Credit cards are a fundamental part of American life.  2010 is a year of major reforms on credit card policies that can greatly impact cardholders.  A clear understanding of these changes are critical to a consumers preparation on how to make transactions using these cards under the new reformations.

A large number of the significant adjustments has already been implemented February of this year.  The passing of the CARD Act legislation is the primary engine in driving these changes.

A majority of the changes affect the billing practices of these credit card institutions.  With the execution of the CARD Act, a credit card issuer must assign all payments to go to the highest balance first.    This ensures the payments a cardholder sends is allocated to the most problematic balances first.  Credit card companies are also now required to give a 45 days' written notice to cardholders if they decide to increase interest rates.  Certain tactics, such as assigning ridiculous due date schedules have also been banned.  Most importantly, credit card companies are now mandated to send payment guidelines on paying of the credit card debts.  This information will allow balance holders to know exactly how long it will take them to pay off standing balances and to better plan these payments.

The CARD Act eliminates or limits the unprincipled tactics the credit card companies have used for years to gain profits from consumers.  Restricted are the loopholes and fine print policies credit card issuers used to charge penalties and high interest rates to unsuspecting consumers in order to gain a hefty profit.

Though the CARD Act is a huge step toward consumer protection, customers can also expect the banks to adopt new tactics of making money.  Credit card companies are aware of the impact of the CARD Act and you can be sure they will come up with more clever ways of making money.  The implementation of new fees are one of these methods.  American Express and JPMorgan Chase have already started to add annual fees for existing customers.  Most cardholders can also expect to see interest rates to rise on their current credit cards.

The best protection for consumers is to try to use cash on purchases as much as possible.  If a credit card must be used, try to use one that offers a low fixed interest rate.