Check Your Credit Cards

In the past, we've mentioned that credit card companies have been changing terms including interest rates and limits. An Associated Press story reports that 58 million credit card holders saw their limits cut in the past 18 months including those with good credit scores.

So if you're doing everything right: paying your credit card bill on time, paying the bill in full and so on—check your interest and limits. This has affected many small businesses and the change can lead to cash flow. Also beware of how the changes impact your credit scores, which can lower your chances of receiving a loan.

Credit Card Act of 2009

Your bank should notify you if it changes your credit limits, interest rates or any other part of your agreement at least 45 days before the changes go in effect. This rule comes from the Credit Card Act of 2009 that President Obama signed in May 2009 and it went into effect in this month. The new rules now in effect require credit card issuers to do the following:

1. Allow customers to close accounts if their annual percentage rates (APR) go up. Most companies allow this, but the rule makes it mandatory. Beware that closing your account will show up on your credit score, which may not be a good thing for your score.
2. Allow customers to pay off their remaining balance at the lower interest rates.
3. Send monthly statements at least 21 days before the payment due date.

More of the regulations in the Credit Card Act of 2009 go into effect on February 22, 2010 including the restricting of interest rate increases in the first year unless the increase comes from variable indexed interest rates. It won't surprise me if many credit card companies switch to variable rates.

Furthermore, credit card issuers can hike your rate if you're over 60 days behind on your payments. However, they must restore your previous rate if you make your minimum payments every month for six months. But you pay off your credit cards  every month, don't you?

Read the Fine Print

It's possible your credit card company could print any changes to your credit card terms in small print. Therefore, check the fine print. Remember, treat your credit card like cash rather than credit. It's not a good way to get a loan or working capital.