Credit changes filling the mail

If you have credit cards, you’ve probably noticed a lot of mail lately. In addition to your monthly bill, creditors are sending notices about upcoming changes to your account. If you don't like the new terms, your option is to "refuse," which effectively cancels the card. But should you dump a card? It depends ...

The next phase of the new credit card law goes into effect in February. The law offers several benefits to consumers, including banning the concept of universal default, the practice of raising interest rates based on a missed payment with another lender. It also requires companies to give you at least 45 days’ notice before making changes -- which many intend to do. Included in my mail were a number of booklets, mailers, etc. related to changes to my cardholder's agreements. As we’ve warned before on All Consuming, even those with good credit might not be able to avoid a shift from a fixed interest rate to a variable one, higher monthly payments or the imposition of an “inactive fee.”

Bankrate.com’s “10 Best Credit Card Moves in 2010” offers some good advice for managing your money. Among the tips: Paying down existing balances, spending rewards points before they expire, and avoiding closing accounts unless necessary. That last one might not seem to make sense, but ditching an account with a zero balance will cause a drop in your available credit – which consequentially could alter your debit-to-credit limit ratio and lower your credit score. If you have other credit cards with high spending limits and low balances, that might not be a problem.

When a reporter called Capital One to ask if there were a way for a consumer to avoid a higher interest rate, they were initially told no. But they kept up the pressure and suddenly, the consumer qualified for a "special offer" that allowed her to temporarily keep her interest rate. According to the report, Cap One's public relations person said "decisions to modify terms are made on a case-by-case basis depending on the individual customer's circumstances." If you try to fight back, let me know how it goes.

Chatter: How do you plan to handle your credit in 2010?