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How to Make the CARD Act Work for you

This week the final reform provisions of the Credit Card Accountability, Reform and Disclosure Act went into effect, making official the law President Barack Obama signed last year with hopes of holding credit card companies accountable to their customers. Here are four steps consumers can take to make the CARD Act work for them.

Don't be afraid to ask the credit card issuer to lower your APR:While interest rates for home buyers continue to tumble, interest rates for credit cards are at their highest levels since 2001 due to credit card companies hiking rates in advance of the CARD Act implementation. The average annual percentage rate on new cards was 14.7% in the past quarter, compared with 13.1% a year earlier, according to the research firm Synovate.

The CARD Act prohibits rate increases on existing balances unless the consumers is 60 days delinquent in making a payment. It does not restrict APR increases for future transactions, but under the final phase of the CARD Act issuers are required to evaluate these rate increases every six months. If a customer's credit history warrants a rate decrease, the company must reduce that rate within 45 days of completing the evaluation. And there's nothing preventing customers from requesting a rate decrease.

"If you know that you were late on a payment because you had lost your job, or because you had a major medical emergency, after three months you might call and plead your case," says Gail Cunningham, vice president of public relations at the National Foundation for Credit Counseling. "If you don't get the answer you want, ask to speak to a supervisor."

Consumers should keep in mind, though, that the issuers have the power to increase rates, too, so pestering the credit card companies with hundreds of calls is a bad idea.

Beware of small-business cards: "A common misconception about the CARD Act is that it applies to all credit cards, including small-business credit cards, when it really only applies to general consumer credit cards," says Odysseas Papadimitriou, chief executive and founder of Card Hub, which aims to help customers find the best credit card rates. "Because small-business credit cards are not protected under the CARD Act from things like unexpected interest rate increases and extensive penalty fees the way that general consumer credit cards are, it is my recommendation that small-business credit cards are only used for transactions that you know you can pay back in full right away."

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