Boston.com reports on a bill currently pending in Congress would stop credit card companies from just deciding it’s time for them to get more money by raising your interest rates and fees. The terms that you were told when you first signed the contract for the card (perhaps minus some exceptionally fine and vague print, or a flat-out “any time, any reason” policy) would be enforced and maintained if the bill passes.

Most are beyond enraged when they find that their debt will soon be significantly increasing as they notice their interest rate has suddenly jumped. With only about 40% (according to Ben Woosley, director of research at CreditCards.com) of consumers paying their balances in full every month, chances are good that you’re in the angry majority.

If the bill passes, it will also make credit card companies mail statements 25 days before payment due dates, as opposed to the current minimum of 14 days.

Credit card debt is almost twice what it was in 1996, nearing one trillion dollars. If it passes, this bill would likely reduce the pace of increase in debt levels, which would lighten the burden on your wallet.

How does Verified by Visa work?  When you attempt to make a purchase on a site participating in Visa’s ”voluntary program” you are directed to a new window to enter your secret Verified by Visa password.  Upon successfully entering the password your transaction is processed.  If you fail to enter the password, the system enters a fraud alert and your credit card account is put on hold.  You then must get the account released to make any other transaction, with any other merchant, anywhere else.

How do I enroll in Verified by Visa?  You can enroll at the Visa website or during your attempted purchase at a participating member site.

How do I opt out of Verified by Visa?  You don’t.  Visa uses the program in the United States, Australia, New Zealand, India, Singapore and South Korea.

What if I decline to participate?  John Leyden reports in The Register article, Net shoppers bullied into being Verified by Visa, that a Visa account was locked each time a customer refused to use the system.  He says Visa requires participating member stores to use the system and if customers do not complete the process, the account is frozen.  This particular account holder complained to Visa without success and warns you might not know you will be required to use Verified by Visa until you attempt a purchase, and then it is too late because the system registers your failure to cooperate as fraud and locks down the account.  Visa says member sites display a Verified by Visa logo.

Do I have any legal rights against Visa? Visa uses its cardmember agreement to make unilateral changes to the account and if you continue to use your account you have to use it on Visa’s terms.

Well, me too.

In the recent days of easy money, credit card and otherwise, if you followed the rules, you could shuffle balances from one zero per cent offer to the next, and not pay interest on your credit card balance.

New Federal Reserve Board rules will make this practice more difficult.

Yes, if you play the game right, without any mistakes, you win and the credit card company loses.  But, if you are ADD like me, and make one late payment, out goes the teaser rate and in comes the 20% to 30% normal rate.  At least until you transfer the balance again.

Now, the Fed wants to prevent the credit card companies from charging a late fee until a payment is 30 days, not 30 seconds, late.

Another new rule would require the company to apply payments to the highest interest balance on the card, instead of the current reverse practice. Of course, the credit card companies are screaming bloody murder.  The proposed Fed credit card rules will cost them 10.6 billion dollars, says Chase.

It does seem beyond the understanding of most government employees that restricting profit in one area will produce changes in other areas by the regulated business.  So, there is some validity that the new rules will result in less credit availability to lower income people.

The problem starts with adhesion contracts.

Which is most of what we sign as consumers.  The credit card company does not sit down with you and negotiate, they say, take it or leave it.  Like mortgages, life and health insurance contracts, vehicle loans, and so on.

Abuses occur,  consumers are stuck by the terms of the contract that they signed, and then the calls start for the government to fix it.

As I have blogged before, I trust the people before the government.  The law about being held to the terms of a contract you sign goes back to the days of Henry VIII, centuries before adhesion contracts.

Having a jury determine, under the common law, whether the terms of the adhesion contract should be imposed on the consumer would be a far better reform than any government intervention in the form of Federal Reserve credit card rule changes.

For example, a credit card company offers you a 0% interest card but when you read the smaller print, you discover the 0% is only valid for the first six months you have the credit card, then it increases to 19%.

Many of us apply for the teaser rate credit cards so that we can transfer a balance from a higher interest rate credit card and, hopefully, reduce the amount of interest we are paying. However, when the intro period expires on the new card, we find ourselves right back where we started - paying a high interest rate because we couldn’t pay the balance in full. Thus, the never-ending cycle of debt.

But his identity has run 90,000 times in the first 9 months since the commercial aired on television, according to MSNBC writer, Helen A.S. Popkin, in her amusing article, “Sing it, FreeCreditReport.com guy!”  And all of America knows his song.

So the free credit report ain’t; and the Dude is a figment of an ad agency imagination.  Does that mean we should not believe everything we see advertised on TV?  P.T. Barnum once said, “There is a sucker born every minute”.   

The legislation would tighten rules on credit card accounts, limit some interest on fee charges and require set time periods for companies to mail monthly statements and before companies increase rates.

The bill’s sponsor, Rep. Carolyn Maloney, D-N.Y. says “”This landmark legislation will help level the playing field between card holders and card companies, and give consumers the tools they need to responsibly manage their own credit.”

The House is pushing legislation forward while federal regulators consider their own timetable on similar issues. Federal regulation takes a slower route than Congressional legislation, as fed regulators are required to participate in a public notice and comment period.

One group, the American Banking Association, used the public comment period to announce its opposition to credit card reform. The ABA position warns that credit will be harder to get and cost more, a line previously heard in defense of mortgage reform.

Colleage Wendell Sherk reports that credit card losses are piling up for banks, resulting in less money available for those banks to lend. Banks offer credit based on the amount of cash reserves held by the bank to support the loan. Less cash on hand now means less lending, a result apparently caused by banks extending too much credit rather than restricting the method of lending.

Any legislation passed by the House would have to be reconciled with a Senate version. Then there is the question whether President Bush would sign or veto the bill before he leaves office. A congressional veto override is unlikely.

Bob Sullivan notes that presidential candidate Barack Obama has proposed his own version of a credit card bill of rights, while candidate John McCain has not offered a solution.

This means you don’t have to make a payment during that time and it is interest free. We can purchase all the furniture we want, budget ourselves and pay it off within the specified period and it did not cost us a dime in interest. What a great deal!

Then reality sets in the cost of living sky rockets. So instead of making your payments on time and paying off that purchase within the specified grace period the money goes into the gas tank or food goes on the table. So at the end of the yellow brick interest free credit road you have not paid off that original agreement and now the balance is quite a bit higher than what it was before. This does not make sense as it was supposed to be interest free.

Make no mistake retailers regardless of their name are out to make money. If they don’t make money then the business fails. This does not mean that I think the retailers are evil and should be stopped from running interest free programs. But I do think that you need to be informed about “interest free financing.” The companies who finance these purchases are relying on human nature. They develop programs after studying the psychology of human beings and what buttons can they push to entice you to purchase something, anything at all. See if they can get you through the door to purchase anything they view it as a good day.

So the psychology behind “interest free financing” is that I, the store owner, know that you want to purchase nice furniture. After all you work and you deserve a $3,000 - $5,000 couch. Why, because if you can’t you are a failure just like media and the credit card industry would lead you to believe. Enter the financing company, they know based on psychology of Americans that probably over 75% of you are NOT going to payoff that interest free purchase because you could not afford the purchase to begin with and/or life gets in the way. You are not a loser because the media says so and you do not need a $3,000 - $5,000 couch to be successful.

The end result is that on the last day of that interest free grace period if the original agreement is NOT paid off then interest at whatever percentage rate has now sprung to life and attached itself to the amount due and owing. The average interest that I have seen is 9%-12%. The interest will accumulate according to the purchase agreement and terms of that agreement.

So a line of credit for $5000 for 2 years interest free could cost an additional $400-$500 more or even higher depending on the terms and conditions of the contract if the entire balance is NOT paid off within that grace period. This balance increases regardless of the payments you made or even if you just have $1.00 left to pay.

If you are going to use the interest free financing then get the facts first. READ THE CONTRACT. Yes, Virginia you are signing a legal contract when you purchase anything with financing. This means that you can be sued if you do not pay. Understand the terms and if you are not comfortable with the terms or do not understand them then just walk away.

As time goes by I become a bigger and bigger fan of Dave Ramsey’s cash only system. People will make deals. How do I know? Because I just used this philosophy on Basset Furniture the other day. I walked in with cash in hand. The dealer tried to sell me a couch that was higher than what my budget allowed. I informed him that I wanted this particular couch at this particular price including tax. Not a penny more. He said; NO! I replied with good bye (Cue AOL) and headed for the door.

The end result was I got my couch for the price I set which was $2500 lower than what he started at and I paid cash for it. Why Bassett as opposed to Nebraska Furniture Mart or Crowley? Bassett had a better deal. Personally, I love Nebraska Furniture Mart and Crowley’s furniture. It is the cost of credit that I no longer enjoy so I deal in cash and if you as the retailer do no want to work me as the consumer I will be more than happy to take my cold hard cash somewhere else.

Remember knowledge is power and the FTC has a wonderful website where you can gain all sorts of powerful facts to assist you in making a financial decision.

Bottom line: generally interest free winds up costing you money in the long run. Be informed, be prepared and be ready to walk away if you are not 100% satisfied with the terms and conditions presented.

Written by Kansas City Bankruptcy Attorney, Rachel Lynn Foley.

Think about this.  If you are using a medical credit card to pay for your treatment, then you probably do not have medical insurance coverage.  If you do not have coverage, then you probably cannot afford the high cost of medical treatment.  So, you are destined to default on the medical credit card debt.  Putting your medical debt on a high interest rate credit card will only increase the chance of your not being able to pay the bill.

Banks used to be good for giving customers toasters and blenders, but stay away from those credit card offers.

I have never understood the logic behind this.  If my wallet was stolen, does it make sense to have a copy of my signature on the back of a credit card that would be thieves would try to use?

On the other hand if the back of the card is blank the thief could sign my name then use the card and the signature would match.

Today, a sales clerk at a store offered a very elegant solution.  When he noticed that the back of my card was not signed, he asked for my driver’s license, thereby triggering a discussion about whether or not to sign the card.  His suggestion - sign the card, but add a note reading “see ID.”   If the back of the card instructs the sales clerk to ask for a driver’s license or other picture ID, it very well might discourage improper use of the card.  It seems to me that credit card companies ought to add a “see ID” requirement to credit cards in general.  For those cards that one uses in retail stores, ID would be required.  If you use a particular card for online purchases, you could disable the requirement for that card or for a particular purchasing session.

What do you think?