By Peter McDougall- manybanking.com
Congress recently passed legislation that changes how credit card companies can treat consumers.
Problem is, the rules don't go into effect until July 2010. "It could be the Wild West for the next 18 months," says Linda Sherry, director of national priorities for Consumer Action, a nationwide consumer advocacy group. "Companies can raise interest rates so they are in place by the time the rules change."
But while credit card companies can still roam free, there are a few things you can do to protect yourself.
Don't carry a big balance on your credit cards: Even though you can afford to pay 7% on a $2,000 balance, what if that rate suddenly jumped to 15% or more? Most likely, that extra interest would put a serious hole in your monthly budget. Best bet: Keep your balances relatively low to keep from sending more of your money toward interest payments.
Pay more than the minimum: Paying just the minimum amount every month increases the time it takes to pay off your balance and can end up costing thousands more in interest charges. (To see just how much, check out this online calculator from manybanking.com.) Make paying down your balance a priority.
Limit the number of cards you use: Many experts recommend that consumers carry no more than two credit cards -- a primary and a backup. Reason: Limiting the number of cards will help control spending and make managing balances much easier.
Use the right card: There are many types of cards available to consumers these days. There are reward cards, such as Miles from Discover Card or Blue Sky from American Express. There are also low-interest rate cards, such as Platinum Select from Citigroup or Platinum Prestige from Capital One. If you have a rewards card but are carrying a hefty balance, consider switching to a low-interest card instead. For more card offers, check out manybanking.com's credit card section.
For credit card offers in your area, go to the manybanking.com credit card center.
—For more ways to save, spend, invest and borrow, visit MainStreet.com.