Frugal folk can raise strategy shields as credit card fees jump

— -- Americans have a complex relationship with credit cards.

They love the convenience of plastic, especially if they need to rent a car or bail an errant relative out of jail. But they detest many credit card company practices, such as raising interest rates for no reason, lowering credit limits or slapping on hefty fees.

These practices have increased in recent weeks as credit card issuers prepare for a series of reforms that will take effect in February. Among other things, the new law will limit when issuers can raise rates on existing debt. In the interim, many issuers are raising rates and fees for some of their customers. Some tips on how to cope:

If you're carrying a balance:

•Do the math before transferring your balance to a low-rate card. Several card issuers are still offering a low introductory interest rate for customers who transfer their balances. But they've also raised their balance-transfer fees, which will eat into the amount you save. For example, Chase plans to raise the maximum balance transfer fee on some of its credit cards to 5% from 3%.

Some credit card issuers cap the maximum amount they'll charge customers to transfer their balances. USAA, for example, caps the fee at $75, according to Bankrate.com's 2009 credit card survey.

But many others don't cap balance-transfer fees, which can lead to substantial charges for customers who transfer large balances, says Ellen Cannon, managing editor for Bankrate.com.

Depending on the size of your balance, "There are still scenarios where balance-transfer deals can work for you," says Curtis Arnold, founder of CardRatings.com. Some credit card issuers are still offering a 0%, 12-month introductory rate, but you need excellent credit to qualify, he says.

•Don't be afraid to negotiate. If your rate goes up, call the credit card issuer and ask for a better deal.

If you always pay on time, pay more than the minimum and have never exceeded your credit limit, there's a good chance your credit card issuer will lower your rate, Cannon says. "They don't want to lose their good customers."

If you don't carry a balance:

The easiest way to avoid higher interest rates is to pay off your balance every month. But even customers who don't carry a balance are vulnerable to stealth fees, according to Bankrate.com. What to watch out for:

•Fees for exceeding your card limit. Many credit card issuers have lowered customers' available credit, increasing the likelihood that you'll inadvertently exceed the limit.

Over-limit fees range from $15 to $39, with some issuers tying the amount of the fee to the amount by which you exceed your limit. Starting in February, banks will be required to get customers' permission before allowing them to make purchases that exceed their limits.

In the meantime, the best way to avoid triggering over-limit fees is to set up online accounts for your credit cards and review them every day, says Adam Levin, founder of Credit.com.

Reviewing your accounts, he says, "brings you face to face, sometimes unpleasantly, with how much you're spending and what you're buying, and how close you might be coming to that magic credit limit line for that particular card." It's also a good way to protect yourself against identity theft.

•Different grace periods. Read the fine print on your credit card statement to find out how much time you've got to pay your bill before triggering finance charges and late fees. In the Bankrate.com survey, grace periods ranged from 20 to 25 days.

Even paying a day late could trigger fees of up to $39, according to Bankrate.com. Want to avoid late fees by making a payment by phone? If you talk to a human being, most issuers will charge you about $15, Bankrate found.

Watch your mail

You probably get a lot of mail marked "very important" that turns out to be junk. But if you receive official-looking notices from your credit card issuer, open them and read them, says Ruth Susswein, deputy director of national priorities at Consumer Action, an advocacy group.

This may be the only notice you get that your interest rate is going up, or that your issuer has increased the minimum you must pay on your balance every month, she says.

Read the material carefully, "even though it's painful to look at," she says. "The smaller the print, the more important it is."

Sandra Block covers personal finance for USA TODAY. Her Your Money column appears Tuesdays. Click here for an index of Your Money columns. E-mail her at: sblock@usatoday.com. Follow on Twitter: www.twitter.com/sandyblock