CREDIT CARDS » Credit Card Rates

Unusual and unexpected credit card practices seem to be pretty common nowadays; however, while they're common, they're not necessarily invited. It's tempting to excuse the credit card companies for their adjustments, until one remembers that they've been granted Federal money to remain operable - and according to Bloomberg data, celebrated $27 billion in operating profits in 2007.

So what does that mean for the customer? What guarantees are we given in the midst of already difficult times that our credit card limits won't fall drastically and our interest rates won't raiseat the drop of a dime?

Here are a few prospective guarantees:

• Interest rate restrictions. Effective July 1, 2010, the Fed will restrict sudden changes in interest rates.
• Congress pushing for change. Democrats in Congress are said to be pushing legislation that will add more consumer protection and move up proposed changes.

Consumers hope these adjustments will make a difference in credit card practices from companies. But what do we do until these laws take effect? Some companies are offering customers extended warranties. For example, all Visa Signature cards come with one year ofadditional coverage for all purchases made on the card. Mastercard offers an extended warranty on Platinum, Gold and World cards. And some companies are offering interest rateand cash-back deals - however, look out for restrictions that may be included.

Unfortunately,there is no definite resolution - or even pattern - to expect regardingthe credit card companies' practices in the near future. So if you have a credit card, your best bet is to buckle up and get ready for a bumpy ride. Credit isn't always a bad thing. If you monitor your spending and build your credit responsibly, you can greatly benefit from having a credit card with low rates.

If you are like most people, you probably pay your monthly credit card bill without looking at the statement. You might also glance at the itemized charges to make sure there hasn't been any unauthorized purchases. But it is important to have a full understanding of every aspect of your credit card statement the finance charges, fees, and minimum payments to help you get a better handle on your credit card account and how it works.

Your monthly credit card statement contains a great deal of important information. So what are the key pieces of information on your credit card statement, and how do you read them? Take a look at the front and back of your statement, you'll find a series of terms. These terms should be on your credit card statement no matter what credit card company you are with.

On the front of your statement, you'll see an account summary which lists:

• previous balance
• payments
• credits or purchases
• fees and finance charges
• new balance
• minimum payment due

How the credit card company arrives at these various figures depends on a couple of key factors:

• the annual percentage rate (or APR)
• your outstanding balance

The annual percentage rate (APR) is the rate of interest you pay on your credit card account on an annual basis, and it's used to calculate your monthly finance charges. On most monthly statements, your credit card APR is calculated as both an annual percentage rate and as a daily or monthly periodic rate. That periodic rate is what will appear as "finance charges" on your account. Keep in mind, your interest rate on cash advances may be higher than that on credit card purchases, and each is calculated separately before being added on as a finance charge.

Your minimum payment each month is determined by calculating a percentage of your outstanding balance. This is typically 2% or 2.5%, depending on which formula is used by your credit card company. You should be aware that making the minimum payment each month will not make progress toward paying off your balance. Even if you make your payments on time and avoid late fees and over-limit fees, your finance charges will most likely exceed the percentage of your minimum payment due.

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