

If you look closely, the new penalty rates bear an uncanny resemblance to the default rates of yore. However, according to Josh Frank Senior Researcher at the Center for Responsible Lending, there are some important differences.

“The main difference is that the penalty APR can only be applied to new charges,” says Frank. “The one exception is if your payment is 60 days late. In that case, you could end up paying 29.99 on existing card balances.”

Another improvement, says Frank, is that cardholders will get a 45-day notice of rate hikes, so they are aware of the change in terms and can plan accordingly.” For the retroactive default rates of the past, in contrast, card issuers could apply them to existing balances without any notice. Cardholders would have to look at their statement to find out the rate had gone up.

Still, the new penalty rates reveal some significant limitations to the protections introduced by the CARD Act, says Frank. For example, card issuers can still use any kind of rate triggers or universal default clauses they want.

Second, while card issuers are supposed to review credit card accounts and lower the rate after six months if the cardholder has paid on time, card issuers are under no obligation to lower the rate back to the original amount. Even more troubling, there is no limit to how much interest rates can be hiked.

“Card issuers can still double the rate or more, if they so decide,” says Frank. “This is a large remaining problem. There is no guarantee that the rate hike is in proportion to the amount of violation that happened.”

How to avoid penalty rate triggers
While the new penalty rates don’t have the same sting as the retroactive default rates of the past, there are still plenty of reasons to be on the alert and avoid late payments or other actions that could trigger penalty rates on future payments.

“The best way to not get hurt by a penalty rate is to not trigger the penalty in the first place,” says Stacey Tisdale, author of “The True Cost of Happiness: The Real Story Behind Managing Your Money.” “Stay on top of your budgeting, always pay on time, and make sure you don’t get yourself into a situation with your credit cards where you can’t meet that minimum payment.”

Here are the four penalty rate triggers to look out for:

1. Paying late. Theoretically, a credit card payment can be considered late if it isn’t received by the due date and time noted on the credit card statement. However, in reality, most card issuers leave a three to five day window, and for many, the penalty rate is only triggered after repeated late payments, unless there are other issues with the account. Don’t push the envelope, however.
2. Exceeding the credit limit. Exceeding your credit limit could result in penalty APR pricing for some credit cards.
3. Paying with insufficient funds. If you make a payment that is returned unpaid, some card issuers will also apply the penalty rate.
4. Any of the above on another loan account. Some card issuers reserve the right to apply the penalty rate if you do any of the above actions on another account or loan you have with the card issuing bank or its affiliates.

The last trigger, of course, sounds deceptively like the universal default clause of the past in which a late payment or returned payment on a completely unrelated account could trigger default rates on your credit cards. Fortunately, the rate increases are subjected to limitations from the CARD Act and only apply to future balances.

Should you inadvertently trigger the penalty APR, don’t just roll over and play dead. Your first step, Tisdale recommends, should be to call your card issuer. If necessary, seek the advice of a credit counselor to help you with the process.

“Card issuers will usually with work people, so you should always try that first,” says Tisdale. “If you call and you have a legitimate issue, the bank will often try to work something out with you, particularly if you’ve been a good customer in the past. Call them and tell them what’s going on and find out what your options are. Don’t just ignore the problem.”

1. Know your APRs.
Most people are familiar with a credit card’s purchase APR, which is the interest that accrues on purchases charged to the card. Most have also heard of promotional APRs, such as 0 APR offers on balance transfers or purchases.

However, there are several other members of the APR family, which you ignore at your own risk. These include:

Cash Advance APRs. A cash advance APR is the interest you pay on cash taken out at ATMs or banks using your credit card.
Overdraft Advance APRs. Overdraft advance APRs are charged by some card issuers on balances resulting from over-the-limit charges.
Penalty APRs. Penalty APRs are triggered if you pay late, miss a payment or fall behind on payments with other loans you have with the card issuing bank.

2. Pay attention to cash advance rates.
Each time you take out a cash advance, you pay a premium for the privilege of spending your hard-earned money. Not only will you pay a 3 percent cash advance fee, the APR on cash advances is higher than the purchase APR (often as high as 24.99 percent), and the interest begins to accrue from day one.

“Many people take out cash advances, because they need cash bad and they don’t bother to read the terms,” says Harrine Freeman, author of “How to Get Out of Debt: Get an ‘A’ Credit Rating for Free.” “It’s one of the reasons people get into credit card debt. If you can’t pay it off at the end of the month, the balance can increase really fast, because the cash advance interest is so high.”

3. Remember the WYSI(PN)WYG principle.
When applying for a credit card, remember the WYSI(PN)WYG principle: What you see is (probably not) what you get. For example, new card purchase APRs are often advertised as a range, such as “between 9.99 percent to 22.99 percent.”

“Interest rates usually have such a range that they really don’t tell you much about what interest rate you’re actually going to end up with,” says Josh Frank, a senior researcher at the Center for Responsible Lending. “It’s not really useful when people get told a range of rates varying by more than 10 percent. You want to know what the credit is going to cost, but there’s just no way of knowing that.”

Even those with excellent credit rates don’t know if they will get the very best purchase APR offered or a higher rate. And this lack of information can have big consequences.

For example, assuming a $5,000 credit card balance, the interest on a card with a 9.99 percent APR adds up to about $500 a year. However, on a card with a 22.99 percent APR, the total interest charged shoots up to a whopping $1,150 — more than twice as much.

4. Bear in mind that paying more pays more.
Paying just the minimum monthly payment every month is like taking two steps forward and one step back. The credit card balance gets reduced by the amount of your payment, but it also increases by the amount of credit card interest that has accumulated since your last payment.

And thanks to the Credit CARD Act of 2009, there’s another great reason to pay more than the minimum. The amount of the minimum payment gets applied to the balance with the lowest APR, and any amount paid above that gets applied to the balance with the highest interest rate, such as cash advance balances. This means that if you pay only the minimum month after month, balances with the highest interest rates will never get touched. Paying more pays more.

5. Memorize your penalty triggers.
Credit card issuers don’t just charge penalty fees if the credit card bill isn’t paid on time or if you go over the limit. Any of these actions may also trigger the penalty APR — a punitive interest rate that is typically around 29.99 percent. This rate will be applied to future charges on the card, and while card issuers are obliged to review the penalty rate every six months, it is their choice whether they lower it and by how much.

Penalty rate triggers — and how strictly they are enforced — vary from card issuer to card issuer. If you’re not sure what they are for your card, call your card issuer to ask.

6. Heed the grace period.
The typical grace period is between 20 and 30 days, so that is a fairly long time to enjoy an interest-free loan. However if you carry a balance on your credit card, the grace period gets voided. From then on, not only will you pay interest on existing balances, new charges will also earn interest from day one. The only way to reset the grace period is to pay the card balance off in full.

7. Keep it simple.
Sounds like way too many rules to keep track of? Okay, here’s one simple short-cut to avoid reading up on complicated APR rules and still dodge all the pitfalls of credit card use: Use your card for purchases only and pay off the bill in full and on time every month, and you will never pay a penny in interest, even if you don’t know the first thing about credit card APRs.

(Updated 09-27-2011. Originally published 05-22-2009.)

Luckily, if you’re among the nearly 75 million smartphone users in the United States, there are plenty of cell-phone apps that promise to make financial management less of a chore.

Most financial experts will tell you that the difference between those who save money and those who end up over their head in debt is a simple one: It comes down to knowing where your money goes.

Keeping close track of how much you charge to your credit cards, how much you spend on necessities and how much spills out of your wallet on who-knows-what is the only way to make sure you’re not spending more than what’s coming in each month, say experts.

However, for most people, time is a serious limitation that makes tracking expenditures and sticking to a budget nearly impossible. Luckily, with a smartphone, you can track, update and monitor your budget on the go. Here are four great smartphone apps that will save you time — and money:

1. Toshl Finance by 3fs
“Track, Analyze and Save” is the mantra of Toshl Finance, an app for iPhones, droids and Blackberries. The app bills itself as an easy-to-use, fun and fast expense tracker that makes it easy to track expenses on the go.

If you’re the type of consumer who wonders where all your money went at the end of the month, this is the app for you. Simply enter the amount that you just spent, tap on the right category and voila, Toshl’s has you covered.

Toshl’s goal is to help you see what you’re really spending money on — without long, tedious spreadsheets or expensive accounting software. It also helps you visualize and analyze your spending patterns — making it easier to determine where you can afford to cut back.

In addition, the app helps you control expenses by letting you set up a budget. Better yet, it will nudge you when it’s time to stop shopping if your budget for that category is running on empty. For some consumers, this may seem too much like having your spouse constantly looking over your shoulder. However, for others, it could be a great aid in helping you achieve your financial goals. And unlike your spouse, the app will congratulate you when you do stick to those money goals.

2. PageOnce Credit Cards
Forget about managing multiple online credit card accounts and fussing with numerous passwords and user names. With the PageOnce Credit Cards app, you can view all your credit card balances, transactions, payments and due dates in one convenient location: Your Android, iPhone, iPad or the Web.

The PageOnce Credit Cards app automatically organizes and tracks your credit card spending. It also tracks the rewards earnings on your cards so you know how far you have to go before cashing in. In addition, it syncs with credit cards for all major credit card users, including Bank of America, American Express, Chase, Discover and Capital One, so the information about your activity across all your accounts is readily available.

The app features real-time alerts about upcoming payments as well, which protects you from late payment fees and even credit score dings. Another great credit score-saving feature is the debt-to-credit ratio tracker, which enables you to view how much of your total available credit limit you are using across all your credit cards.

“Tracking your debt-to-credit ratio and getting automatic alerts about late payments can really help you protect your credit score,” says Scott Gamm, founder of the personal finance website HelpSaveMyDollars.com. “A full 65 percent of your score depends on credit utilization and payment history, so it’s important to stay on top of these. This app really helps you stay on track.”

3. Debt Free – Pay off Your Debt with Debt Snowball Method by Mobile Innovations
If you’re looking for the best way to pay off your credit card debt or other loans, this iPhone app has it all. It lets you create a debt reduction strategy using the Debt Snowball method, in which you focus on paying off one debt at a time and pay the minimum on all other debts.

Once each debt is paid off, you put the previous payment towards paying off the next debt. Compounding payments in this way, financial professionals say, is the easiest and fastest way to pare back debt.

Apart from helping you set up a debt repayment strategy, this app also excels with additional time-saving features. It lets you view a summary of your total debts with percentage progress and your debt-free date and lets you chart your debt by category.

You can experiment with different debt payoff strategies, either by choosing to pay the debt with the lowest balance, the highest interest rate or the highest balance. You can also run each of the strategies separately to see how each affects the total interest paid and the debt payoff dates.

In addition, the app features an amortization table for each of your debts, lets you calculate the interest and time savings resulting from extra payments, and, of course, enables you to set payment reminders for each account.

4. myFICO by Apperian, Inc.
Applying for a new credit card or mortgage, carrying a large balance on your credit card or paying your bill 30 days late: These are all actions that will impact your credit score in one way or another. Ever wonder by how much? This app will let you estimate your FICO credit score for free and see how it might vary based on different financial decisions.

The app gives iPhone or iPad users easy access to a free FICO score calculator, as well as lots of detailed information about how credit scores are calculated and how you can keep your credit score high.

If you’re looking for more: For a fuller fledged personal finance app that helps you with numerous money management tasks, the leading personal finance sites, such as Mint.com, Buxfer.com and Wesabe.com, all have apps that link in to your financial information online. These are your best choice if you’re already using a Web-based service. They’ll give you a unified view of your finances and automatically download transactions from your bank accounts and credit cards.