In fact, many experts say that the S&P downgrade could result in interest rate increases in as soon as three to six months. How much? Some experts estimate as much as two to three percent.

So, what can you do about these changes that most certainly will take place?

• The CARD Act of 2009 protects us, somewhat, from interest rate hikes. For example, credit card companies cannot hike up your card’s APR on your existing credit card balances unless you fail to pay on time. In other words, NEVER miss a credit card payment or your credit card company!
• Under the CARD Act, credit card companies also cannot raise your credit card’s interest rate on future purchases unless they give you a 45-day notice. It is therefore important to keep a close eye on any information sent to you by your credit card company. In other words, now is not the time to ignore any correspondence you receive from your credit card company.
• If you do receive a notice from your credit card company in the upcoming months regarding a hike in your interest rate, you do have the ability to cancel the card and continue paying off your balance with your current interest rate (provided you pay on time, without fail). If you are a good customer and have a strong history with your credit card company, you may also be able to negotiate a lower rate.
• Beware of signing up for a new credit card in the upcoming months, as the credit card company may try to sneak around many of the CARD Act’s provisions by handing out variable-interest credit cards that don’t have the same rules and regulations as their fixed-rate counterparts. In general, it is best to stay away from credit cards unless they have fixed rates.

In fact, the number of new accounts opened through colleges or other such higher learning institutions dropped 17 percent in 2010, according to the Federal Reserve Board. In addition, agreements between colleges and credit card companies were down, too.

The CARD Act Consequences

The drop-off in activity was, no doubt, brought on by the Credit Card Accountability Responsibility and Disclosure (CARD) Act. In particular, the CARD Act included language that limited the ability for credit card companies to market to college students. The CARD Act also limits credit card companies from passing out gifts to college students for opening accounts.

Restrictions through the CARD Act

In addition, the CARD Act also requires credit card companies to disclose, on an annual basis, the agreements they made with colleges and related groups. As a result of these new rules spelled out in the CARD Act, many colleges have canceled their agreements with credit card companies who use aggressive marketing tactics. In fact, over the years, many colleges kept this information quiet, as they were getting paid by credit card companies to provide information about their undergraduates. Now, with advent of the CARD Act and better transparency, colleges are rethinking their relationships with credit card companies.

Linda Sherry, national priorities director for the nonprofit group Consumer Actions says, “Just the ‘sunshine’ on the card agreements called for with the public reports is a great way to shame the universities from profiting off of making students debtors, and it seems to be working.”

The CARD Act, although it has cut down on the rate at which credit card companies market to college students, has yet to keep many college students from taking on credit card debt. It appears that the effects of the recession and the fact that credit card companies are simply being more particular when it comes to approving individuals for credit may have more of an impact on college students and credit than a decreased rate of marketing through college campuses.

You can report a problem with any number of financial institutions by contacting the Consumer Financial Protection Bureau at (855) 411-2372 or by visiting them at www.consumerfinance.gov.

Richard Cordray, Ohio’s former attorney general, is set to serve as the director for the Consumer Financial Protection Bureau, although the confirmation is currently awaiting Congressional confirmation. Republicans in the House are still in the process of negotiating the overall structure of the Bureau, which is creating the delay of confirmation. In the meantime, Associate Director Raj Date will take on the duty of overseeing the Bureau’s daily activities.

The Consumer Financial Protection Bureau will be responsible for, among other things:

• Receiving consumer complaints about financial institutions and the financial industry as a whole
• Learning how Americans use financial products
• Restricting deceptive behaviors by the financial industry
• Promoting financial education
• Enforcing consumer financial protection laws

The Bureau is said to serve as an “EPA for money” and will “leverage the latest technology to analyze consumer data and to support Americans in their fight for responsible financial products and services.”

The Bureau may assist credit bureaus when monitoring cash transfers through MoneyGram, Western Union and similar companies; it may educate consumers about credit scores and credit scoring models; and it may encourage credit card companies to exceed the transparency laws recently in place through the CARD Act.

In addition to providing consumers with education and information resources, they will also have a Twitter feed and will be active through several social media sites, thereby making it easier than ever for consumers to report problems or issues with financial institutions.

Here is a list of the laws through which the federal government protects credit card holders and consumers:

• The Fair Credit Billing Act – The Fair Credit Billing Act, which protects most cardholders, is a law that protects you from inaccurate or unauthorized charges on your credit card statement. Through the Fair Credit Billing Act, most consumers are responsible for just the first $50 of unauthorized charges. In addition, this Act protects consumers from paying for merchandise that never arrived; for any goods that were not what was promised; and double charges for goods or services.
• The Fair Credit Reporting Act – The Fair Credit Reporting Act, which was amended by the Fair and Accurate Credit Transactions Act of 2003, protects you from inaccurate or incorrect information found on your credit report. Within this Act, consumers have the right to dispute inaccuracies, which then have to be investigated by the appropriate credit reporting bureau within 30 days. Any information that cannot be verified during this time must be removed from your credit report.  This Act also allows you order a free copy of your credit report if you have been denied credit.  Finally, this Act also prevents just anyone from looking at your credit report; only those with a need (a creditor, insurer or landlord, for example) can gain access to your credit report.
• Truth in Lending Act – The Truth in Lending Act prohibits creditors from offering credit to consumers unless all terms, rates and conditions are clearly outlined.
• The Credit CARD Act – One of the newest forms of federal legislation regarding credit cards, the CARD Act is a far-reaching piece of legislation, although some of the highlights include: creditors cannot raise your interest rate without at least 45 days’ notice; double-cycle billing is prohibited; and your creditor cannot raise your interest rate on existing balances if you continue to meet the minimum payment and due date requirements set forth by the creditor.

American Express recently banned purchases of medical marijuana with its credit cards, and the resulting debate has brought the idea of credit card companies and the authority they should carry when consumers make purchases deemed questionable back into the spotlight.

Some of the purchases banned by some credit card companies include: gambling chips, donations to controversial non-profit organizations, medical marijuana and, in some cases, pornography.

Most credit card companies say that they are simply protecting themselves against legal liability, but consumer groups say that they are simply infringing on consumers’ rights and shouldn’t play the morality card.

John M. Simpson, of the consumer group Consumer Watchdog, says: “It seems to me that credit card companies are imposing their moral values on the world.”

It appears that, among the industry’s biggest companies, that American Express is the most conservative of them all, as it has banned medical marijuana in all 16 states that have legalized it. They have also banned online pornography.

Inconsistencies in Credit Card Rules

Some critics, however, note that there is a considerable amount of inconsistencies in these rules. For example, some cardholders don’t allow its credit card customers to charge gambling chips, but they can use the casino’s ATM to get cash advances at casinos.

A MasterCard spokesman has adopted a number of policies to “combat illegal or brand-damaging behavior.” American Express states that it “abides by federal law and prohibits transaction where the risk of dispute is unusually high.”

Adhering to Federal Law, or Making Moral Judgments?

In addition, American Express bans online pornography sales with its credit cards because they want to fight sales of child pornography. As such, they ban all pornography sales as an “additional safeguard.” Medical marijuana is also prohibited because the company says it is “adhering to federal law.” MasterCard and Visa are expected to follow suit.

American Express has banned online pornography purchases since 2000 because they considered it to be a “risk-based decision” because they had to deal with a number of disputed transactions prior to that date. They consider their decision to be based on risk alone; that it is “not a moral judgment.”

What is an inactivity fee?

An inactivity fee is a new fee that many credit card companies are employing to encourage customers to either start spending or risk losing their account. In short, the CARD Act put a serious dent in the wallets of the credit card companies; in response, they began cutting the dead weight, so to speak. In other words, they are now looking to cut ties with those customers who held a credit card, but did very little spending on it.

Why are credit card companies charging this fee?

Because of the CARD Act, and the poor economy of the last, few years, fewer people have been using charge cards. As a result, credit card companies began imposing inactivity fees to: (a) encourage consumers to start spending on their credit cards again; and (b) generate revenue lost by the legislation of the CARD Act.

How do I know if my credit card company is charging an inactivity fee?

The inactivity fee must be detailed in your card’s terms and conditions, so read them closely. Each credit card will have its own rules regarding inactivity fee – mainly the time that elapses before you are charged this fee – and some cards do not even charge this fee. If in doubt, give your credit card company a call to verify whether they are imposing an inactivity fee.

How can I avoid paying an inactivity fee?

If you have a credit card, but you relegate it to the back of your wallet for use only in emergencies, you could be facing an inactivity fee from your credit card company. Unfortunately, most credit card companies are not willing to negotiate this fee. So to avoid this charge, simply make a point of spending on the card a couple times a year.

The sheer number of online security breaches and sophisticated computer hackers has left many consumers weary about making online purchases. Although the only way to ensure safety from online hackers is to completely eliminate making online purchases, there are a few things you can do to greatly reduce the chances that you will become the next victim of online credit card theft:

• Ask your bank if you are able to create a “disposable” credit card number.  Consider ShopSafe, through Bank of America, for example. If you have a Bank of America Visa or MasterCard credit card, you can simply sign into your Bank of America account online and follow the ShopSafe prompts to sign up for a temporary, 16-digit credit card number, which can then be used to make an online purchase. This temporary card number, which even comes with its own expiration date and security code, is valid at only one online vendor. Therefore, you must sign up for a new card number for each online purchase. However, if you frequent a certain online vendor, you can continue to use that same temporary credit card number.
• Consider using an online payment service, like PayPal or Google Checkout. These online payment services eliminate the need to provide online vendors with credit card numbers and other personal information, and instead allow you to sign into the service and make the purchase. In addition, they also offer protection against unauthorized purchases, provided you report the fraud within 60 days.
• Consider purchasing a prepaid credit card. If you really want to avoid entering your credit card information online, you may want to purchase a prepaid credit card. To activate one of these cards, simply load it with the desired amount of money. Then, every time you make a purchase, the purchase total is deducted from your account balance, like a debit card. Be careful, however, of the fees that are often associated with prepaid credit cards, as they can come with their share of sneaky fees, such as activation fees and “load” fees.

How about your finances? If there’s one thing to be prepared for, it’s handling your finances and protecting yourself during your summer travels. Here’s what to do:

• Contact your credit card company, particularly if you are traveling out of the country, and advise them of your travel plans. Many times, credit card companies will put a spending freeze on your credit card if they see unusual activity on the card, so it is best to advise them of your travel plans so you can avoid dealing with a frozen account while away on holiday.
• Take the credit card, leave the cash. Although you will want to have a bit of cash on hand while traveling, in general it is best to charge your expenses on a credit card. A credit card will provide you with a number of protections and, unlike cash, can be easily replaced if lost or stolen.
• Charge your car rental, hotel reservation and airline tickets. Many credit cards (check yours before you leave) offer such perks as lost luggage insurance, airline ticket insurance and car rental insurance. It just doesn’t make sense to pay for these things out of pocket when your credit card likely offers them for free.
• Place a hold on your mail service while you are away. It is always best to put in a request with your local post office so they can hold your mail until you return. Mail sitting in a mailbox for any period of time is an invitation for credit card thieves to swoop in and steal your credit card and other personal information.
• Keep your credit card company phone number in a separate location so you can quickly contact your credit card company if your card is lost or stolen. Write down the phone number for a lost or stolen credit card (it’s usually located on the back of your card), and stash it in another piece of luggage so you can quickly get a hold of your credit card company in case of an emergency.

Although the CARD Act was created and enacted to protect the rights of consumers, it has also had some unexpected consequences:

• Higher interest rates – As soon as word spread that the CARD Act was underway, credit card interest rates began to climb. Whether or not the rising interest rates had anything to do with the CARD Act is uncertain, but it seem rather coincidental that these two things occurred around the same time. Consider that the average interest rate is above 16 percent, up from 14 percent in the first part of 2009.
• More fees – Because the CARD Act placed limitations on the fees that credit card companies could charge consumers, the credit card companies have found new and interest fees to charge to make up for the lost revenue. Expect such things as “minimum finance charges” and “inactivity fees” to be commonplace with credit cards now as a result of the CARD Act.
• Lower credit limits – The struggling economy and the CARD Act likely worked together to cause credit card companies to steadily lower credit limits on consumers. In fact, you may have been one of those consumers who were shocked to find your credit card limit had been slashed by your credit card company.
• Less credit card approvals – Perhaps one of the biggest changes to come about as a result of the CARD Act is that credit card companies are no longer willing to offer credit to those individuals with questionable credit histories. Of course, the flailing housing market over the last two years, combined with the poor economy, also played a part in credit card companies pulling back when it comes to approvals, but the CARD Act has definitely played a part in this new era of tighter credit standards.

What is Skimming?

Skimming is the process of placing a fake credit card reader over a legitimate one. It works like this: a credit card thief places the fraudulent device over a legitimate one, such as those found at retailers nationwide, and sits back while customer after customer swipes their card into the device. After a day or two, the thief then removes the skimming device and – voila – has hundreds, maybe even thousands, of credit card numbers.

The latest skimming fraud took place in Michaels Stores across the country, including two in Utah. The Irving, Texas-based company confirmed that their credit/debit card readers in several stores have been compromised by skimming devices. Although Michaels Stores claims that less than 90 pin pads were affected, the store has removed all devices – there’s more than 7,000 – from their stores due to what they call an “abundance of caution.”

How They do It

Many criminals have managed to carry off this scam by either distracting cashiers or posing as repairmen. Many times, thieves simply replace the legitimate card readers with processing machines embedded with skimmers.

Although avoiding this type of scam is close to impossible, particularly if the thief actually replaces the real card reader with a fraudulent one, many times the thieves place a small skimming device over the legitimate one, making identifying it a bit easier.

The best thing you can do to avoid falling victim to a skimming scam is to never use a card reader at a retailer or location at which you are not familiar; to not use an ATM machine at a location you are not familiar; and to never use a card reader that looks suspect.

Finally, it always pays to look closely at your credit card statement each month and your bank account each month if you use a debit card. Immediately reporting fraudulent activity is the best way to avoid a considerable amount of damage to your bank accounts or credit score.