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Credit card debt

Question: Recently I received, unsolicited, a new credit card from JC Penneys with a higher credit limit. The new card comes with "benefits"--more opportunity to spend at a time when I want nothing more than to reduce my debt. Is there a downside to refusing the increase? Is there a downside to accepting it? Should I use it as leverage to request a lower interest rate?

I am also concerned in general about the fast-and-loose way banks can change credit agreements, and in particular, Bank of America, which also made changes in the credit agreement on my account with them in the last few months. I'm sure you've gotten this question often, but one more time--what can consumers do to protect themselves against the lack of regulation, aside from not holding credit at all? The looseness is reminiscent of the airline industry where you might book a flight, but they are under no obligation to get you there. Mary Rose, Montpelier, VT

Answer: Continue to pay down your debt. Ignore the increase in your credit limit. You don't want to carry debt on your credit card. Period. If you use a credit card for convenience--which is the reason to have one and use it--pay off your bill in full every month, as soon as the tab comes in. This way, there's nothing the credit card companies can do to you. You have a high credit score. And a pristine balance sheet.

To your second point, many people are getting a harsh lesson in how the credit card industry stacks the deck in its own favor. Here's one of my pet peeves. You probably have a "fixed" rate credit card. Now, to you and me a fixed rate means it can't be changed, just like a 30-year fixed rate mortgage. Problem is, that's not what the credit card companies mean by "fixed" rate. They can change their "fixed" rate with as little as 15 days notice, depending on the state or the credit card's contract terms.

Here's even worse behavior: "Universal default.' A number of issuers impose what's called a "universal" default clause hidden in the fine print of a credit card agreement. If you're late on any payment to any creditor, be it the electric company or your mortgage, the rate on your card could automatically jump--even if you are current with your payments on the card.

I could go on with abuses. The Federal Reserve has approved new rules that ban or clean up a number of these practices. Problem is, the rules don't go into effect until 2010. I don't understand why. It looks like the new Congress doesn't, either. There's a chance that new legislation will accelerate the timetable.

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