Now, more than a year later, it seems that, for the most part, the jury is still out. The CARD Act turned out to be just the first in a long line of hits that have cut into
bank revenue, as we've since seen new regulations on overdraft protection, as well as the Durbin Amendment, which would substantially cut into the interchange fees issuers charge retailers for each debit-card swipe.
We're still waiting to see what the cumulative impact will be but, in the meantime, one thing is clear: Banks are struggling to make up for the lost income. So you might be surprised when I tell you that the credit climate for consumers is pretty good right now.
•Sign-up incentives are ripe. If you have good to excellent credit and you're looking for a new card, issuers are willing to make it worth your while. Often just for signing up, you'll get some cash back or bonus airline miles. A couple of the best examples, from : The British Airways Visa Signature Card, which gives you 50,000 bonus miles after your first purchase and another 50,000 if you spend $2,500 in the first three months after opening the account. That's enough to cover two transatlantic flights. If cash is more your style, he suggests the Chase Freedom Visa, which will give you a $150 bonus if you make $500 in purchases during your first three months.
•Ongoing rewards are attractive, too — again, primarily for customers with attractive credit scores. One to keep on your radar, says and author of "The Credit Card Guidebook," is Bank of America's Accelerated Cash Rewards American Express card, which has no annual fee and gives you 1.25 percent cash back on all purchases. If you have a Discover card, he says you should also be aware that most will give you double cash back (worth 2 percent) on up to $500 in purchases throughout your birthday month. You have to sign up to get this incentive.
•We're seeing longer introductory 0 percent interest rates. Citi is offering two lucrative ones right now: Both the Diamond Preferred Card and the Platinum Select MasterCard have a 0 percent APR on purchases and balance transfers for 21 months. (The balance transfer fee for both cards is 3 percent.)
•More banks are playing to subprime customers — this according to experts, who says the bad credit market used to be dominated by relatively small credit card companies. "None of the big guys wanted to play in that space because the product terms that were required to make the product work were something that no big company really wanted to put their name next to."
•Finally, a few words of warning. All credit card offers are rife with fine print. That British Airways Visa card I mentioned earlier? It has a $95 annual fee. That's worth it for a big spender who earns enough miles to more than make up for that cost, but only you know if you're that person.
"Credit card marketers are some of the best in the business; they'll make any credit card sound great. It's up to you to dive into the terms and conditions and not just the advertised, attractive features," Hardekopf says.
Rewards cards are notorious for having higher interest rates. That's fine if you pay your balance off every month, but what if you run into trouble and your credit card is all you have to fall back on?
For this reason, you need emergency savings, but it also makes sense to have at least two cards in your wallet: a rewards card that you use for regular purchases and pay off every month, and a low-interest rate card that goes largely unused but is available in case you suddenly need to carry a balance.
By Jean Chatzky
