If you really want to pay down your credit card debt quickly, let’s face it, you’re going to have to make some sacrifices. As often in life, the things that create the greatest discomfort in the short run, can end up conferring the greatest benefits in the long run. And so it is with credit card debt. If you cut back on some of your largest recurring expenditures, you will free up money to pay down your debt much more quickly.

This will, inevitably, be a painful affair. Most of us have gotten so used to our creature comforts that we think we cannot live without them. However, if you’re really struggling with credit card debt or other types of debt, the consequences of defaulting on the debt will be much more painful than foregoing some of the comforts you currently take for granted. Plus, you don’t have to cut back forever! Once your finances are back under control and you have wiped out your debt, you will have money left over to scale your lifestyle back up. So take a deep breath, relax, and sit back. Here goes.

1. Cable TV. Yes, we feel your pain. After all, cable is like the holy cow of American households. However, if you carry high credit card debt, you don’t have the money for cable. Just because you can charge it, doesn’t mean you can afford it. So, take a deep breath, and get rid of that $80-100 monthly charge. That money will go a long way towards paying down your debt each month. Once the debt is paid off, you can always reevaluate whether or not to get cable again, unless, of course, you decide that having a cable subscription is not a life or death matter after all.

2. Dump your cell phone. It’s hard to imagine that less than ten years ago we all got along just fine without a cell phone. But in fact, we did. So, take a break from the mobile; or cut your subscription to the most basic, enroll in Friends and Family programs, and talk mainly on free minutes.

3. Get a Cheaper Car. So what if your car doesn’t look like it’s straight off the assembly line. There are plenty of reliable, low-maintenance, ten-year old cars around, costing you a fraction in monthly costs.

4. Start Cooking. Okay, so you don’t have to become a Julia Childs, but cooking your own meals instead of eating out isn’t just healthy for your wallet, it’s good for your body as well. And while you’re at it, junk those expensive, unhealthy habits. Stop smoking; scrap the junk food, avoid sinking money down the drain guzzling soda pop or expensive lattes. It’s a great way to tighten the belt, so to speak, and free up money to pay off your credit card debt.

5. Take a Shopping Break. With the exception of groceries, put a moratorium on spending for six months. Most of us have plenty of stuff, much more than we need. Avoid going shopping for six months; postpone major purchases; avoid purchasing new clothing (unless it’s for your kids); pass up on gadgets, thingamajigs, and irresistible sales offers; shun the mall. At the end of six months, make a list of the things you absolutely do need, and purchase those. Rinse and repeat. If you keep taking six-months shopping breaks; you’ll be surprised how quickly you can wipe off that debt.

Let’s face it, radically changing your spending habits in this way won’t be pleasurable. However, treat it like an experiment in reevaluating priorities and trying out some new lifestyle habits. At the end, you may find that you haven’t just succeeded in wiping out your credit card debt, your old habits may have been replaced by some new hobbies and interests in the process. Good luck!

If you are among the many consumers whose blood pressure rises when you hear about new, large bonus pay-out at financial institutions propped up by taxpayer bail-out money, here, for a change, is some good news. While the credit crisis is not fully behind us, it turns out that taxpayers may still get the last laugh.

According to a new report from the Congressional Oversight Panel, the $700 billion allocated to purchase or insure “troubled assets” under the Troubled Asset Relief Program (TARP) may turn out to reap profits, not losses. The November 5 report notes that the income from the government guarantee programs issued under TARP and related programs will likely exceed the losses. Up to this point, the Treasury Department has received a total of $17.4 billion in fees for various TARP-related programs, while shouldering only $2 million in losses.

According to the Panel, much of the benefits from TARP and related programs have come not so much from purchasing assets directly from troubled financial institutions, but from supporting the value of assets indirectly by issuing government-backed guarantees. At the height of the credit crisis in late 2008 and early 2009, the government increased existing guarantees and stepped in as a guarantor in numerous other programs. The maximum guaranteed value of FDIC-insured accounts was increased from $100,000 to $250,000 per account. In addition, the FDIC created the Debt Guarantee Program (DGP) to encourage liquidity in the banking system, and numerous other programs. In addition, the government stepped in to rescue financial institutions deemed “too big to fail,” which included securing hundreds of billions of dollars in risky assets belonging to Citigroup and Bank of America.

Issuing guarantees instead of outright purchasing troubled assets enabled the Treasury to secure assets without paying an upfront price. For example, at the peak of the credit crisis in late 2008, the government stepped in to guarantee $300 billion in Citigroup assets with no immediate cost to taxpayers. Citigroup paid the government $7.3 billion in preferred stock for those guarantees. Bank of America was given guarantees on $118 billion of assets, but never went through with the agreement. In September, the bank opted to pay the government $425 million to exit the program.

By issuing guarantees, the Treasury and federal agencies were able to leverage the TARP money to secure a larger pool of assets. The Congressional Oversight Panel concludes that the guarantees succeeded in their ultimate objective to free up frozen credit markets and halt the tailspin of the financial markets.

Despite their advantages, the guarantees were also a high-risk gamble. At the high point, the federal government was backing $4.3 trillion in face value of high-risk assets held by financial institutions teetering on the edge of bankruptcy. Had the economy taken a deeper dive and the guaranteed assets declined dramatically in value, tax payers could have been on the hook for much higher losses than originally approved under the TARP program.

However, the gamble appears to have paid off. Under current conditions, the Panel concludes, taxpayers “appear likely to earn a profit from fees assuming economic conditions do not deteriorate further.”

The Oversight Panel noted that the Treasure had become more aggressive in safeguarding taxpayers’ money, but also recommends much greater transparency in disclosing the details of the guarantee programs and the rationale behind choosing one approach over another.

The Panel lastly comments that government guarantees come with a significant downside: they create moral hazard by limiting the amount of money investors can lose and possibly tempting lenders to engage in riskier behavior than they otherwise would. “The cost of moral hazard is not as easily measured as the price of guarantee payouts or the income from guarantee fees,” the report notes, “but it remains a real and significant force influencing the financial system today.” The Panel concludes that unwinding the implicit guarantee of government support will be a critical part of phasing out the TARP program.

Credit card reform has taken much flak for giving card issuers plenty of time to take measures to protect themselves against some of the more important provisions of the new law. Card issuers have aggressively hiked interest rates in advance of the February 22 deadline for new rules that limit interest rate increases on existing balances. As a result, many consumers may feel that even when the new provision becomes effective, it will be too little, too late.

However, there are still reasons to celebrate. Starting 2010, cardholders can say good riddance to some of the more sneaky and onerous of credit card terms, including double cycle billing and card issuers’ ability to apply payments to the balance with the lowest interest rate first.

Over the long term, however, the most important features of the new law may well turn out to some of the less conspicuous ones, i.e. the new provisions, which mandate greater disclosures, more consumer education, and easier access to debt counseling resources.

Why? With credit cards, the general rule is this: the less you know, the more it will hurt you. There is nothing wrong with credit cards per see, it depends on how they are put to use. Unfortunately, credit card companies have made an art of making credit card terms deceptively obscure. As a result, unawares consumers end up paying through the nose for the convenience of paying with plastic.

Ultimately, greater consumer awareness will provide the best protection of all. Bearing this in mind, here is CreditCardGuide.com’s vote for the three most important rules of the new credit card reform:

1. Minimum payment disclosures. Effective February 22, 2010, credit card statements must educate cardholders about the consequences of the financial decisions they make about their credit card debt. Firstly, statements must show how long it would take to pay off the balance on the credit card, if the cardholder opts to make only minimum payments, and how much the cardholder would end up paying in interest charges.

To give cardholders a basis of comparison, that statement must also disclose how much cardholders would have to pay each month if they wish to pay off the balance in 36 months, and how much interest that would accrue. Card issuers must also clearly disclose information like year-to-date totals on interest charges and fees, as well as the reasons for those fees.

The new rules about disclosures could turn out to be perhaps the most important provision of the new law. The minimum payment is one of the most deceptive things about credit card usage and a main reason people end up with credit card debt. The low monthly payments encourage a charge-now, pay-later mentality. Up till now, many consumers had no idea just how expensive the practice of paying just the minimum monthly credit card payment is.

2. Higher minimum age, and required financial literacy education for students. Young adults in the past have been one of the most vulnerable groups of new credit card users, often lured in by aggressive marketing tactics and freebies offered in exchange for filling out a credit card application. The new law raises the minimum age for applying for a credit card (without a co-signer) to 21 years, and restricts credit card companies’ ability to market cards on campuses.

Perhaps most importantly, colleges and universities that allow card issuers to market on campus are required to provide financial literacy education for their students. Depending on how it is implemented at colleges and universities across the country, mandatory financial literacy education could turn out to offer the most effective protections for students.

3. Greater Information about Debt Management Counseling. The new law requires credit card companies to take some degree of responsibility to help consumers with high credit card debt and other financial woes. Under the law, card issuers are required to set up toll-free telephone numbers through which consumers can get information about resources for nonprofit credit counseling and debt management assistance. The Federal Reserve has been given the mandate to issue more specific guidelines to card issuers about this provision by November 22, 2009.

If you have bad credit and are looking for a credit card, it pays to do some careful research first to make sure that you really get what you want. Credit cards for people with poor credit are often more expensive, because issuers charge higher fees to protect themselves against the increased risk of default. Many subprime credit cards also come with very low credit limits, often as low as $250.

The card that is best for you depends on your goals, so first determine what your needs are. If you need a card mainly for convenience, e.g. to make online purchases, book hotel rooms, rent a car, or make flight reservations, your least costly option will likely be a prepaid credit card. These are cards that you prepay money to, and like a checking account, you simply draw down the amount over time. There are many prepaid credit cards available, and the fees they charge vary quite a bit, so compare prepaid credit card offers to find the one with the lowest fees.

On the other hand, if your goal is to improve your credit, you may opt for an unsecured credit card for people with bad credit or for a secured credit card. Both these types of cards come with tricky rules and fees, so it’s important to read up on the terms before you apply. Otherwise, you could end up paying a lot for something you really didn’t want.

Here are eight questions to ask before applying for a bad credit credit card.

1. Which bank is issuing the card? There are many credit card offers for people with bad credit, but many of these are issued by the same bank. First Premier Bank, for example, issues not just the First Premier Master/Visa Card, but also cards like the Centennial and Aventium Gold MasterCard. The terms of cards issued from the same bank are often very similar, so knowing that saves you some time reading through the terms for every single credit card offer.

2. Is the credit card secured or unsecured? With secured credit cards, you deposit an amount in a bank account before you get the card, and this amount counts as security against your credit line. With unsecured cards, you get a low line of credit without depositing money first, typically around $250-$500. The advantage of secured cards is that you can get a higher credit line, if you deposit more money as security. Also, the fees may in some cases be lower. The disadvantage, of course, is that you have to come up with the money for the security deposit.

3. Are the terms clearly stated? If you have to look a long time on the online credit card application to find the disclosure of terms and fees, it’s usually a sign that the card issuer does not use above-board business tactics. Stay away from this type of card issuer, or you will likely live to regret it.

4. What are the fees? To determine the real cost of the credit card offer, make a list of all the fees, including opening fees, annual fees, monthly maintenance fees, and so on. Add them all up, and, if they are assessed before the card is used for the first time, subtract them from the minimum credit line offered. This will give you an estimate of the amount of credit you are likely to have available when you receive the card. Also look at other fees, such as late payment fees, over-the-limit fees, and fees charged for reviewing your account for a credit limit increase.

5. What is the APR on purchases? The APR, or annual percentage rate, is the interest rate charged on the purchases made to your card. A typical range will be from 9.99% to as high as 24.99%. If you’ll be carrying a balance on the card, the card with the lower APR may be the best choice, depending on the other fees charged.

6. Is there a grace period? The grace period is an interest free period. If you pay your balance in full each month, credit cards typically offer about a 21-day period before they begin to charge interest on the new purchases. Some subprime credit cards don’t have a grace period, in which case interest charges accrue from the day you make the purchase. For secured credit cards without a grace period, you’re charging against money you have deposited, so you’re essentially paying interest to the bank for lending you your own money. If this sounds like a bad deal, it’s because it is.

7. Does the card issuer report every month to the credit bureaus? If your goal is to improve your credit score, make sure to pick a card that clearly states that it reports every month to the credit rating agencies. This will ensure that you credit score increases fast, as long of course, as you make your payments on time.

8. Is the cost worth it? Once you know exactly what it will cost you to get the card, you can decide if it’s worth the cost. For the most part, with unsecured and secured credit cards, you pay a high cost in proportion to the credit limit you actually get. If your goal is to improve your credit score, you may decide that the cost is worth it. If not, again, you’re better off saving yourself some money by getting a debit card or a prepaid credit card.

The movement to stem rising credit card interest rates gained new momentum on Wednesday this week, as the House voted to move up the effective date of key provisions of the new Credit CARD Act, which limit card issuers’ ability to raise interest rates retroactively.

The 331-92 vote comes in response to mounting consumer complaints about aggressive interest rate hikes, which have threatened to undermine the effectiveness of some of the more important consumer protections included in the new credit card law.

When Congress passed the law in May, it gave credit card companies nine month to comply with the new law in order to make the necessary changes to their systems. Lawmakers have been angered by the fact that card issuers instead appear to have used that time to focus on hiking cardholders’ interest rates, decrease credit limits, and increase fees. Consumers have complained of interest rate increases as high as 29.99%, even for cardholders who always pay on time.

The House vote moves the effective date of the new limitations on credit card interest increases up to December 1. The new provisions include curbs on card issuers’ ability to increase interest rates on existing balances, and further protect consumers from hair-trigger rate changes for small infractions like sending in one late payment. The bill was sponsored by House Financial Services Chairman Barney Frank (D., Mass.) and Rep. Carolyn Maloney (D., N.Y.).

If a similar bill is passed in the Senate and signed into law by the President, it would move up the enactment of most of the remaining provisions of the credit card law. While a few of the new provisions went into effect in August, the key provisions were scheduled for February 22, 2010, and a few are due to step in effect next August.

The Senate has a similar legislation on the table, introduced by Senate Banking Committee Chairman Christopher Dodd (D., CT). Dodd proposed to freeze rates on existing credit card balances until the new law steps into effect. However, no vote has been scheduled in the Senate on the proposed legislation.

The accelerated implementation of the new law has been opposed by Federal Reserve Chair Ben S. Bernanke. In an October 20 letter Bernanke warned that failing to give banks enough time to comply with the new provisions could result in “unintended consequences.” In response to Bernanke’s concerns, the law passed in the House exempts companies with 2 million cardholders or less from the December 1 effective date and allows them to comply by the original February 22 deadline.

Credit card issuers all along have maintained that they are raising interest rates to shore up losses in the face of rising credit card defaults and delinquencies. The majority of the U.S. credit card market is dominated by eight card issuers, including JP Morgan Chase, Bank of America, and Citigroup, all of which have been facing default rates in the range of 8 to 14% over the past six months.

The House bill was strongly opposed by the American Banker’s Association, which in response to the new bill issued a statement saying that accelerating the timeframe for implementation of the CARD Act would be extremely difficult for card issuers and would only serve to further restrict access to credit for both consumers and small businesses.

While the new law puts limits on card issuers’ ability to raise interest rates retroactively, credit card companies will still have plenty of latitude to increase interest rates on future charges, even when the new law becomes fully effective.

Thinking of giving a prepaid gift card or cash to a special someone this Holiday Season? You’re not alone. Gift cards or cash make great presents. First of all, they are convenient; prepaid Visa and MasterCard gift cards can be used at any store. Secondly, you know that the receiver is going to love your present!

Seven out of ten Americans will be giving either a prepaid card or cash this season to family and friends. However, if you plan to buy a general-purpose bank gift card issued by Visa, MasterCard, or American Express, do your homework. Many prepaid gift cards come with nasty fees and other surprises, so it’s important to do a little background research before deciding which gift card to get.

Consumers are projected to spend $50 billion this holiday season on gift cards. The majority of these will be store gift cards, which don’t have fees or expiration dates. However, general-purpose Visa and MasterCard gift cards are becoming increasingly popular, with sales projected to be nearly $4 billion this year. Most of these gift cards cost $4 to $7 to purchase, and some begin to charge monthly fees six or twelve months after they are issued. With fees running as high as $4.95 a month, that great Holiday present could quickly evaporate if the gift card is left too long in the recipient’s wallet. An estimated 10 percent of the value of gift cards is never used, and value is further lost through monthly fees.

According to a newly released report from the Consumer Federation of America, one reason that so much value is lost through gift cards is that Americans are not familiar with the terms of prepaid gift cards. In a recent survey of 1004 adults, only 33 percent knew that there would be a fee to buy the card. And only about one out of two of the people surveyed (54 percent) knew that they could end up paying a monthly fee if they did use up the gift card within six to twelve months.

In short, if you are planning to give a cash gift card this year, read up on the terms before deciding which card to buy. Since you don’t know how quickly the recipient will use the card, stay away from gift cards that charge monthly fees after an introductory period. While many Visa and MasterCard gift cards come with fees and an expiration date, American Express gift cards do not. Even if you go beyond the “valid thru” date listed on the front of the American Express gift card, the card is still valid, and you can call Amex to get a free replacement card.

If you are the happy recipient of a prepaid gift card, here are four tips to make sure you got the most out of your present:

• Pay Attention to the Expiration Date and Charges. Educate yourself on the terms, particularly noticing if the card will accrue monthly fees after an introductory period, and if it has an expiration date.
• Check for Split Payments. Not all stores allow you to split the amount of purchase between a gift card and another payment method, such as cash or another credit card. Most larger chains do. Check with the cashier up front and tell him or her that you will be using a gift card to pay for part of the purchase.
• Spend the Entire Balance within 6 Months. If you can, use up the entire value of the card within the first six months. This will make you more likely to use its full value and avoid monthly fees.
• Guard your card like cash. Gift cards are like cash, and can easily be used by someone else should it be lost or stolen. To protect yourself, write down the card number, along with the customer service number and keep these in a safe place. You need the card number to check your balance or replace the card if it is lost or stolen.

While it’s important to remain alert for this Holiday shopping season, starting next year the terms of bank issued gift cards will improve. Under the consumer protections passed as part of the new Credit CARD Act, effective in August 2010, gift cards issued must be valid for at least 5 years, and no fees can be charged if the gift card is used at any time within the past 12 months.

CFA and the National Association of Consumer Agency Administrators (NACAA), have issued a new consumer brochure on gift cards for use this season. The two agencies plan to distribute the brochure through their local agencies; in addition, American Express will distribute1.5 million copies to major retailers, including CVS and Walgreens. You can download a copy of the brochure on CFA’s website, www.consumerfed.org, or by clicking here.

Like an emergency medical assistance team rushing a dying patient to the hospital before the last vital signs fade away, members of Congress are pushing to move up the deadline for the enactment of the key provisions of the new credit card law to December 1.

Will one of the key features of credit card reform turn out to be dead on arrival? It’s barely six months since Congress passed the new Credit CARD Act of 2009, and already, one of its key provisions aiming to curb interest rate increases has been rendered almost ineffective. In advance of the February 22, 2010 effective date of the new provision, card issuers have aggressively hiked interest rates across the board, and changed fixed rate credit cards to variable rate cards, which are less affected by the new provision.

Even if Congress succeeds in moving up the deadline, will it really make a difference? According to a report scheduled to be released end of October by Pew Charitable Trusts’ Safe Credit Cards Project, card issuers have already increased interest rates by an average of about 20 percent, and in many cases more than doubled interest rates on credit cards, taking aim even at cardholders who have never made a late payment.

So, has credit card reform lost its teeth, so to speak? Or worse, as some would argue, has government intervention done more harm than good by precipitating a pull-back of credit card terms that might otherwise not have been?

Well, not so fast. On the face of it, yes, card issuers are hiking interest rates and tightening credit terms in advance of the enactment of the new credit card provisions. However, let’s not forget that the credit pull-back began long before Congress passed the Credit CARD Act in May of this year.

Tightening credit card terms was triggered not by the anticipation of the new laws, but by the increasingly risky lending environment that followed in the wake of the near-economic collapse in the fall of 2008. The credit crisis, which began in the subprime mortgage market, but quickly spread to other types of credit, is the main reason card issuers had to take steps to restructure the risk profile of their credit card portfolios.

Credit card companies over the past decade have harvested huge profits by willy-nilly handing out unsecured credit lines with high interest to marginal consumers. However, issuing credit cards with starting credit limits of $10,000 or more, no questions asked, to consumers earning $40,000 or less is a risky proposition even in the best of times. When the economic recession hit, and the ranks of the unemployed began to swell, credit card defaults sky-rocketed. Card issuers had to take steps to curb losses by increasing revenues. And the easiest way to increase revenues in credit card world, of course, is to jack up interest rates.

Did the February 22, 2010 deadline set by Congress, which puts an end to card issuers’ ability to increase interest rates on existing balances, speed up the process of rate hikes? Undoubtedly. Would it have happened anyway? Most likely. With average credit card defaults topping 10 percent, card issuers must and will do anything they can to stem the tidal waves of losses.

Would the interest rate increases have happened as fast and as aggressively? Probably not. Chances are that rate increased would have been introduced much more cautiously, gradually and inconspicuously.

And so, even as the patient is being rushed to the emergency room, perhaps we should call the glass not half empty, but half full. The dramatic pace with which card issuers have hiked interest rates has awakened consumers, many of whom had grown dependent on easy credit, to the fact that credit cards are not their friend after all. As many have learned the hard way, credit cards can be toxic financial assets if not handled with the utmost care. Twice-wary consumers, newly awakened to the pitfalls of plastic, might well on their own accord begin to use credit cards with much greater caution. And, credit card reform or not, that wouldn’t be such a bad thing after all.

As a nation, we pride ourselves in having overcome many of the racial barriers that marred America in the past. However, according to a recent study by economist Ethan Cohen-Cole at the Federal Reserve Bank of Boston, when it comes to getting approved for a credit card, race may still matter.

Based on an analysis of the credit files of 285,780 individuals, the study found evidence that credit card companies may base their decision about who to approve for credit cards in part on the racial composition of the neighborhood in which the applicant lives. In other words, two individuals of the same age, earning a similar salary, with similar credit histories and credit scores may receive a different reply when they apply for a credit card. An individual living in a predominantly Black neighborhood is less likely to get approved for a credit card than the individual in a White neighborhood, even when the neighborhoods have identical community characteristics. In addition, for individuals who do get approved for credit cards, the amount of credit they get approved for is also likely to vary. Someone living in a White neighborhood is likely to get started out with a higher line of credit.

In today’s society, credit cards are an important first step up the financial ladder. For most consumers, they are the first form of credit obtained, and the first step on the path to building a credit history and a good credit score.

As a result, any disparities in access to credit cards might get magnified down the road by making it more difficult later in life for the same consumers to get access to other forms of credit, most notably a mortgage, because their credit history is too incomplete. For this reason, the differential access to credit cards could reinforce current disparities in home ownership.

Many studies over the past decades have highlighted the fact that despite federal legislation prohibiting discrimination among home-buyers, minorities still face significant barriers to buying homes. One of the key factors that contributes to the difficulties faced by minorities is having an insufficient credit history, which lenders more cautious about approving loan applications. Even when people with incomplete credit histories do get approved for a loan, they face more stringent terms, including higher interest rates and monthly payments.

If, indeed, the results of the Boston Federal Reserve Bank study are correct and it’s harder for minorities to get approved for credit cards, these disparities are likely to persist. Without regular use of credit cards to show a reliable payment history, it is much more difficult to build up the good credit history necessary to buy a house. Credit histories, of course, are also used in approving people for car loans, for car insurance rates and in job applications.

The disparity in access to credit cards has another drawback. Many card users feel that credit card interest rates to the tune of 25% APR or higher amount to little less than usury. However, these rates are nothing compared to the 300+% charged by the payday loan market, where consumers without credit cards often are forced to go when needing extra cash.

Of course, a single study is just that, and not conclusive evidence. Still, the study speaks to the need for greater transparency in the credit card industry and more regulatory study of the factors that impact the credit decision process.

The Credit CARD Act passed in May of this year aimed to protect consumers against deceptive and abusive credit card practices. However, credit card companies are masters at playing the game “Heads I win, tails, you lose.” In the months leading up to February 22, 2010, when some of the more important provisions of the new credit card law step in to effect, card issuers have been hard at work to comply with new rules in ways that minimize their effects. And of course, as always, where there is a team of high-paid lawyers, there’s a way.

When it comes to credit card tricks, the new kids on the block are more nimble, swift, and savvy than an urchin pickpocket. Some are old tricks with a new face, some are brand-new. However, they all have one thing in common: they are clever ways to lift your money right out of your pocket, and you will likely never know that you got tricked. Here are three of the newest credit card tricks and traps:

1. The 0% Balance Transfer Deal at 15% APR. That greatest credit card perk of all, the 0% APR balance transfer, is no more. You may think it is, because you still get balance transfer offers in the mail. However look closely, and you’ll see that that 0% balance transfer deal has morphed into a very different creature. Balance transfers offers these days are of shorter duration, typically three to four months, and for most part, they come with a balance transfer fee of 5%.

Do the math. A four-month 0% balance transfer offer with a 5% fee is essentially a loan with an annualized interest rate of 15%. A balance transfer offer with e.g. a 3.99% APR, effectively gives you an annualized interest rate of 3.99% plus 15%, or 18.99%. That is just not a deal.

2. The Old Bait-and-Switch Has New Teeth. Balance transfer offers have always been a great way for card issuers to lure in customers tempted by the prospect of seemingly free money. If everyone paid their low interest balance transfer off before the promotional rate expired, balance transfers would be a terrible business. So why are credit card companies pushing them so aggressively? Because many cardholders are unprepared when the interest free period expires, and end up paying the balance off at the standard purchase rate. That may be manageable if the purchase APR is 12.99%, but not when it’s 24.99% or higher, as it is on many cards after the recent onslaught of interest rates. Don’t get duped.

3. The Credit Back That’s Not. One credit card company recently sent out a letter raising the purchase APR for many of their cardholders to 29.99%. To soften the blow, the company offered cardholders a 10% credit back of the total interest charges on the purchase balance for each month they paid on time. On the face of it, a 10% credit back may sound like a generous cash back offer. Except it’s not. Do the math: 10% credit back on a 29.99% APR essentially just lowers the 29.99% APR by 2.99%, to 26.99%. Credit back or not, that’s still an exorbitant interest rate.

These are just a small sampling of the new tricks—for more, check back on these pages frequently as CreditCardGuide.com will continue reporting on the new, revised terms card issuers introduce in advance of the new Credit CARD Act. Each card issuer has a slightly different approach to how the new rules are implemented, and as a result, it may be harder than ever for cardholders to stay on top of the rules, particularly if you carry several different credit cards.

Ultimately, the best way to protect yourself against confusing credit card terms is to follow the three basic rules of credit card use:

1. Always pay off your card in full each month.
2. Don’t carry a balance.
3. Never make just the 2% minimum payment; make a 100% payment.

If that sounds like three ways of saying the same thing, it’s because it is. Like the basic rule of real estate, location, location, location, the basic rule of credit card use, which will protect you from all the tricks in the world, is just this: Pay your balance off in full every month.

The Credit CARD Act signed into law in May of this year aimed to protect cardholders from unfair and abusive credit card practices. Unfortunately, as most all cardholders know first hand by now, credit card companies have been raising interest rates aggressively in advance of the enactment of the new law, in an effort to minimize the impact of some of its provisions.

Well, there may be good news. If your interest rate has been raised anytime after January 1, 2009, credit card companies could be required to lower the interest rate back down, once an important new provision of the new Credit CARD Act steps into effect.

Congress put a bit of a poison pill into the Credit CARD Act, a.k.a. section 101(c). The section requires credit card companies to regularly review interest rate increases they make on credit cards, and lower rates back down, if the cardholder’s risk profile or general market conditions have improved. The interest rate reviews will step into effect in August 22, 2010. Most significantly, the reviews are to include credit card interest rate hikes dating back all the way to January 1, 2009.

Credit card companies are further required to set up and maintain “reasonable methodologies” for the interest rate review, and undertake reviews at least every six months. Based on the review, if any risk factor has declined, the card issuer shall reduce the annual percentage rate previously increased. Card issuers will also be required to provide a written notice of future interest rate increases, including a statement with the reasons for the interest rate increase.

That is the good news. The bad news is that the law leaves plenty of uncertainties. Most notably, it says nothing about how much the interest rate reduction should be, or whether credit card companies will be required to reset interest rates to their previous levels. It also leaves out any discussion about which criteria card issuers should use to go about determining what constitutes “reduced risk.”

These specifics and other details of how 101(c) will be implemented are left to the Federal Reserve Board to determine, as the nation’s primary financial regulatory agency. The Fed is required to issue rules for how the interest rate reviews are to be conducted by February 22, 2010, six months before the interest rate reviews become effective.

Disturbed by the recent interest rate hikes on credit cards, Senator Chris Dodd, Chairman of the Senate Banking Committee, recently sent a letter to Fed Chair Ben Bernanke along with the heads of key regulatory agencies. In the letter, Dodd called on the Federal Reserve Board to provide tough, clear specifics for what would be required by the interest rate reviews. He further called on the agencies charged with enforcing the Credit CARD Act to hold the credit card companies strictly accountable for conducting thorough reviews and decreasing rates.

Dodd asked Fed Chair Ben Bernanke to immediately notify credit card companies that they will be held accountable for all interest rate increases since January 1, 2009, and will be subject to the review requirement once it takes effect.

According to Senator Dodd, the January look-back provision was designed expressly as a means to deter card issuers from raising interest rates before the provisions of the Credit CARD Act take effect. “However,” Senator Dodd states in his letter to the Fed Chair, “the look-back provision will serve as a deterrent only if it will be implemented and enforced effectively.”

In view of the aggressive rate hikes that have hit consumers over the last six months, Section 101(c) could turn out to be one of the more important parts of the Credit CARD Act. Whether or not the regular interest rate reviews will have any teeth, however, will ultimately boil down to the criteria the Fed Reserve Board lays out for conducting the reviews and determining how much interest rates should be lowered.

We won’t know the details about that until the Fed issues the guidelines for interest rate reviews, sometime on or before February 22, 2010. After that, there will be a required public comment period, during which the public—and that means you and I—will be able to weigh in on whether or not the rules for interest rate reviews deliver on the intention of the law: to protect consumers against arbitrary and unreasonable interest rate increases.