Got bad credit? Bail yourself out.
Work the angles of the new credit card law to your advantage.
If you’re facing a pile of bills you can’t pay, the buzz about credit card reform may seem like a lot of hot air. But in fact, the new laws give you some leverage that could help you manage―and conquer―your debt. Here are some common scenarios people with less-than-stellar credit might face in the coming months, and ways to capitalize on the new, more consumer-friendly regulations.
Credit conundrum #1: The bank hiked your interest
What you need to know: After years of declining, average rates have started to climb again. This is especially true for variable-rate cards. As the economy improves, these indexes will rise―and so will your interest.
What changes with the new law: Banks are now required to give 45 days’ notice of any interest increase. In addition, if they bump up your rate because you paid late, they must revert to your former rate if you make on-time payments six months in a row afterward.
Take action: The new law buys you some time. If you’re notified that your rate will increase, look in your wallet. You may have other cards with lower interest See if it makes sense to transfer your balance to one of those. But watch out: most balance transfers come with a 3 to 5 percent surcharge. It won’t make sense to transfer a balance to save 2 percent on interest. Alternatively shop for a new card. Try Bankrate.com, Cardtrack.com and CreditCards.com. Each lets you search according to what type of card you want, such as low-interest or rewards cards. At Bankrate, you can also search by how good your credit is (excellent, good, average or poor) to find the best card. Another site, BillShrink.com, ask for info about your spending habits and then recommends cards suited to your needs.