What does this mean? In essence, it means that you, and you alone, are ultimately responsible for understanding how your credit card works, as well as the card’s terms and conditions.

If you are thoroughly confused (who isn’t?) about the CARD Act and the ways in which you may not be covered, here is a list of things you may want to watch for:

• Your interest rate may be increased during the first year, in certain cases – Although the CARD Act prohibits creditors from raising your card’s interest rate during the first year, there are exceptions to this rule. Your interest rate can increase: if you have a credit card with a variable interest rate that is tied to an index; if your account is 60 days past due; and if your interest rate is tied to a promotional rate.
• Your credit card account may be closed, without warning – Your creditor does not have to provide you with notice if they decide to close your account, reduce your credit line or cancel any of your credit card privileges. The only circumstance under which they must provide you with notice is when they impose a penalty for exceeding your credit limit.
• If the creditor imposes a rate increase, you cannot reject it – You can certainly close the account and pay off your balance under your current interest rate, but you cannot reject the rate increase on future purchases.
• If the terms of your credit card are disclosed in the account-opening table, you do not have the right to reject the changes – You also do not have the right to reject an increase in your minimum payment amount.
• THE CARD Act cannot put a cap on penalty interest rates – Although the CARD Act protects consumers from an increase in interest rates without warning, creditors are under no obligation to cap their penalty rates. In other words, it is not out of the ordinary for a creditor to change a 10 percent interest rate to nearly 30 percent if a penalty is imposed.

• Begin by understanding the current credits you have and if they are still working for you – The best first thing you can do is to take an inventory of your current credit cards to make sure that they still have what you want and need. Take a look at the interest rate on your credit cards, as well as any other thing you may need to use the credit card for, including balance transfer offers, credit card insurance and protection and rewards features.
• Consider your needs and choose a credit card based on them – In order to guarantee that you have found a credit card that’s right for you, you must first consider your credit card wants and needs. For most individuals, a good credit card with a low, fixed interest rate will be suffice, while some individuals may find value in rewards and cash-back credit cards. Of course, the credit card you choose will be a personal decision, so take your time to explore your options when it comes to credit cards.
• Make it a point to thoroughly understanding the rates, terms and conditions of your credit card – Before you accept a credit card offer, take the time to read and understand every aspect of the credit card; otherwise you could be setting yourself up for disaster. If you are accepting a card with a 0% introductory interest rate, for example, make sure you understand the terms of the promotional rate and the rate you will be charged once the promotional rate has ended. If you accept a rewards credit card or a cash-back credit card, read the fine print so you can be sure you understand the best ways to earn points and redeem them. Although the CARD Act has made credit card companies become more forthright when it comes to their terms and conditions, it should never replace your responsibility of understanding the card and its terms and conditions.

Although the CARD Act certainly has helped protect consumers regarding their rights, it is still ultimately up to us, the cardholders, to understand the terms, rates and conditions of our credit cards so that we can always make the best decision regarding our credit.

One of the most important aspects of any credit card is the interest rate, or the APR. Sure, you think, I know my card’s interest rate, so I’m covered.

But it may not be as simple as that.

Understanding your credit card’s interest rate is not quite as cut and dry. Here are a few questions you may have regarding the interest rate on your card:

• What is the APR?

The annual percentage rate, or APR, is what you want to look for when determining your card’s interest rate.  Although the APR is generally straightforward, it may be of either the fixed or variable variety. A fixed interest rate will not change unless it is a promotional rate or if you fail to meet your cardholder terms and conditions, while a variable rate is one that will change and is often tied to the prime rate.

• Can my card’s APR change at any time?

The only way your card’s fixed APR can change is if the credit card company provides you with written notice of the change. A variable APR, however, can change at any time, so you will need to keep an eye out for any rate changes.

• What is a default APR?

A default APR, which will be clearly listed alongside your card’s APR in the terms and conditions section of your credit card statement, is charged when you fail to meet your cardholder obligations. For example, your credit card company may charge you a default APR if you are more than 60 days past due on your account. However, the default APR can only be charged on future purchases, and you can opt to cancel the card and pay off your balance at the previous APR if you feel the default APR is too steep.

Your credit card can be incredibly valuable, or it can be incredibly detrimental; in other words, your credit card is only as useful as the behavior that accompanies it. And that means starting with a good understanding of your credit card and the important terms to study when applying for a credit card.

1. Annual percentage rate – The annual percentage rate on a credit card, otherwise known at the APR, is usually the best place to start when comparing credit cards. Pay close attention to the APR, as well as the APR should you become delinquent on a payment. New credit card legislation states that a creditor can raise your APR if you are more than 60 days delinquent on a credit card payment, so make it a top priority to get your credit card payment in on time, or else you could be faced with an astronomical APR.
2. Grace period – The grace period on the card is the time frame during which you must pay your credit card’s minimum balance. Although the new credit card legislation has forced creditors to allow customers adequate time to pay their credit card bills, you should still pay very close attention to the due date on the card, as well as a the grace period, and allow yourself plenty of time to get your payment in on time, each and every month.
3. Credit limit – Your credit limit should never, under any circumstances, be disregarded. In addition to incurring hefty over-the-limit fees, your credit score will inevitably become damaged, as your debt-to-income ratio will soar. In other words, make a great effort to keep your balance paid down and to not come close to maxing out your credit card.
4. Introductory rate – Many cards offer introductory rates to court customers. As they say, all good things must come to and end and this goes for introductory rates, as well. Pay close attention to the length of your introductory rate, as well as the APR once the introductory rate has ended.

Many creditors are in the process of changing their terms and conditions because of the newly introduced credit card legislation. It is therefore extremely important to keep abreast of all changes that may be taking place with your creditor and your credit card.

Don’t cast aside the information included in with your monthly statement; instead, make sure to read it carefully, as it could change the way you use your card. It may also prompt you to ditch your current credit card in favor of another one with more competitive features and benefits.

How to tell if it’s time to move on:

• Customer service is lacking – Excellent customer service is usually on the top of many cardholders’ wish lists when it comes to deciding on a credit card company. You may want to ask yourself if you have been satisfied with the customer service the last time you called. For example: Did the customer service rep handle your problem/question in a professional manner? Was the problem remedied in a reasonable amount of time? Was the customer service rep polite and friendly? If you answered “no” to any of these questions, then it may be time to find a creditor that takes pride in excellent customer service.
• Your interest rate goes sky high – Many creditors, in response to the new credit card legislation, are now raising interest rates to make up for decreased profits. If you have been a loyal customer and have always paid your bills on time, then you should not have to put up with a hike in your interest rate.
• Your credit limit is cut – Just like increased APRs many creditors have begun cutting credit limits on current customers. Once again, if your credit limit has been cut but you have proven to be a loyal and responsible customer then you shouldn’t have to deal with a decrease in your credit limit.
• Your rewards are not what they cracked up to be – If you chose a rewards credit card, but the rewards are riddled with exceptions and restrictions, then you may want to look for a new rewards card with less restrictions and more ,well, rewards!

Although it certainly is important to thoroughly read our credit card’s terms and conditions so that we understand such things as our APR, our monthly due dates, cash advance fees, credit limit and the like, we should also take the time to read all of the features that so many creditors offer with their cards.

So many consumers fail to read and understand their credit card’s features, which means that many of us are losing out on some great perks and features. In other words, take a second look at your cardholder agreement to learn about your credit card’s benefits:

• Proof of purchase – Perhaps one of the best features of your credit card is your monthly statement. Sounds weird, doesn’t it? But it’s true! Your monthly statement is a clear proof of purchase for any expenditure, so if you need a run-down of expenses for your business, for your taxes or simply for your own records, your credit card statement does the trick. Plus, it can also serve as a receipt for a purchase if you misplaced your original store receipt. The bottom line is: hang on to your monthly credit card statement – you never know when it will come in handy!
• Purchase protection coverage – Many cards now offer purchase protection coverage, which essentially protects you from damaged or defective goods when purchased on your credit card. Your creditor can actually go after the retailer in question to get you a refund on a defective or faulty purchase.
• Car insurance rental coverage – Did you know that if you pay for a rental car with your credit card that you may automatically have rental insurance coverage? Many creditors offer their cardholders insurance coverage for rental insurance companies; which means that you won’t have to purchase the costly insurance through the car rental company.

But before you begin using your first credit card, you’ll need to first make sure you completely understand the terms and conditions of your credit card – and that means understanding the language that credit card companies use when describing these terms and conditions.

A solid understanding of your credit card’s terms and conditions will help you make the best decisions regarding your credit card so that you don’t end up mismanaging your credit and ultimately ruining your credit score.

Credit Card Terms to Know:

• Annual Fee – An annual fee is essentially a fee charged by the credit card company once a year to you for the privilege of using the credit card. Most annual fees range between $20 and $40, although there are plenty of credit card companies out there that charge no annual fee.
• Annual Percentage Rate (APR) – Ann annual percentage rate is the interest rate charged to make purchases. Always pay close attention to you card’s APR to make sure you are receiving the most competitive interest rate possible.
• Credit Line –A credit line is the maximum amount you may charge on your credit card. If you go over this limit, the credit card company will likely hit you with costly over-the-limit fees.
• Due Date – Your due date is the date that your credit card payment is due every month. If you don’t meet this due date, you will likely be charged a late payment fee and even a hike in your APR, so always pay attention to this date and make a point to get the payment in at least a week or so before the due date to avoid any problems.
• Card Member Agreement – A card member agreement details all of the card’s terms and conditions, all of which you agree to every time you make a purchase on your credit card. Never, ever make a credit card purchase if you don’t understand your card member agreement. Contact the credit card company if there is anything in the statement that is not clear.

Making the decision to own a credit card and pay the monthly bill on time, without fail, is a decision which should not be taken lightly. A credit card can be a tremendous convenience, and it can certainly be a practical way to pay monthly expenses without dealing with cash and checks. However, it can also become overwhelming if you don’t approach credit card ownership with financial common sense.

With that said, there are the ABCs of credit card ownership that you should keep in mind should you decide to own a credit card:

• Always pay your bill – no exceptions! Treat your credit card bill just like you would you mortgage or car payment, as neglecting to do this could seriously impact your credit rating. One of the simplest ways to make sure your credit card bill is paid on time is to immediately pay it when you receive the bill. If you make a point to do this every month, then you won’t ever be caught in a situation where the credit card bill simply slipped your mind.
• Be aware of the credit card’s terms and fees. Many credit card owners fail to investigate all of the fees and terms associated with their credit card, and then are shocked to discover additional expenses each month. Remember: it is your responsibility to read and understand all of the fine print associated with your credit card.
• Consider credit card reward programs when choosing your credit card. Many of today’s credit cards include reward programs that offer great incentives on everything from hotels to airfare. Your job is to sort through the different types of credit cards and find the one that is best suited for you. For example, if you are a business traveler, you may want to consider a credit card that offers rewards in the form of free hotel stays. Of course, you should also take the credit card’s interest rate and associated fees in mind when choosing a reward credit card, but it is certainly worth your time to explore your options when considering which credit card is right for you.

It is up to you to educate yourself on the terms and conditions of your credit cards so that you can use the card responsibly and secure your credit score.

If you are in the market for a new credit card, there are three questions you should ask yourself:

• What do I need in a credit card?

Just as there are loan programs for different needs, there are certainly different credit cards for different needs, budgets and lifestyles.

Credit card reward programs, for example, may be ideal for individuals who use their credit cards regularly, or for business travelers who use their credit cards for hotel stays and meals. Credit cards with high credit limits may be ideal for big spenders, while basic cards with no frills may suit individuals who use their credit cards for emergency purposes only.

Whatever the case, decide which kind of credit card you are, and find the card that meets your needs.

• Do I understand the terms of the credit card?

Although recent changes in credit card laws have made it easier to decipher the cardholder’s agreement, it still may prove quite difficult to read and understand the fine print.

Before you accept a credit card offer, read the entire agreement and make sure you fully understand what it says. If you don’t understand something, ask the company for an explanation.

Some important terms to pay attention to include: annual percentage rate, finance charges, grace period, late payment fees, minimum payment, over-the-limit fees and periodic rate.

• Do I really need this credit card?

If your credit is overextended, and you are merely looking for another source of open credit, then it may be time to reevaluate your credit situation.

It is also important to note that many credit card companies are tightening their belts regarding to whom they will offer credit, so make sure your credit score is strong and your debt is manageable before applying for a new credit card.