Is there a connection between the problems of the United States Postal Service and the insolvency of the giant bailout banks?

Consider this: As recently as three years ago, the banks sent out over 8 billion solicitations for new credit cards each year. That was big money for the USPS. This year, however, solicitations will drop to around 1.5 billion, according to The Financial Times of London.

Clark believes that if you trace the deficit of the USPS, it is closely related to the fact that banks aren't begging for customers anymore via the mail!

Meanwhile, the American people are now politely declining any offers when banks do still try to hand out credit like candy. New numbers from the Federal Reserve show that consumers reduced the amount of debt they're carrying for 10 of the last 12 months.

It's as if we're finally getting it; reducing debt can lead to prosperity in the long run on an individual and national level. And it also reduces anxiety in your life. Too many Americans still live in fear of the mailbox and the telephone because they're hounded by creditors.

Don't be duped by the numerous TV ads with promises to reduce your debt down to just pennies on the dollar -- if you pay them several thousand dollars upfront! Their strategy is to get you to stop paying your bills, which may or may not scare your creditor(s) into negotiation. But it will certainly trash your credit in the process.

Remember, you can always get free or low-cost credit counseling through a local affiliate of the National Foundation for Credit Counseling.

The slashing of credit card limits has been a hot topic here on the show. Recent news reports suggested that many travelers were caught unaware while on the road and had their credit cards shut down without any advance warning. This reportedly affected certain Citibank MasterCard accounts co-branded with select retailers.

According to FICO, some 70 percent of those who had their cards shut down had good credit standing. The San Francisco Chronicle reports that having one of your cards closed can result in a drop of more than 50 points in your credit score.

That's a very meaningful drop that can be the difference between getting credit and not getting it -- and the rate at which it is offered to you.

So what can you do to protect yourself and your score? Clark has been advising people that still have good credit to go out and get more lines of credit.

The cautious path here is to add another two major cards to your credit portfolio. One should be from a credit union, if possible. And be sure to use your "back of wallets" -- those cards you hardly ever use -- twice a year to keep them active in your credit mix.

Bank of America is experimenting with levying annual fees on previously fee-free credit cards among approximately one percent of its customers.

One staffer on our team got a letter stating her annual fee would be $59. Other reports in the media suggest people are being told they'll face fees at either $29 or $49.

"We're testing this to see what the feedback is," a BOA spokesperson told the Associated Press. "In terms of any plans going forward, we haven't made any decisions." Basically they're testing the waters to see if people get hot under the collar.

So what should you do? Pick up the phone and tell them to stop clowning around. They may be instructed to give you the cold shoulder. We don't yet know how it will play out.

This is another example of why it's so important -- even if you're not a fan of credit -- to have three or four different cards from three or four different issuers. Remember, your "safe harbor" card should probably be from a community bank or credit union.

The reality is that if BOA gets away with this, then other dominant players in the industry like Chase, Citi, Capital One and American Express will immediately roll out similar fees.

You have to stand up to BOA; maybe the best way is to fire them.

MONEY-SAVING MOMENT: Wells Fargo is planning to raise interest rates on credit card customers across the board by November 30. They're rushing through an increase before a new federal ban on raising rates on existing balances goes into effect December 1.

So what does this mean to you?

Well, the giant monster mega-bank was a beneficiary of bailout money and your reward is that they boost your interest rate?! Your assignment is to reduce the amount of money you owe on credit cards. Go join a credit union and get one of their credit cards to do a balance transfer if you must. At least the credit unions are not pulling all these gimmicks like Wells Fargo.

And we have one more announcement for Wells Fargo customers. The San Francisco Chronicle reports the bank is doing blanket reductions in home-equity lines of credit (HELOCs) without doing individual property assessments.

(Editor's note: Wells Fargo gave us the following statement: "The fact is we conduct case-by-case reviews based on a variety of possible factors such as credit scores, debt levels, payment history, property value changes, etc. to determine if a customer’s home equity line of credit limit is in line with their financial condition. We also encourage our customers to call us if they believe we made our decision on incorrect or incomplete information.")

This is reportedly happening to 3.6 million people.

(Editor's note: Wells Fargo maintains the following: "We serve a total of 2.6 million home equity households across the country. And the majority of our customers have not had their lines reduced or restricted.")

If you are in midst of using your Wells Fargo HELOC, Clark advises you to draw it down right away and deposit it at another financial institution so they can't automatically claw it back from your account.

Bank of America is garnering laurels from Clark for a new credit card that comes with one simple page of terms and conditions in plain English. Who says the consumer champ never has a kind word for the giant monster mega-bank?!

The BankAmericard Basic Visa card also includes the following features below.

(Editor's note: Clark is presenting these for your information only. He is not implying that these terms are necessarily favorable. He is, however, excited by the one-page disclosure that accompanies this card.)

• The interest rate is the same for all transactions, including purchases and cash advances.
• It comes with one interest rate -- set at U.S. Prime plus a margin of 14 percent -- that never changes for the life of the account. Unless, of course, the Prime Rate changes.
• No over-the-limit fee.
• One flat fee of $39 for late payments.

Looks like BOA has finally heard how how feed up people have become with bank gotchas, mice type and lawyer doublespeak in their contracts.

It should not have required the collective anger of a nation -- which gave rise to the Credit Card Holders Bill of Rights -- to get to the point where a giant bank finally makes the terms and conditions on a credit card understandable. But Clark's glad we got here all the same.

The Washington Post reports that credit card lenders are now agreeing to lower outstanding balances, interest rates or even both in some cases.

Chase has admitted to modifications for 600,000 customers. Bank of America, meanwhile, is doing modifications for 1.2 million card holder accounts, according to the article.

If you are in a pickle, call your credit card company and try to obtain a modification. It is happening for people out there. Be organized and be realistic about what you can afford to pay when you talk to them. And don't be afraid to play hardball by ignoring their first offer and holding out for a better deal.

Know that not all credit card lenders are not doing modifications in the same manner. Some require you to be delinquent. Others will only work with you if you're current on your account.

Why are the banks that control credit cards even doing these modifications in the first place? Well, they're scared of people going bankrupt, in which case they would get nothing. The charge-off rate in July was 10.5 percent for credit cards. Those are big money losses for the banks.

Keep in mind the tax implications of a modification. You won't incur any tax penalty if you just get your interest rate reduced. But if the bank reduces the outstanding balance, you will get a tax bill for the money that's written off.

Clark knows there are people listening to him who are incensed by what he's saying. But these kinds of modifications have always been done in commercial lending under the name of "workouts." They're not unprecedented, they're not evil and they're not immoral. This is how business operates.

Debit cards are something that Clark has worried about for years. Years ago, the powerful banking lobby got one set of rules for credit cards long before the first debit cards came on the scene. That effectively made debit cards exempt from many of the protections afforded to credit cards.

Banks will approve transactions using a debit card when they know you have no money. They want to generate overdraft fees, which are a massive profit center.

The New York Times reports that banks now for the first time make more money from debit overdraft fees than from all penalty fees combined on all credit cards in the United States!

Bank of America was one proud pioneer of a computer program that automatically juggles your daily transactions to generate the most overdraft fees possible. Now three-quarters of all the giant banks approve overdrafts in a similar way. According to the FDIC, giant banks are getting an effective interest rates of 3,520 percent with these overdraft fees!

Meanwhile, Wells Fargo has a system where branch managers have their pay reduced for making too many concessions to customers complaining about overdrafts on debit cards, according to the same New York Times report.

Of course, let's not overlook the personal responsibility issue here. If you don't overdraw your account, you don't get ripped off. So keep close tabs on your money! If you don't want to keep a running tally, then go to a cash-only lifestyle.

As previously reported, Bank of America will begin allowing you to opt out of their overdraft trap, but you've got to specifically request it.

Debt-settlement firms promise they can negotiate your credit card debt down to just pennies on the dollar. But are they true to their word?

Too often that promise is an illusion. You usually pay an upfront fee to the debt-settlement firm, plus a monthly retainer. Their strategy is to get you to stop paying on your bills. They typically have you take the money you would have paid on monthly minimums and stash it in a savings account.

The basic idea is to make the credit card companies so desperate that they'll settle with you. The reality, however, is that you just wind up damaging your credit.

Did you know that you can negotiate down your debt by yourself? Begin by figuring out what you owe and what you can afford to pay. Then call up your various creditors and say, "My total debt is X number of dollars and I can afford to pay you X amount every month."

Set a condition that all of your creditors must agree to your terms in writing or no one gets anything at all. And don't give them access to your checking account! You'll want to pay them directly to safeguard your funds.

It's important to know that this approach will foul up your credit and you'll get a tax bill from the IRS for each settlement. If you owe $10,000 to one creditor and they take $2,000, then the $8,000 that's written off is considered taxable income for you.

The power you have lies in the fact that credit card companies are scared you'll go bankrupt and then they get zero. More than a million people are expected to file bankruptcy in 2009. That means creditors that wouldn't deal with you before now probably will.

Finally, there is another option. You can use NFCC.org to pay off your debt over time in a negotiated settlement. Those who are particularly burdened may qualify for a hardship debt-management plan (DMP) through the above link.

RIP-OFF ALERT: Entrepreneurs are being cautioned to avoid signing up for or using small business credit cards. These types of cards will lock you into extra liability in spite of the Credit Card Holder Bill of Rights that goes into effect February 2010.

The initial liability comes because the small business is the signatory and has responsibility in the event of default. Yet there's a second level of liability to the individual that's specific to small business cards. The lender can do what's called "piercing the corporate veil." In plain English, that means if your business can't pay the bill, the bank comes after you.

The Credit Card Holder Bill of Rights does not offer any protections on this specific issue for entrepreneurs and small business owners.

You can expect to see a flurry of offers trying to lock you into a small business card instead of a personal card over the next several months. But you want the personal card instead.

Remember, you should be using a personal card for business expenses and simply paying the bill from your business account.

The Wall Street Journal reports that Chase is launching no less than four new small business cards to ensnare entrepreneurs. They'll tell you that you're being offered these cards because of your personal success and business acumen. But don't be fooled. Accept the compliment and shred the offer.

One of the great provisions of the Credit Card Holders Bill of Rights is that it will prevent interest rate hikes on existing balances when it becomes fully implemented by February 2010.

But the banks have found a loophole that you need to know about.

Be on the lookout for a notification about your credit card being switched from a fixed rate to a variable rate. Variable rate cards typically put the interest rate at the prime rate plus additional points.

The prime rate is low right now, which might give you a false sense of security. But as the economy recovers, it will likely rise -- even on your existing balances. And this is totally legal!

Estimates suggest that somewhere around three-fourths of all cards will become variable rate cards by February. People who run balances will most definitely be targeted.

But you don't have to take it. You can reject the notice of the change by certified mail. That will ensure there's no question that you properly notified your credit card issuer.

And if you're not running a balance and always pay in full, who cares what they do with the interest rate? The interest rate becomes irrelevant to you.

Finally, beware that some banks are now charging a monthly inactivity fee on cards that haven't been used for 12 months. That makes Clark's longstanding advice about using your "back of wallet" cards at least twice a year more important now than ever.

Why do we get in over our heads with credit cards? The likeliest explanation is that we kid ourselves. When we use a card, we expect that we'll pay it off when the bill comes.

But most Americans run balances on cards. What's the interest rate on your credit card(s)? JD Power reports that 53% of us can't answer that question.

Clark sees that glass as half empty because when you are paying interest for a debt, you should know what that interest rate is. A high interest rate eats at your future. Remember, most of your standard monthly payment goes to interest, not principal.

The credit card issuers want you hooked on debt forever. Nobody ever got rich paying interest to Visa and MasterCard issuers.

If you are one of the Americans who still has good credit, why not shop around for a better deal on credit cards? Clark wants you to look at your local credit union first. They won't have flashy offers or enticing teasers; they'll just give you a straight deal.

Quality varies dramatically among the big credit card issuers. JD Powers' 2009 Credit Card Satisfaction Study reports that American Express and Discover get higher scores than competitors. A lesser known issuer called National City also gets a decent score.

Among the big issuers, the worst scores went to Capital One and Bank of America. Both rank significantly below average.

But the absolute lowest scores went to two small issuers who target those with poor credit: First Premier Bank and Credit One Bank. General Electric, another large issuer of private label cards, also got very poor marks.

Again, if you have good credit, Clark wants you to get out there and shop the market. Look at your credit union first, then look at American Express and Discover.

The numbers of people going bankrupt in 2009 will likely be the second-highest total ever. With the recession and unemployment, nearly 130,000 families filed for bankruptcy just last month.

Very often on Clark Stinks, we'll get posters who express that the consumer champ shouldn't have any kind word to say about people who file for bankruptcy. Sure, some people contemplate going into bankruptcy like they're ordering a pizza. But for most it is a devastating life decision.

What's at the root of the bankruptcy trend? The easy answer is that it's a side-effect of the recession and unemployment. But so many who are facing a problem are doing so because they went into the recession with a large amount of debt at the time that they lost their job or had hours cut back.

Barron's reports that the debt level of the average American household stayed steady at 60% of personal income for decades, all the way through 1985. But today, Americans carry a debt-to-income ratio of 130%.

Slicing the same data another way, Barron's estimates that Americans used to carry debt equal to 20% of the nation's output of goods and services. Today, that figure is 100% -- five times the level of debt relative to the size of the economy.

Interestingly, the amount of monthly spending used to service debt is not up dramatically because of lower interest rates. Even so, it's still a 40% larger monthly "carry" (that is, what it takes just to service the debt) than a few short years ago.

The tie-in between people going bankrupt and the debt levels that exist in their lives is so concrete.

Clark despises debt because it puts you in a weakened position. Of course, some debt is the result of people getting hit with catastrophic illness or divorce. Mostly, however, it sneaks up on you with a little bit here and a little bit there to create a huge problem.

Let's face it, life is messy and you need financial breathing room. Think about that the next time you buy something you don't have the cash for. The consequences can be ugly.

A recent FICO study shows that an estimated 24 million Americans with no change in income and no late pays on their accounts had their credit lines reduced between October 2008 and April 2009.

This can be a real double-whammy. If you're traveling, you're inconvenienced because your card may be denied for a hotel or car rental. And then, of course, the credit line reduction can reduce your overall credit score. And it's all because of an arbitrary decision made by some giant monster mega-bank!

The FICO study also shows that of these 24 million people, 50% of them had very high credit scores of 760 or greater. So the banks, in a rush to reduce their own level of risk, went after the wrong people!

Remember, your available credit use accounts for 30% of your total credit score.

If, for example, you have a line of $20,000 and owe $5,000, then you are using 25% of your available credit, which is perfectly acceptable. But if your card is cut to $6,000, suddenly you're using 83% of your available credit, which is a no-no.

According to FICO research, people using 70% or more of their available credit are up to 50 times more likely to default.

Here's what you need to know: If you're hit with a sudden credit line cut, go look for another card if your credit is still good enough. See several popular cash-back options.

And if you only have a single card or 2 cards, be sure to use these "back of the wallets" every 6 months to keep them active in your credit mix.

Several provisions of the new credit card rules begin going into effect later this week, according to The Washington Post.

First, banks will now be required to give you 45 days of notice when changing the terms and conditions of your card. The 15-day rule is history.

The great thing is this gives you the time to make a choice. You will have the option to reject proposed changes in terms -- usually an interest rate hike -- and pay off your outstanding balance under its original terms. Of course, doing so revokes your future charging privileges.

Second, banks will be required to give you 21 days to pay your bill from the date it is mailed. No more bills showing up just before they're due -- even though you were previously supposed to be given at least 14 days.

Additional consumer protections will go into effect next year. But nothing protects you like not owing on a credit card. When you owe, you're at the mercy of the giant monster mega-banks.

The goal you need work toward is being credit card debt free.

The theft of 130 million credit and debit card numbers by 28-year-old Albert Gonzalez of Miami has gotten so much press.

But Clark wants to take a contrarian spin on what's being called the largest identity theft of all time and explain why you shouldn't really be concerned!

Gonzalez and two unidentified Russians compromised the accounts of retailers like 7-Eleven and supermarket chain Hannaford Brothers, along with back-office merchant processors like Heartland Payment Systems.

Yet this is not a big deal for the average credit card holder. If you find fraudulent charges on your statement, just dispute those charges. The bank will already know about the security breach and just issue you a new card with a new number and you're done.

Debit card holders who may have been compromised will encounter more hassle. There are no ironclad protections for debit cards as there are for credit cards. Instead of the typical 60 days you have to dispute a credit card charge, you have 2 days to report fraudulent activity with a debit card. After that, it's your responsibility.

The real problem is true identity theft, where someone pretends to be you and opens new accounts in your name. That could easily be rectified if the banks used smart chip technology in cards. But they know it's cheaper to deal with cases of fraud on an individual basis than to overhaul the entire system.

Too bad.

The nation's biggest credit card issuers have new data management policies in place that directly affect your ability to retain lines of credit.

Up to now, it's been very common for the banks that issue most of the credit cards in our country to monitor your credit reports and score on a monthly basis. They were using that info as a gauge to determine if they should reduce your credit line, cut it altogether or just raise your interest rate.

Now, however, they may be analyzing other factors. The banks often have other relationships with credit card customers -- through checking accounts, savings accounts, mortgages or car loans -- so they're judging the entire relationship to assess what level of credit risk you represent.

So, for example, constantly running a low balance in your checking account or occasionally overdrawing it may be warning signs to the banks that they need to cut your line of credit.

Of course, not everybody is getting cut these days. Select people are still being sought for their business. In fact, executive producer Christa's friend recently received an ultra-fancy invitation for the Visa Black Card.

This card is supposedly limited to 1% of U.S. residents. It came with a vague description about a fantastic rewards program that wasn't clearly defined. And the card itself is "guaranteed to get you noticed" because it's made out of carbon!

But at what price? The annual APR is 13.24% and the annual fee is $495!

There are wonderful deals on credit cards for those who pay their balances in full every month. In industry lingo, any one who pays in full is referred to as a "deadbeat." Isn't that interesting?!

SmartMoney magazine has revealed its picks for the best cards out in the marketplace. Among the top choices:

• American Express Blue
• Schwab Visa (2% cash-back!)
• Fidelity Retirement Rewards AmEx (2% cash-back to IRA or 529!)

An honorable mention goes to the TrueEarning Card from Costco and American Express. And which cards stunk it up, according to SmartMoney? The Capital One No Hassle card and the Discover Miles card.

Debt Relief USA -- a prominent debt-settlement firm that Clark criticized in the past -- has filed for bankruptcy, according to The Dallas Morning News.

The debt-settlement firms in general will promise to reduce your credit card debt by up to 75% -- if you pay them several thousand dollars upfront. Their strategy is to get you to stop paying your bills! Once you hit 6 months of non-payment, your debt is written off the lender's books; they know they're not likely to ever see their money.

So the debt-settlement firms want to try to scare the lender into negotiation.

But don't waste your money paying upfront fees, Clark says. You can do the negotiation yourself once you hit 6 months of delinquency. Those in the most trouble have the most negotiating power.

You may recall that American Express was sending out letters offering to pay you if you paid off your balance and closed your account. Other lenders took a cue from the program's success and started calling customers with similar offers. People were getting friendly calls from their lenders looking to settle for 60 cents on the dollar or what have you!

So call up your credit card lender, tell them your story and try to work out a deal on your own. There's no need to pay any outfit on TV to do it for you.

The state of Texas is going after debt-settlement outfits that claim they can negotiate your debt down to just pennies on the dollar or wipe it out altogether.

The firms in question include BC Credit Solution, FH Financial Service, Four Peaks Financial Services and DebtORSolution.

"The defendants unlawfully misrepresented and overstated the nature of their services," according to a press release from the Texas attorney general's office.

Most debt-settlement outfits ask their customers for an upfront fee, plus a monthly retainer. Their strategy is to get you to stop paying on your bills; the basic idea is to make the credit card companies so desperate that they'll settle with you. The reality, however, is that you wind up damaging your credit.

The debt-settlement outfits have supposed money-back guarantees, but this is really just a one-way street with you giving them money -- not the other way around.

Is there a kernel of truth somewhere in the claims of the debt-settlement companies? Yes, they may be able to do some negotiating on your behalf, but in the meantime your credit will be trashed.

Here's another gotcha: You'll get a 1099 form for any money that a creditor forgives. It's considered "phantom income" by the IRS.

Last month, Clark gave listeners early warning about Advanta. This ailing credit card provider to small business was dealing with an unprecedented amount of debt, and at the time had announced it would shut down all credit lines sometime in June.

But Advanta ran out of money early and shut down 1 million accounts on May 30. People who were traveling on business suddenly couldn't use their credit cards to check into hotels or rent a car.

So now the inevitable question: How can small business find access to funds in a post-Advanta world?

If you're a business with an open line of credit at a bank, draw down that money now before it gets cut off. Be sure to deposit the money at a different bank or credit union.

In most loan agreements, there's a clause that allows the bank to claw back the money owed on a loan when it is suddenly called due. So if the money is sitting on deposit at the issuing bank, they'll just help themselves to your account to get it. You could easily wind up bouncing checks all over town.

(Editor's note: This advice also applies to individual homeowners with a home equity line of credit.)

As a business, you need to have multiple lines of credit. But Clark knows that's easier said than done in today's climate. If your lines of credit being shut off would put you out of business, then you have some homework to do to line up alternate sources of funding.

The level of credit card debt being carried by college students has risen dramatically in the last 5 years, according to a new Sallie Mae study.

For too long, the giant banks handed out credit cards like candy to freshman. In many cases, the schools themselves got kickbacks for every student that signed up.

82% of students now run a balance on high interest cards, according to the latest numbers. That's up about 37% in just 5 years. Even more disturbing, if you go back 5 years you'll see that nearly 70% of students carried no monthly balances. Yet today, only 15% pay in full each month!

The good news here is that the banks won't be allowed to target college students like they have in the past when the new credit card rules go into effect.

Yet it's still incumbent on parents to educate your children about the dangers of credit card debt before they go off to school. If they protest and say you're infringing on their freedom, you should explain that there is no freedom when you owe the credit card companies.

The nation's new credit card rules have caused all kinds of unnecessary overreaction and Clark wants to take a moment to calm some of the hysteria.

There have been "woe is me" articles everywhere speculating wildly about the end of credit as we know it. One headlines even proclaimed, "Credit cards are going back to the '50s, low limits and only for the rich."

Come on, capitalists adjust! The only reason we had these rules in the first place is because things became too unbalanced with "gotchas" hidden in mice type.

The new rules lay down some basic guidelines; they don't mean that banks can't make any money in the credit card market. They simply mean that banks can't continue to retroactively cheat you with low teaser rates, where they get you all charged up and then switch the rate. Nor can they continue the unfair practice of sending around those mailers that advertise a "fixed rate" that isn't really a fixed rate.

But the dire predictions about no credit cards being available in the future are just false. Companies will figure out how to compete for market share under the new rules.

Meanwhile, the idea that banks can impose whatever terms they wish on us is baloney. Credit unions and stock brokerage houses are busting up the banks' stranglehold on the credit card market. We will still have plenty of competition and choice.

So don't fret. It's not like a party has ended. The party is actually just beginning -- the party of more responsible lending and charging is coming.

Meanwhile, "croak and choke" insurance that's intended to protect your family in the event you die with credit card debt is a complete rip, according to The Wall Street Journal.

Their findings suggest that for the price of $5,000 of coverage, you could buy a $250,000 life insurance policy for your heirs. Also, check your statement and make sure you're not being defaulted into a "croak and choke" insurance option, as Clark's mom was!

Sometimes it seems as if nobody cares about small business people and entrepreneurs. Here's yet another example.

Under the new credit card law, small business owners are left completely exposed to all the old policies that individuals are now being protected from.

Small business owners using business credit cards will still be subject to sudden interest rate hikes, retroactive rate increases, shorter billing cycles and more.

And remember, when you apply for a business credit card, you sign for personal liability. That means you're still personally responsible for charges even if your business fails.

So Clark has a very simple workaround for you: Just use a personal credit card for your business expenses. As a business owner using a personal card, you still come under the protection of the new credit card rules.

Need another reason to switch from a business card to a personal credit card? If you lose a personal card, your maximum liability is capped at $50. But with a business card, your liability could potentially be unlimited under the Uniform Commercial Code!

Have you seen ads being run by the debt-settlement outfits on late-night TV? They promise to reduce your credit card debt to just pennies on the dollar without making you file for bankruptcy.

But that promise is an illusion. Here's the scoop: You usually pay an upfront fee to the debt-settlement firm, plus a monthly retainer. Their strategy is to get you to stop paying on your bills. They typically have you take the money you would have paid on monthly minimums and stash it in a savings account.

The basic idea is to make the credit card companies so desperate that they'll settle with you. The reality, however, is that you just wind up damaging your credit.

In fact, complaints about debt-settlement firms have doubled in North Carolina; tripled in Florida; and quadrupled in Oregon, according to The New York Times.

The reason these companies even exist goes back to 2005 when the bankruptcy laws changed in our nation. At that point, the banks stopped being cooperative with affiliates of the National Foundation for Credit Counseling (NFCC). They were cynically trying to force people into a position where they had no choice other than to pay up. The debt-settlement firms then popped up promising they knew how to defeat the banks.

The irony here is that the banks have now agreed to work with the NFCC again. A newly announced debt-management initiative offers reduced interest rates and the possibility to waive your late fees.

The credit card reform act has passed Congress and will now go off to President Obama to be signed into law. Clark calls this a sweeping victory for the American people. (Editor's note: This has since been signed into law and will go into effect at the end of February 2010.) But what exactly does it mean to you? Here are some highlights:

• 45 days notice will be required to raise the interest rate on future purchases.
• Bills must mail to you no later than 21 days before the due date.
• The new daily cutoff for a lender to receive payment via the mail is 5 p.m.
• Payments must be applied to your highest interest rate if you have multiple open accounts.
• It will be illegal for a bank to let a transaction run when they know you'll go over your limit -- unless you give them written permission to do so.
• Teenagers can no longer apply for a credit card unless a parent expressly signs as guarantor on that account. Certain waivers apply for economically independent teens.
• Sellers of debit gift cards must clearly disclose the rip-off fees that are passed on to the user. Such cards will now have a 5-year lifespan.

New rules about credit cards passed today in the Senate by a vote of 90-to-5. No longer will this industry be able to completely control your life if you can't pay your balance in full!

Lenders are expected to be required to give 45 days notice before any changes in their terms and conditions. In addition, you'll now have to be late for more than 60 days before they put you into a penalty rate. And they won't be allowed to raise rates on existing balances that you're currently paying.

There are so many positives here. Of course, the Senate bill still has to be reconciled with the House bill and made into a law that President Obama is expected to sign within a week or so.

One provision that Clark hopes survives would be to allow retailers to offer a discount for paying in cash vs. paying with a credit card.

Right now, there's no financial benefit for consumers who want to pay cash upfront -- even though it's cheaper for retailers because they don't have to pay credit-processing fees. So the consumer champ's fingers are crossed on this one! We spent too long encouraging people to spend themselves into oblivion and this would be a refreshing change.

Meanwhile, President Obama today announced new standards for vehicle emissions. In essence, he's adopted California's standards, which has been regulating emissions for years before the feds ever decided to do so.

The new fuel standards call for the average vehicle to get 35 mpg by 2016. Right now, only 7 cars meet that standard…and they're mostly hybrids. The sole gas engine vehicle that makes the cut is the Smartcar, according to The Washington Post.

Will we be able to meet the 2016 deadline? Clark likens Obama's announcement to what JFK did when he told a dispirited nation that we'd be the first to put a man on the moon.

Finally, the penny-pincher believes the new fuel standards represent smart federal policy from a national defense angle. He's in support of anything we can do to reduce our dependence on foreign oil. Why be held over a barrel by nations that want to harm us?

The National Foundation for Credit Counseling has announced its new Call to Action initiative. This 60-month payment plan aims to help consumers who are struggling with credit card debt and may be facing possible bankruptcy.

Under the Call to Action initiative, the 10 largest credit issuers have agreed to modify the terms and conditions of their repayment policies. That means they may waive late and over-the-limit fees, in addition to reducing interest rates.

In general industry terms, this kind of arrangement is known as a debt management plan (DMP).

The goal here is to increase the chance that you'll pay off your debt instead of bankrupting out of it. But the lenders have not agreed to a reduction of your outstanding balance.

Participating credit card issuers include American Express, Bank of America, Capital One, Chase Card Services, Citi, Discover Financial Services, GE Money, HSBC Card Services, U.S. Bank and Wells Fargo Card Services.

Keep in mind that not everyone will be eligible to participate in Call to Action. Visit NFCC.org or call 800-388-2227 for more details to see if you qualify.

We have a new interest rate hike to share with you that tops anything we've previously heard…and you're not going to believe it!

A caller named Jodie sent us his credit card statement to prove an earlier claim about the terrible treatment he's been getting from his Chase MasterCard.

His 20% interest rate was raised to 64.20%!

Clark had been incredulous before actually seeing it with his own eyes. Take a look below if you're still unconvinced.

Interestingly, the consumer champ did not recommend that Jodie close the account. That would only hurt his credit score.

The whole episode reminds Clark of a recent guest editorial about payday lending that he read in a newspaper.

The author was a college professor who was arguing that if you outlawed payday lending, then you might have criminals stepping into the marketplace void and charging interest rates of hundreds of percents themselves.

The penny-pincher, however, see this as faulty logic. If you legalized murder and someone went out and killed another person, they've still killed someone, right?

It's all a matter of perspective when you get down to it. After all, Jodie's 64% credit card interest rate would be a great rate in the world of payday lending.

Americans have changed their spending habits on a dime. Want proof? Clark has a couple of strong examples to share with you.

First, our credit card usage has greatly declined. For the first time ever, the amount purchased on debit cards exceeds the amount purchased on credit cards.

Our collective debt on credit cards is finally under $1 trillion. In fact, it's now $995.7 billion to be exact, according to a recent Federal Reserve report. That's a very positive move.

Of course, Clark has had a longstanding beef with debit cards because they carry very weak protection for consumers versus credit cards. But if using a debit card means that you're spending only what you have, then he's all for it.

Remember, if you live on less than what you make, you reduce the level of anxiety in your life. Do you really want to be that person with the "I owe, I owe, so off to work I go" bumper sticker for the rest of your days?

In another positive example, Americans who thought that Wal-Mart was beneath them are changing their ways too.

The average Wal-Mart customer has a salary of $30,000. But now, the retailer is seeing a surge of new customers with salaries of $50,000. The urge to save has hit us at all income levels. And as a result, sales at Wal-Mart are up because those with salaries of $50,000 spend 40% more than someone who earns $30,000.

Clark has a double warning for business owners that he needs to share.

First, the proposed Credit Cardholders Bill of Rights would leave business credit cards unprotected under its provisions.

You'd still be subjected to sudden interest rate hikes, retroactive rate increases, shorter billing cycles and more on your business card -- all the things that normal consumers may soon not have to deal with any longer.

In addition, when you apply for a business credit card, you sign for personal liability. That means you're still personally responsible for charges even if your business fails.

However, there's a very simple workaround you should know about. Just use a personal credit card for your business expenses. As a business owner using a personal card, you would still come under the protection of the potential law.

One further caveat and another reason to switch to a personal credit card: If you lose a personal card, your maximum liability is capped at $50. But with a business card, your liability could potentially be unlimited under the Uniform Commercial Code!

Basically, you're carrying dynamite in your wallet or purse if you carry business credit cards.

Meanwhile, here's the second part of Clark's double warning: BusinessWeek reports that a number of small businesses were bankrupted recently because their merchant processors for credit card transactions kept "hold back" money up to 100%.

"Hold back" money is money the processors keep based on their guesstimate of how likely you are to have charge-backs. Holding back 100% would mean an instant stop of cash flow.

So how can business owners protect themselves from this danger? You should always be under contract with more than one processor. If one tries to stick it to you, you can go with the other one to run your transactions.

And as always, with banks shutting down their lines of credit to small business, Clark wants to repeat another of his recent alerts: If your business relies on a line of credit to survive, draw it down now before the bank cuts it off. Then be sure to deposit it elsewhere at another institution so the original bank can't automatically seize the funds.

President Obama has invited the credit card companies to his office for a strict reprimand about their behavior. Following a perp walk on the White House lawn, the representatives of the giant monster mega-banks that control credit card portfolios all refused to speak to the media.

No surprise there. How can you defend the indefensible?

The big banks lured people in with easy, cheap credit only to get them addicted. They acted no different than a drug dealer.

But changes are coming. The way credit works in the United States will change dramatically. During the last 20 years, you only needed a pulse to get a card. Well, that's over. Say goodbye to the billions upon billions of solicitations the banks routinely mailed out.

You already know that there's a ban on retroactive rate increases going into effect next year.

Clark anticipates other changes will include a tightening of restrictions on the junk fees that go along with credit cards, plus a reining in of teaser intro rates. In addition, the rewards for high-volume chargers are likely to scale back over time.

Will you still be able to get credit? Yes. The most noticeable change is that cards will carry higher interest rates upfront.

But we are moving into an era where using credit will hurt. The time of buying something you can't afford as a lifestyle splurge is coming to an end.

The security used by the nation's banks is so pitifully antiquated that even the criminals are complaining that crime does not pay any longer!

In a true case of supply and demand, there are so many stolen credit card numbers floating around that each one is now worth less than 60 cents!

The problem is that we still use 45-year old magnetic strip technology on the back of our credit cards. Meanwhile, much of the rest of the world is using smart chip technology. Smart chips require you to enter an additional secret code -- so you're protected even if someone steals your credit card number.

According to PC Magazine, the big thing now is for criminals to steal PINs from debit cards. That allows them to empty your checking account, and then you get stuck with overdraft fees.

Where are the breaches happening? About a third of the time, it takes place at a retailer. Another third of time, it takes place from within the banking sector. And the rest of the time, it occurs at a variety of places like hotels and restaurants.

The main culprits are crooked employees doing inside jobs.

We get calls on the show where this happens and the banks typically treat you like you're guilty until proven innocent. The banks assume it's your fault and you're behind the ruse.

So how can you protect yourself? One solution is to turn off the 'debit' function on your debit card. See how one listener got his credit union to do just that.

If that doesn't appeal to you, it's then your responsibility to check your account each and every day of the year to nip any theft in the bud.

Remember, there's precious little protection under the law for you otherwise. There's no requirement for the bank to return your money in a timely fashion, nor for them to remove any overdraft fees you may incur.

The credit card portfolios in our country are controlled overwhelmingly by a handful of big banks: Bank of America, JP Morgan Chase, Wells Fargo and Citibank.

These also happen to be the banks that received bailout funds to stay in business. They owe their survival to we the taxpayers. And they're also the same clowns who are trying to retroactively gouge customers on existing balances, a practice which will be illegal come summer 2010.

President Obama is summoning the leaders of the banks for a tongue-lashing later this week. Of course, they laid themselves open for scrutiny because they took our money!

The consumer champ can't wait for the next photo-op of the perp walk when the President talks to the banks. He can just see them lining up now in their dark navy suits, with their initials monogrammed on their sleeves because they're too dumb to remember them and their red power ties as they drive a stake through the heart of the American economy day-by-day.

Yes, the banking sector required a bailout. But individual banks should have collapsed and been taken over through the FDIC system.

Meanwhile, we should never permit them to become so large again that they put the sovereign wealth of our nation at risk. The head of the Federal Reserve Bank of Atlanta recently spoke out against busting up the big banks. Clark would love to debate him on this point anytime, anywhere.

Isn't it ironic that we've become a beggar nation pleading with communist China to keep our economy afloat, all because of the actions of our giant monster mega-banks?

CLARKONOMICS/RIP-OFF ALERT: New data shows that defaults on credit cards have skyrocketed. Just under 9% of balances have been charged off as uncollectable debt as of February, according to Reuters. That's up from 5% last year.

Are you facing a credit card balance that you can't seem to handle? Is it being compounded by a job loss?

You may need to go on food stamps. Food stamps are a necessary social net, unlike the bulk of the $787 billion stimulus package…but that's a discussion for a political talk show!

You'll also need to triage your finances. Paying your car note may be a higher priority than your housing debt. After all, most Americans need a car to go to job interviews. Credit card debt should be the lowest item on your totem pole of financial obligations.

Moody's is predicting the rate of credit-card default will rise from the current 9% to 10.5% in the next year. And therein is the rip-off. If you carry a balance on your card, you'll be punished with higher interest rates to indirectly pay for those who default.

You've probably heard the calls on the show about this. The increases on interest rates tend to be anywhere from 10 to 25 points -- even if you are a good payer. In bankspeak, this is known as the "implementation of yield-enhancing actions."

And there is no limit on how high they can raise your interest rate if you carry a balance. The highest we've heard of is 40%, but 30% is very common too.

So it's more important than ever to trim your budget and throw every last dollar you can at outstanding credit card debt.

CLARKONOMICS: Americans reduced their credit card debt by 10% during the month of February, according to new figures.

The Federal Reserve has been tracking typical credit card balances for 41 years. During that time, the reduction seen in February has only happened once before in the past 4 decades!

People are tired of being held over a barrel by the big banks that operate credit cards. If you owe money, you're putting yourself in danger of some bank jacking up your interest rate overnight.

We're getting calls from people who have had their rate jump from 8% to 30% while they were making timely payments!

Meanwhile, a new piece of legislation going into place next summer will ban such retroactive increases on existing balances you carry. So the cynical "banksters" have responded to that threat by trying to rush in the increases right now.

Another danger people are facing is that their credit line may be reduced or closed in the blink of an eye. That's why Clark recommends that you open additional lines of credit as a form of insurance against possible closures of your existing cards.

When you consider that 30% of a credit score is determined by the amount of available credit that you're using, you can see the importance of the consumer champ's advice. A low credit score could ultimately cost you a job or bring higher insurance rates.

So keep paying down your debt, but also be strategic about how you handle credit. You don't want to get in a situation where you're put in a penalty box even though you consistently make timely payments.

Last month, a number of callers were reporting that Chase was trying to raise the interest rate on their fixed-rate cards.

The bank was telling customers that in order to keep their low interest rate for life, they'd have to pay an annual fee of $120. They were also charging interest on this $120 fee! That's outrageous on both counts, considering that Chase had entered into a contract with customers when they locked in the original low fixed rate for life.

Imagine being a rep at Chase customer no service and having to tell customers with a straight face that this is how it's going to be.

Meanwhile, as the Office of the Comptroller of the Currency and the Federal Reserve were both sleeping, New York State Attorney General Andrew Cuomo was on the ball. Cuomo went after Chase because he believed their actions were illegal.

Now Chase has agreed to refund all the money they charged customers on this rip-off. Clark would like to hear Chase CEO Jamie Dimon say, "We messed up and we are sorry." But that's not in the DNA of a giant monster mega-bank.

Remember, this is one of the banks lined up at the trough of the federal bailout guzzling our tax dollars.

Furthermore, the consumer champ believes Cuomo should continue with criminal charges. Yet there's no need for jail time or home detainment. Clark has another more fitting punishment in mind: Dimon should be sentenced to 30 days on the phone in customer no service so he can talk to the people he's ripped off every day and face them!

There's a new gotcha involving those kinds of credit cards where you try to rack up points for free travel or free merchandise. These types of "affinity cards" are tied in with a particular retailer or airline or other business.

However, the risk is that with so many companies on the ropes, these points may become fool's gold should that company go bust.

The only reward you should be getting is cold hard cash. By all means, if you already have a lot of points, you should use them up as quickly as possible. But be sure to then make the switch a cash-back reward card.

A recent report in USA Today suggested that we're now in the midst of a third major breach of credit card numbers that could affect both Visa and MasterCard holders.

This breach again involves the back-office operations where credit card numbers are processed on behalf of merchants. Surprisingly, these operations typically use the most sophisticated levels of encryption available for our obsolete magnetic strip card system.

The direct danger to you is if the crooks behind this breach make a duplicate of your credit card and start charging it up. Of course, you can always dispute the charge with your credit card company. Ultimately, your liability is zero.

However, if they have your debit card number, you have very few rights under the law. You can have checks bouncing all over the place if they empty out your account. And your bank is not even required to cover you for overdrafts under this circumstance!

Neither Visa nor MasterCard are talking, so we don't know exactly how many people may be affected either way.

Unfortunately, we will continue to be vulnerable until we get modern "smart chip" security standards for our credit cards like they have in Europe. American Express tried to lead the charge on this stateside, but the banks pushed back. Sounds like the heavy hand of government may have to intervene with some regulations on the industry before anything gets better.

So if you use a debit card, here's your assignment: You've got to monitor your account everyday online. This is the only way you can limit the amount of harm in a potential breach.

The financial meltdown of 2008-2009 has surely had some bizarre moments. But there's one thing that has really made Americans sit up and take notice of the collective freakshow.

American Express is now sending out targeted letters to select customers -- they're not divulging how many customers -- offering them money to pay off their balance and turn in their cards. In fact, people can earn $300 for firing AmEx!

What a reversal that is. This is an industry that used to send out some 7 billion solicitations a year like they were candy -- all in an effort to get you hooked on plastic. The low point for Clark was being on a plane when the flight attendants ran a contest to see who had the most credit cards in their name. The winner had 13 cards!

AmEx must be getting very nervous about the possibility of default among people who are only paying minimums or a little more each month. Their offer stipulates that you have to pay off your entire balance in a 60-day period to get the $300. And they don't care how you pay it off; it can even be balance transferred.

The company just wants to reduce its exposure on accounts that computer modeling shows could default. This really speaks to the dire difficulties all the big credit card issuers are facing.

How are you doing with your credit? Are you wheezing? The No. 1 early warning sign of trouble is when you can't pay your balance in full each month when the bill comes.

Remember, plastic is not one of the four food groups. In other words, credit cards are not necessary for you to live. If you have a problem, you may need to remove plastic from your diet entirely.

Citibank, Bank of America, JP Morgan Chase and US Bancorp are feeing the unemployed to death, according to a report from the Associated Press.

Talk about kicking people when they're down! Here's the scoop: Some 30 state labor departments are essentially outsourcing the handling of unemployment compensation to the banks. As part of the deal, the banks are issuing unemployment checks via piece-of-trash plastic debit cards. You get fees each time you use them -- even if you just check the balance to see what you have left!

This disgusting and outrageous behavior really highlights the ethical bankruptcy of the banks. And to the state employees who green-lighted this arrangement, is it really a good idea to rip the citizenry?

Bank of America spokeswoman Brittany Sheehan says the bank believes the fee schedule associated with the unemployment debit cards is "reasonable and consistent with similar programs." Yeah, right. If you have a choice between the plastic and the check…get the check!

And just when you thought the giant monster mega-banks weren't capable of another outrage!

There are tens of millions of Americans who are among the "great unbanked" in our country. These hard-working Americans can't take their paycheck and direct deposit it into a bank because they've been banned from having an account -- usually for 5 years -- after running afoul of the ChexSystem.

So what are their options? Well, they can go to a check casher and pay big fees to cash their payroll check -- plus more fees if they want to pay a bill or get a money order.

Wal-Mart has a different solution in mind…and it's one that Clark calls the "best deal in America -- without question."

At Wal-Mart, you can take your paycheck and deposit it onto a stored-value card (aka pre-paid card) for a monthly fee of just $3. That's vastly cheaper than going to a check casher. And you can use it anywhere that the Visa card logo is shown -- not just at Wal-Mart.

Wal-Mart's stored-value card also removes the threat of personal hazard to the holder. Thugs are known to prey on those people who go to check cashers. They hide out nearby and jump them for their wad of cash when no one is looking.

Any way you look at it, the Wal-Mart option is a winner for those who don't have bank accounts.

There is great tumult in the credit card market with the rate of defaults climbing to what could be historic highs. As a result, banks are punishing those of us who pay to make up for those of us who are non-payers.

Take JP Morgan Chase as a case in point. Chase has been a recipient of billions of dollars of our bailout money. So how have they turned around and thanked us? By raising rates on fixed-rate cards!

Clark's been hearing from callers who may have had a fixed interest rate at 3.99%, for example, after doing a balance transfer. But Chase is now sending out notifications that in order to keep your fixed rate, you'll now have to pay a $120 annual fee. We're also hearing that payments are jumping from 2% of the balance to 5% of the balance.

This is unsavory and unethical, according to Clark, but it is completely legal under current regulations.

Chase is trying to force you into less favorable terms to make a buck. So what should you do? The consumer champ recommends closing your account, which would allow you to pay off the balance under the old interest rate you and the bank originally agreed upon.

Reward cards are beginning to dole out less perks because the giant monster mega banks that issue them are financially ailing.

This trend especially affects the 1 in every 3 of you who pay your balance in full every month. Historically, banks have had a love/hate relationship with what they call "deadbeats" -- those of us who do pay in full each month.

On one hand, they lost money by making an interest-free loan to you each month. But they were making up for it with the merchant fees they charge to the retailers you might patronize.

Be sure to read those mice-type notifications you get in the mail about possible changes to your card's rewards program. You may suddenly need to rack up more points for that free airline mileage, cash-back payment, etc.

Of course, there are several institutions out there not cutting back on the rewards. See Clark's recent discussion of Charles Schwab and Fidelity Investment and their great reward cards offers for details.

Up to 100 million of us could have sensitive financial info exposed because of a new security breach after a back-office credit card processing operation was hit by hackers.

Heartland Payment Systems was hit despite having modern encryption software. The crooks who breached their system got credit card numbers, expiration dates and internal bank codes for Visa and MasterCard users.

While the exact number of compromised accounts is not yet known, the Heartland breach is expected to surpass the massive TJX breach of 2007.

How can you protect yourself? You've got to thoroughly check your credit card statements and report any suspicious activity.

Beyond that, Clark feels it's unacceptable that we still use '60s-era magnetic strip technology in our credit and debit cards while other nations have gone to smart chip technology. With smart chip technology, even if a crook had your credit card number, they'd still need an additional secret PIN to make any charges.

It's only through sheer corruption that bank regulators haven't required smart chip technology of the banks.

If you discover false transactions on your credit card, you're protected under the law, right? But what about your debit card? There's nothing required in current regulations to forbid your bank from charging you NSF fees if a thief steals your debit card. Your bank is only required to restore funds -- they're not required to waive any bounced check charges. Shame on the banks.

These kinds of things will continue happening until we implement real security. Be sure to vote in Clark's poll about smart chip technology.

There are new rules coming concerning credit cards that are both a win and a loss for consumers.

First, the good news: The rules will ensure that banks can't retroactively raise the rate on existing balances you carry. They can still, however, do so if you stopping paying, as well as on all future purchases. Meanwhile, the banks will also be required to give 45 days of notice -- up from 15 days -- whenever they want to change your terms.

Now, the not-so-good news: These rules won't go into effect until July 2010! As Clark quips, that gives the banks plenty of time to buy off members of Congress and get these rules overturned!

In related news, CNN reports that Citibank is one of the worst offenders when it comes to what they're calling "rate jacking." Rate jacking is where the banks raise your interest rate even if you pay on time -- simply because you run a balance. So pay those balances off!

CLARKONOMICS: Our Consumer Action Center has been getting tons of calls from people complaining about big run-ups in interest rates on their credit cards and their lines of credit being greatly reduced.

In fact, one call came from a listener who had her interest rate raised to 58%! The old high we'd heard was around 40%.

Of course, this only affects you if you run a balance, which is around 70% of Americans. Banks used to love customers who only made minimum payments every month. But now they're getting very nervous after seeing a trend of minimum payers going into default.

So the banks are punishing everybody. Even if your credit is solid and you pay your balance in full each month, there's a strong chance that your limit will be cut. Incidentally, new stats suggest that only 10% of Americans paid their bill in full every single month during a 12-month period.

A top economist named Meredith Whitney predicts that credit limits will be shrunk globally by $2 trillion over the next year and a half. So follow Clark's advice about dormant cards (aka "back of the wallets") so you're not left without any credit cards to use down the road.

Clark's been getting a ton of calls from people complaining that their credit card limits have been greatly reduced or cut off altogether. In fact, the consumer champion recently read a new report that suggests up to $2 trillion in credit lines will be cut off by the end of 2009. The cuts are expected to intensify in the next 2 months.

So what's going on here? JP Morgan Chase, Bank of America and American Express -- the 3 bigs of the credit card business -- account for more than half of all the credit cards out there. Right now, the 3 bigs are getting pinched on their ability to go out and borrow money to lend to you, plus they're terrified about the rising number of defaults.

Basically, that has them looking for any excuse to cut off your line of credit. This can be particularly bad if you're a traveling businessman or woman who needs a credit card to rent hotels or vehicles.

Know this: If you miss a single payment or are late on any card, you may have one or all of your cards shut off or greatly reduced.

So you've got to make a note of the payment due date on every card, and make sure you pay at least the minimum payment. Also, be sure to use your "back of the wallets" at least twice a year to keep them active and avoid having them shut down.

In the midst of all the credit card companies reducing people's limits, Charles Schwab and Fidelity Investments -- the Hatfields and McCoys of the investment world -- have 2 of the best credit card offers available.

Schwab got the ball rolling with a new Visa card that offers 2% cash back for every charge you make. There are no limits or caps; this is the real deal. The money gets deposited into your Schwab One investment account, but you can choose to just spend the cash instead of investing it if you wish.

The offering from Fidelity is slightly different. Their Fidelity Retirement Rewards American Express Card takes your 2% cash back and deposits it directly to your IRA or 529 plan.

The number of calls we're receiving from people who are in trouble with credit cards has skyrocketed. Traditionally, Clark advises people about negotiating one-on-one with a creditor; seeking help from NFCC.org; or dealing with a collection agency.

But we're on the cusp of a new way that consumers may soon be dealing with credit card debt. The banks have petitioned federal regulators for permission to offer an immediate 40% write-off to those facing default. The remaining 60% would then be paid off through a 5-year payment plan.

So why do the banks have to seek federal permission to do this? If they just go ahead and reduce your balance, you are taxed on that as imputed income via a 1099 and you have to pay on that. So they asked for a waiver of that rule. In addition, the minute they charge something off of their books, they have their capital standing reduced.

The banks are likely to get permission to do the 40/60 split experiment with a small segment of 50,000 customers. If it is successful, the banks may roll it out nationwide. It's enlightened self-interest on the part of the banks; after all, getting 60% of a debt is better than getting nada.

Please note: The banks haven't gotten permission for this quite yet, so Clark doesn't have details about applying for this program at this point. But he'll let you know as soon as it happens so you can be first in line.

Clark has some disturbing news to share -- just as the number of bankruptcy filings is likely to hit an all-time high in 2009.

According to The New York Times, banks are buying "trigger lists" from credit bureaus and independent data management firms. These lists compile info about who is in bankruptcy or otherwise in desperate financial shape. Once a bank obtains a trigger list, they target the people on it with horrible come-ons for new lines of credit.

Their "second chance" pitches offer you another shot at rebuilding your credit by opening more of it! One industry insider in the Times article referred to this segment of the market as "creative lending products."

You're typically expected to pay hundreds of dollars to apply for a credit card that may have annual fees of up to $200. Then you're given a credit line that's equal to what they charge you in fees -- so that the risk to the bank is nada. In addition, they charge you massive rates of interest.

Equifax has a proprietary way of culling names for trigger lists called the TargetPoint Predictive Triggers system. Basically, the bureau analyzes data to see a customer's propensity to open new lines of credit within 90 days. The exact formula, however, remains a "secret sauce," according to a spokesperson in the article.

Trigger lists are also common in the world of mortgages. When you apply for a mortgage, your info can be sold so that other marketers can call you and solicit your mortgage business.

This is so far out of line, according to Clark. Here we are in a time when we need to heal both the banking sector and our family budgets, and everybody is trying to slice and dice us to figure out how to take advantage of us. Shame on all involved parties.

Clark wants you to know about this so you can resist the temptation of "second chance" pitches. It's not a lifeline they're offering; it's an anchor around your neck that will make you financially drown.

With the high rates of credit card default, the banks are in a panic trying to close down stale credit card accounts that haven't been used in 24 months. That's a double whammy to you: It reduces your available credit and the length of the history of your credit. Both criteria can really hurt your overall credit score.

So the key is to use all your credit cards twice a year. Simply mark a day on your calendar, make a small purchase of $5 or less and then turn around and pay it right off. This keeps your account active and raises your credit score, plus it helps make it less likely that your account will be closed.

In related news, the banks are also redlining by shutting down accounts based on zip code. This practice is illegal -- though no one seems to be stopping it. The banks must justify for your individual situation why they're closing your line or reducing it.

The bottom-line is this: It's important to have more -- rather than less -- lines of credit right now. Have a backup card if your main one gets shut down.

Clark is getting scattered calls from listeners who are outraged or perplexed by the actions of their credit card issuer. The issuing banks are raising interest rates by 20% or more -- even if the individual has good credit, has never been late or hasn't even had any change in their credit standing. This is happening across income levels, affecting even successful business owners and moderate to wealthy individuals.

Fortune confirms that people have seen their rates skyrocket for no reason. The magazine profiled a man named John who had a card that went from 7% to 26% even though nothing changed with his financial standing. Bank of America, Citibank and Capital One are among the issuers who are jacking up rates in the face of a "continually changing business environment" -- which simply means "we're doing it because we can."

The Federal Reserve says that 37% of issuers have increased rates. And get this, Business Week reports that the dollars at risk with people who may not pay is greater in the credit market than in the mortgage market. As the magazine writes, "The consumer debt bomb is already beginning to spray shrapnel throughout the financial markets."

The problem with banks jacking up the rates is that they're making it tougher for someone who might have been able to pay at 5%, but could never pay at 30%. They're shooting themselves in the foot.

Here's the takeaway: The only smart move is to pay your debt down or pay it off. Don't assume you're a sitting duck if your standing is decent; you can shop around for a lower rate offer.

Meanwhile, a special warning: If you're in debt over your head, be wary of those debt negotiation firms that are all over the Internet and late-night TV. They're through and through rip-off artists, according to Clark. Do not believe these lying fools about their ability to negotiate with your credit card company and reduce your outstanding balance by 50% or more. These con artists get you to pay them money as a retainer and then tell you to stop making all payments. But many banks won't even take a phone call from these people anymore because they're on to their game.

So what can you do? Try calling your issuer and telling them you're in over your head. You may get blown off or they may work with you. If you get the cold shoulder, go to NFCC.org and find a local affiliate who can help you to come up with a debt-conquering plan.

One-third of Americans are paying only minimums on their credit cards. At that rate, the average credit card holder with an 18% interest rate will be in debt for 42 years, according to The Los Angeles Times. Can you say 2050? And that's never charging another penny to the card as long as you live!

The interest on credit cards is figured daily. So getting money to them earlier in a billing cycle is to your benefit. If you want to climb out of debt, try making a separate payment every 14 days to the credit card company. This method is proven to get you out of debt at one-fourth the time.

Simply mark your calendar every 14 days and write that check or send your online payment on that day. That will add up to one additional monthly payment a year. Just be sure to work these payments around your statement cycle to avoid paying late fees.

Here's another tip: The banks will try to keep you hooked for decades by lowering your minimum monthly payment as you go along. Don't fall for it! Keep paying the same amount each time -- even if your monthly payment gets drastically lowered.

If you have a little extra money to pay, be sure to put all of it on your credit card with the highest interest rate. Don't simply dole it out among all your credit cards without first considering interest rate differences.

Finally, you can't simultaneously pay on a card and then use it and expect to get out of debt. You've got to ditch the plastic!

Clark has a special warning concerning credit cards for those who travel. American Express -- which has reported lower earnings and a much higher rate of charge-offs -- is using new software that can unexpectedly harm some of its best customers.

According to The Wall Street Journal, AMEX now uses data-mining software to analyze where you use your card and shut off your credit line if they deem it necessary -- based on where you shop. This is even happening to elite customers who carry Platinum cards.

Customers who shop at Wal-Mart or Marshall's, plus those who have a mortgage through Countrywide, are suspect in AMEX's estimation. The company's software tells them that those customers are more likely to default on their accounts -- even if they've never been late in their lives!

This is really just a gross overreaction on AMEX's part. Clark shops at Wal-Mart, so he's expecting his Costco-branded AMEX to be shut off at some point! And furthermore, the logic just doesn't seem to work out here. Would shopping at overpriced high-end stores at the mall then mean you're more likely to pay your bills than shopping at a discount store?

The MBAs must have too much time on their hands, to take discrete pieces of info and make an ironclad determination about you. As always, the forum is open for an AMEX spokesperson to come on the show and refute The Wall Street Journal's report.

The takeaway here is that you should have more than 1 line of credit available at all times, especially if you travel. Who wants to be stuck somewhere and not be able to rent a car or get a hotel room?

Of course, you should only have multiple lines of credit if you know you won't spend yourself into oblivion!

Credit card companies long ago adopted the same tactics as hoodlum drug dealers on the street corner. Pushers may get people hooked on pot, for example, but the real money is in cocaine or meth or what have you. So a drug dealer will give you a free sample of the big-money items to lure you in and create a new revenue stream.

Banks do the exact same thing with credit cards. For years, they deluged your mailbox with debt solicitations. Once you were hooked, they would turn around and raise the interest rates on your existing balances.

But that practice may soon be coming to an end. The House, in a 312-112 bipartisan vote, approved what's being called the "Credit Cardholders Bill of Rights Act" -- and the bankers are squealing like pigs. The bill would halt rate hikes on existing balances. In addition, it would require 45 days of notice if there is to be any interest rate change at all for future balances.

There's another provision of the bill that Clark's particularly pleased about. His American Express bill showed up 4 days before the due date -- fortunately he pays online! Under the bill, banks would have to mail statements 25 days before the due date.

Now the bill goes to the Senate. You just know the banks will be using dirty money to prevent the bill from coming up for vote. The president has indicated he'll veto the bill, but it won't do him any good if it passes both the House and the Senate with a veto-proof majority. That's why the Senate will be a key battleground.

Clark thinks its a rotten game that credit card companies play: They lure you in, get you drunk on plastic with low interest rates, and then once they see you've got a big balance going, they say, "We were just kidding! Your interest rate is now 17%!" Clark has even seen it go as high as 39%. Under current federal regulations, a bank is allowed to raise your interest rates on previous purchases with only 15 days notice. There's been so much uproar about it around the country, that after great delay and much legislation, the Fed and other agencies have issued some proposed rules for the credit card industry. Instead of 15 days notice, you'd get 45. Another new rule is that a bank would be free to raise interest rates on future purchases, but on any balances that already exist, the interest rate you purchased under would apply. The banks are going crazy, because these rules would destroy their ability to cheat you. But that's what Clark thinks the banks are doing, which is nothing short of slimy. When the Fed issued these regulations, they got over 60,000 comments from bank lobbyists--usually they only get a couple hundred at most. The head of the Office of the Controller of Currency even took it upon himself to plead the case for the banks. Clark really wishes he could get him to come on the show so Clark can ask him why he wants to stab the American peope in the back. One of the arguments the Controller makes is that by issuing these rules, there might be less credit made available to the people. Clark says: "As if the American people need more credit!" Spending money we don't have is how we've made our position weaker in the world. If banks can't lend money to people because they can't rip off the customers in the end... so what? That said, it's a free market. If someone says they want to lend money at 35%, that's their right. But if they promise a 7% rate, they shouldn't be able to raise it after the fact. This whole issue has Clark really steamed.

Have you ever used your credit card and been asked for ID or told you'd have to make a minimum purchase? Both stipulations are against the merchant guidelines that govern Visa and MasterCard.

Clark is not upset when he's asked for ID; he sees it as another safeguard, even if it is against the guidelines. However, there is some recourse available if you are peeved.

MasterCard has a simple-to-use form where you can alert them if a merchant required ID or a minimum purchase. Clark has no idea what becomes of this info once you submit it to MasterCard.

Visa, on other hand, has no such procedure in place. So they have a rule, but no enforcement.

The underlying issue here is that we're still using '60-era magnetic strip technology for credit cards. Europe and Asia, meanwhile, are years ahead of us with their smart chip technology. With the smart chip, you're required to enter a secret code to use your credit card. But the banks that issue cards don't want to spend the money to have a safe system on our shores!

Do you recall the T.J. Maxx security breach a couple of years ago? It turns out that was not an isolated occurrence, but part of a long-running criminal conspiracy. It recently became big news again when some of the ringleaders were busted.

These particular criminals would sit in store parking lots and try to hack into credit card processing machines -- and then into mainframes -- to get credit card and debit card numbers.

Unfortunately, there's nothing we as consumers can do to prevent these security breaches. But if you handle them right after being affected, it shouldn't cost you any money.

The solution is simple: Read your bank and credit card statements line item by line item when you get them. With credit cards, you must pursue any discrepancies within 60 days or your forfeit your right to the money.

The real problem is posed by petty thefts that might otherwise fly under the radar on your statement.

College kids are bombarded with an average of 4 phone calls and 5 mailings every month to get them hooked on credit cards, according to a new PIRG study. There's a feeding frenzy because teens are the most profitable of all customers for the banks that issue credit cards. It's unreal to Clark that university presidents and alumni groups are co-conspirators with the banks in trying to demolish the credit standing of our youth. Some cash-hungry universities even make deals with banks to provide them with personal student information and on-campus access to students.

The consequences of this are severe. Clark's senior producer, Kim, ran up $17K of lifestyle debt at college by the time she was 24. She didn't get it all paid off until she was 31. Meanwhile, Citibank and other lenders are being sued in the state of Ohio for handing out coupons for free sandwiches to students. But the catch was students had to apply for a credit card before the coupons could be redeemed. You as a parent have to guide your teens and teach them about the dangers of debt. This should not be a onetime talk; it needs to be an ongoing educational process. Get your own finances in order so you can teach by example.

Many of us have what are called -- in credit card lingo -- "back of the wallets." These are the cards we hardly ever use that may be buried somewhere in our wallets or in a drawer at home.

The typical American has about a dozen cards, but only 2 that are used frequently. The rest of those cards are ignored until they go dormant. In fact, you may not even activate the new card when you get it in the mail.

Banks used to just let these dormant accounts sit and hope you'd someday use the card again -- but not anymore. Now if an account goes stale, they'll close that account. That hurts your credit score and limits your access to funds.

So you may want to consider using your "back of the wallets" twice a year about 6 months apart. Charge a nominal amount and then pay it off. That will keep these accounts current in your credit mix and raise your credit score.

This is not just a silly assignment. You'll be helping your score, which is very important in getting lower interest rates, securing job offers and more.

There's been a widespread security breach at some 5,700 Citibank ATMs. Heed this special warning if you've used a Citibank ATM (including those found at 7-Eleven stores) at any point this year.

Criminals hacked into the bank's system and were remotely able to capture account numbers and PINs. They then made duplicate cards that were used to withdraw money from accounts for about 7 months.

The banking industry's longtime rule has been that the burden of proof was on you if your PIN was stolen. They believed their system was impenetrable and if something went wrong, well, you must have been at fault by not protecting your account or PIN. But the hacker community shares info about how to break into back-end systems on a variety of message boards.

The real problem is that our banks rely on 1960s ATM card technology. Over in Europe, they've long since switched to using smart chips in ATM cards. These smart chips defeat the ability of hackers to duplicate a card should they capture a number.

Washington D.C. has also been complicit in this backwards-looking policy. Federal regulators who are in cahoots with the banks have not followed through on requiring them to follow international banking security standards.

The takeaway for you is that you've got to thoroughly monitor your account and follow up on any discrepancies.

Meanwhile, the folks at Wired magazine originally broke the Citibank story. And Citibank, to its shame, is still being hush-hush about the number of people affected and the amount of money that's been stolen. Ukrainian immigrant Yuriy Rakushchynets and 2 others are the likely culprits of the crime.

Our banking industry operates at below-Third World standards when it comes to data safety. It's well past time for our government to mandate that the banks adhere to recognized world standards in the field. Clark also thinks banks should be required to provide full disclosure to the media and the American people when breaches like this one occur.

The nation's banks are reaching new lows when it comes to customer no service. The latest wrinkle took Clark by surprise because he's received scattered calls about this issue without realizing there was a pattern emerging.

Now The Wall Street Journal has discovered that banks are arbitrarily reducing credit limits without telling you. The first you'll hear about it is when your purchase is denied!

Some banks are having up to a 10% default rate on the cards they issue. That's a huge number compared to historical averages. Their panic is so great that they're indiscriminately reducing credit limits -- even sometimes for those who pay their bills in full every month.

The Wall Street Journal also reports that banks are taking a zip code approach to reducing credit limits. This is especially true throughout the real-estate bubble states -- California, Arizona, Nevada or Florida. Again, the banks are frightened because they've seen people go from being current on their bills to declaring bankruptcy practically overnight.

Meanwhile, the banks are also targeting the self-employed because they're frightened of small business bankruptcies. Clark read about one person who had an American Express card that got cut from a credit limit of $36,000 to $4,300!

So if you fit into any of these categories, make sure you're not dependent on any one bank or one credit card. You should have multiple lines from multiple banks. But beware if you miss a payment or are late. Then you've really got a bull's-eye on your back.

Gas rebate credit cards are hot right now. Is that any surprise? We're all shell-shocked by prices at the pump and the promise of HUGE rebates sounds great. But beware that these offers may only be good for a couple of weeks or months.

For example, BP has one heavily advertised offer for a card that gives you 10% back on gas for 2 months. After that, it drops to 5%, which is still not that bad.

But Clark doesn't recommend getting a rebate card for any one particular brand of gasoline. Consider this: The price of gas at BP may be, for argument's sake, 10 cents higher per gallon than other brands. So after the rebate drops down, you'd probably be better off having a plain vanilla MasterCard or Visa with rebates.

A word to the wise: Purchasing gas from a major oil company will usually cost more than at an independent. You can buy with confidence from indie brands because their gas is regulated by the government just like the majors. In fact, Clark only goes to the off-brands for gasoline because they're so much cheaper.

The Federal Reserve is proposing new guidelines for the credit card industry. These are simply proposed regulations; they haven't been finalized yet and may not be until after the November elections. The banks, predictably, are going berserk trying to push back on these proposals.

Here are some highlights of what's being considered:

• Banks would be required to give you a minimum of 21 days to pay a bill. That means statements would have to go out in a timely manner. Banks could no longer pull that funny business of sending out your statement a day or so before it's due.

• Credit card companies would no longer be allowed to raise rates on existing balances.

• Holds would no longer count toward your limit. This tactic is frequently used to force you over your limit. Holds are placed on your account when you use your card at a hotel, car rental counter or gas pump.

• Double-cycle billing -- often used to charge interest on a statement that's already been paid in full -- will be banned.

Keep in mind that these are only proposals. The aim is to make it look like there's a cop on the beat during an election year. These may be changed completely before they become the law of the land.

One thing is certain -- you can expect an uphill battle! Here's an example of the mentality coming from the banks: Capital One was recently investigated by California's state attorney general for its practices concerning customers. The company decided to change its registration from a state bank to a national one during the inquiry. That exempted them from the attorney general's scrutiny and allowed them to turn around and file a counter suit!

So what's the takeaway for you? Seize the power by not carrying a revolving balance on your credit card. Stop accumulating lifestyle debt and the banks will have no power over you.

College kids are bombarded with an average of 4 phone calls and 5 mailings every month to get them hooked on credit cards, according to a new PIRG study. There's a feeding frenzy because teens are the most profitable of all customers for the banks that issue credit cards. It's unreal to Clark that university presidents and alumni groups are co-conspirators with the banks in trying to demolish the credit standing of our youth. Some cash-hungry universities even make deals with banks to provide them with personal student information and on-campus access to students.

The consequences of this are severe. Clark's senior producer, Kim, ran up $17K of lifestyle debt at college by the time she was 24. She didn't get it all paid off until she was 31. Meanwhile, Citibank and other lenders are being sued in the state of Ohio for handing out coupons for free sandwiches to students. But the catch was students had to apply for a credit card before the coupons could be redeemed. You as a parent have to guide your teens and teach them about the dangers of debt. This should not be a onetime talk; it needs to be an ongoing educational process. Get your own finances in order so you can teach by example.

There's a bill in Congress to rein in the giant monster mega-banks and their abuses of the public with credit cards. Credit card bills are often due "net 30," which means 30 days after the date the bill was posted. The credit card companies, which are mostly owned by the giant monster mega-banks, have found that they can generate massive late fees by shortening the amount of time you have to pay. Some companies even have it down to net 15 just so they could post late fees of up to $40! Unless you pay electronically, you can't prove timely payments.

Clark was recently talking to a man in Austin who electronically made a credit card payment the day before it was due. The company received it on time, but waited 48 hours to credit his account. They then charged him a $35 late fee and raised his interest rate 15 points. Clark thinks that's despicable. This industry is missing any morality and doesn't care about treating people properly. The federal regulators, meanwhile, only act as the industry's protector. This new legislation would require you be given 25 days to pay your bill; it's ridiculous this has to be done by Congressional act. The legislation also wants to make it so you get 45 days notice -- instead of the current 15 -- that your rates are going up. Clark thinks they're addressing the wrong problem with that latter measure.

The real problem is that the credit card companies are hoodlums because they agree to make a loan to you, get you hooked and then raise the interest rate on loans you already took out. If Congress wants to help the credit card companies, they should allow them to raise the rates on future charges -- not on amounts that are outstanding. It's been said that people love their credit cards, but hate their credit card companies. This is true with any addiction. Credit card debt as a way of life used to be a uniquely American experience, but the international financial press is reporting the same story around the world. The sad thing is that the banks give so much money to Washington D.C. that Clark doesn't foresee anything changing. So you've got to be responsible for getting your balance paid off. Don't carry a card if you can't control yourself. Also, try carrying a check register to subtract your charges from your savings or checking balance so you know when to stop charging.

There are brand-new stats out about credit card debt that really disturb Clark. It turns out 1 in 9 people can barely make their minimum monthly payment. If the average card holder never uses the card again and pays only the minimum payment, they'll be done in 2043. Clark will be 87 in that year! He doesn't want to have to walk with cane and say, "What was that you said? You finally paid it off?!" Minimum payers are also subject to retroactive interest rate hikes under current law. So that means they can raise the rate on your existing balance from 14 percent to 20 percent or even to 39 percent! Clark has no problem with high rates on future purchases, but he thinks it is dirty pool to raise rates on an existing balance.

What if there was a way to make the minimum payment and get out of debt in a quarter of the time? Fortunately, there is: Say your minimum is $100. Try paying $50 every two weeks instead of $100 once a month. By doing that, you'll make 13 monthly payments in a year. Beware that as the balance comes down, the credit card company will drop the minimum to try to keep you in debt even longer. Don't fall for it!

Beware if you're in a credit crunch and you get a credit card offer in the mail from First Premier Bank. This locust lender will offer you a card with a $250 credit limit, but it also comes with a $95 program fee, a $29 set-up fee, an $84 dollar/year participation fee and an annual fee of $48. By the time you pay all the initial fees, you barely have any of your original credit line still available. Lenders like First Premier and CompuCredit have been in the news lately for this practice, yet there are also many online opportunities enticing those with damaged credit. If you're contemplating getting one of these cards, stop it immediately. There are alternatives called stored-value cards that have just a fraction of the fees. Stored-value cards are popular in Europe, but not widely known in the United States. Here's how they work: You pay a fee, usually around $5, to open an account. Then you get a Visa or MasterCard that holds your stored value. So you don't have a credit card per se, but you've got a card that you can electronically load cash onto and use as a payment system. Stored-value cards can help you make online purchases, for example. Be sure to read all the terms and conditions because additional fees usually apply. You can find stored-value cards at discount stores, but don't purchase them at convenience stores. The fees you'll face there will defeat the purpose.

People with damaged credit have a new bull's-eye on their backs. The nation's banks are doing mailings for MasterCards and Visas that are just awful. They're offering cards with low credit limits of a few hundred dollars. The catch is that they charge fees to get the card that nearly equal the credit limit they've given you. This tactic has been called "fee harvesting" by the National Consumer Law Center. That's because there's a multitude of subtle fees that they load on. These can include an annual fee, a setup fee, a program fee and a participation fee. The New York Times reports that Capital One and CompuCredit are some of the worst offenders. Except for the annual fee, all of these other fees are completely bogus. You think they're doing you a big favor by taking you on as a customer. But they eliminate all their risk by hitting you upfront with huge ridiculous fees. Clark thinks practice is diabolical but pretty clever in a sad sort of way. So beware if you're suddenly getting an offer for a card and nobody else has wanted you -- it could be a fee harvesting ploy coming your way.

We're living in a time when people are carrying record levels of debt, close to the trillion dollar mark. Per person that's like $1,500 or $1,600, while per household it's several thousand dollars. The Supreme Court ruled that credit card companies could set up shop in states like South Dakota and Delaware where there is no consumer protection. That's been like a free pass for them to do whatever they want. The big fuss right now is over people who pay on time every month and still get hit with giant increases in their interest rates. Clark is not in favor of having fixed rates set by a government cap. But he does think it's reasonable that if you sign up at a certain interest rate, the bank must honor that rate on all existing balances. They should be free to raise the rate on all future purchases, but not on those existing balances.

Clark likens the credit card companies to drug dealers. They want to get you hooked, so they hand out the cards like candy. If you pay down your balance, they'll lower the minimum payment to try to keep you hooked. So it's up to you to control yourself and not abuse that card. Don't charge balances you can't pay. Get yourself on a debt diet. If you have multiple cards, pay as much on the one with the highest rate as possible. Try making a payment every 14 days instead of every month. This works to your benefit because interest is calculated daily. If you keep paying what you've already been paying when they lower your minimum payment, you'll find that steadily more of your dollar will go to the principal instead of the interest. One final thought: This is not like ancient times when people were forcibly enslaved. Today we're making slaves of ourselves with our debt.

For weeks, Clark has been receiving scattered calls from people who say they've received a new unsolicited credit card in the mail. The complaints stem from Citibank buying Macy's credit portfolio and mailing out MasterCards to some 3.5 million inactive accounts. This is outrageous, disgusting and it should be illegal, Clark says. Citi is contributing to account and ID theft by its behavior. A report in The Boston Globe states that Citi says they've received positive feedback from customers about these new cards. Citi also goes on to claim that they informed customers about how to decline these new cards, and that there are no privacy or security issues of concern. Lies, lies and more lies, according to Clark. What's really going on is that Macy's now has created another credit line for people -- also lowering your score, by the way -- by reducing the aging on your credit accounts and issuing you a new major credit card when you might not have wanted one. So if you get one of these pieces of trash in the mail, cut it up. And if you do other business with Citi, don't use their cards. This is the power the marketplace affords you to punish a company that has done the wrong thing.

Clark has taken about 8 calls over the last several months that he thought were UFO questions with no connection to each other. People have been telling Clark they're getting harassed by collectors over debts that were wiped away when they filed for bankruptcy, or that debts that had been thrown out in bankruptcy court are showing up on credit reports as outstanding. Then Clark read Business Week's recent cover story "Prisoners of Debt" and it all made sense: Certain banks, collection agencies and credit bureaus are working together to undermine existing bankruptcy laws. When you file for Chapter 7, you get a bad mark on your record for 10 years. The tradeoff is that you also get to wipe out any credit card debts clean and clear. You usually first go through an evaluation process to see if you should pay a portion of your debts back under Chapter 13. Today you can only do Chapter 7 if your situation is hopeless.

Business Week discovered that Capital One, Bank of America, Chase and Discover are ignoring these bankruptcy laws -- by accident or on purpose -- and illegally selling debts to collection agencies so they can go after you. This flouts the law of the land, whether you agree with it or not. When a Chase lawyer was questioned by a judge about why they've sold bankrupt debts, the lawyer replied that it happens all the time. The Business Week article says the banks claim this is all an unintentional mistake. But there's a clear pattern here: First the lenders fail to wipe out the debt when you file for bankruptcy. Then they sell it off to collectors and score some cash. Next the collectors try to illegally collect the money. Finally, the credit bureaus act as co-conspirators by listing debts on your report that aren't valid. So if you've filed for bankruptcy and are caught in this vicious circle, contact the banks and bureaus by phone and in writing. Try getting them to update the status of your legally expired debts. If that doesn't work, go back to the bankruptcy court where you filed and talk to the judge.

The banks that issue the bulk of credit cards in our country are seeing more and more problems with delinquency. Their response has been to raise interest rates across the board -- even on people who have not been late on their payments in any way. Sometimes they try to justify the hike by telling you that you've cross defaulted, which means you're penalized for being late on another bank's card. But your bank can also arbitrarily raise your interest rate -- sometimes up to 30 or 33 percent -- on just 15 days notice. So what power do you have? Much of the time, you have the option to suspend charge privileges on a card in return for being able to pay off your balance at the old rate. But if you have other credit lines, vote with your feet by threatening to take your business elsewhere. Try pitting your lenders against each other to get the lowest interest rate.

Several weeks ago, Clark told you that Consumer Reports rated the best and worst credit cards in America. The single best card was the USAA Federal Savings Bank MasterCard, while all cards issued through credit unions came in at No. 2. Meanwhile, the big banks that issue the bulk of cards in America got stinky scores. Now there's a new survey out from J.D. Power and Associates that corroborates the findings of Consumer Reports. The J.D. Power tally focused on the big names only and is topped by American Express and Discover. On the bottom of the heap, J.D. Power says HSBC is the worst, followed by Bank of America and Capital One. That's very similar to what Consumer Reports said in ranking Capital One as the worst followed by Bank of America. Meanwhile, Citibank, Chase, Washington Mutual and Wells Fargo all got lousy scores from J.D. Power even though they came in near the top of the tally. So the important thing to note is that you should get your credit card through a credit union if you have access to it. Don't go through one of the giant monster mega-banks. Size does not equal quality in the world of credit cards.

Clark has long believed that debt is a disease when it becomes your way of life. It can eat at you, lead to anxiety, hurt your confidence and so much more. The New York Post recently ran a story about how members of Generation X (aged 30 to 45) are saddled with debt. Some of their debt stems from educational loans, but even more is attributed to lifestyle debt. Some 33 percent are so deep in debt that they'll never get out. About 20 percent are depressed over the financial obligations stemming from their lifestyle. The irony here is that Gen X got into lifestyle debt because they were doing something that was called "keeping up with the Joneses" back in the 1950s. People want to live large and have all the things their friends have. But the folks who ride in BMWs with the fancy houses may not own -- rather they owe through financing.

If you watch TV during fall season premiere week, look at all the local ads for furniture with no money down or no payment until whenever. It feels like it's free, but it builds a burden in your life. The pleasure of the possession is eclipsed by the burden of the debt. It is the very freedom to borrow today that has created this burden. Past generations like the baby boomers had to put money down to buy their first homes; today you can finance 100 percent. But just because the freedom to borrow and get buried in debt is there, it doesn't mean you have to use it. The Post article quoted a Charles Schwab employee who said that they expected Gen X to be saddled with debt, but they didn't expect them to develop anxiety over it. That's funny, because Clark has been hearing about debt anxiety for 20 years doing the show. As a parting thought, Clark said home is defined by where you are with your family and loved ones. It's not defined by square footage, crown moldings or a huge stainless steel fridge in your kitchen.

Sometimes it seems like young people have a huge bull's eye on their backs for the banks. People who are between the ages of 18 and 24 are being killed with bank overdraft fees. The latest stats say they're paying more than one billion dollars in overdraft fees every year. Clark recently heard from someone who has a teen that overdrew a debit account by $15 and that generated $80 in fees. As a parent, it's getting more and more difficult to teach the young about money. But it must be done. When Clark was in school, you paid for things with cash. Today there's no equivalent in a credit-crazy world. While cash is finite, plastic is infinite. A parent's most important lesson to a son or daughter should involve a pen and a check register -- showing them how to take debit transactions seriously. Banks are only too happy to approve transactions that will result in overdrawn accounts and high fees.

There's a bill in Congress that's trying to make it so that a bank must contact you for approval before they overdraw your account. The banks, predictably, are incensed about this because they may lose profit. Clark loves it when people have more info to make smart (or dumb) choices. What happened to ethics and morality in the banking world? Why do bankers get up in the morning and try to figure out how to rip off fellow Americans? If a bank approves an overdrawn transaction that generates fees, how is that moral or ethical?? It's not. The bill will probably be killed because the bankers are so strong giving dirty money to politicians. So teach your children well and you'll save them from losing money in the school of hard knocks.

Five years ago, Clark's daughter Stephanie was three years old and received a pre-approved offer for a Visa credit card -- what she then called a "Wisa" card. Stephanie loved the fake plastic card that came with the offer and often tried to scan it using her Barbie cash register. At that time she didn't really understand that you have to apply for credit and use it responsibly. Now that Stephanie is eight years old, she's received a solicitation from American Express. She wants to apply and so far Clark hasn't discouraged her. She's going to list her income as zero, her occupation as a student and disclose her true age. Then she'll wait to see if her application gets approved. Clark wonders what he's going to say to her when she's declined. Even worse, he's wondering what to say to her if she gets approved! The credit-card companies are so desperate for customers that there have even been documented cases where they've extended credit to people's dogs. Clark thinks his executive producer Christa should sign up her cat Willow for e-mail lists from merchants and assorted cat-alogs -- pun intended! The whole trend of young people having credit cards is very dangerous in Clark's eyes. One in 10 high-school students has one. But teens should be learning about saving, not spending. It's also important to look at the message about credit that we as parents are giving our children. If you run a balance every month, you need to get your own finances in shape before you try to teach your children by example.

There are changes coming to the way credit scores are calculated that could affect millions of women. For many years, people have been allowed to share their credit cards with authorized users. Husbands historically have done this for their spouses. But then some criminals figured out how to take the whole authorized user thing one step further -- they actually generate inflated credit scores for risky candidates by renting out someone's good credit. Think about it in the following way. Let's say Clark has terrible credit and his executive producer Christa has great credit. A third party operator can charge Clark $1,000 to rent Christa's status. Christa will receive $500, the operator will keep the other $500 and Clark gets a bogus good credit score in his name. The problem is that the renters -- Clark in this example -- have been defaulting at huge rates. So now the credit bureaus are just eliminating all authorized user credit standing across the board.

Women (or men) who have been married for many years and have always used their spouse's credit cards in lieu of building their own credit will be most affected by this change. They'll go from having great credit to zero credit overnight. The San Francisco Chronicle reports that there are more than three million women who have no credit standing of their own. Clark sometimes gets calls from new widows who suddenly have to deal with all the finances after a husband's death. He advises all women to have credit of their own. If you don't already have two credit cards in your name, now is the time to get them.

Talk about kicking people when they’re down. Credit card companies are now targeting those in danger of losing their homes because of sub-prime mortgages. Imagine being a homeowner who is in trouble and getting offers for new credit cards in the mail. While you might think you’re getting a lifeline, you’re actually being thrown a cinder block. The Boston Globe reports that the credit card industry has doubled its solicitations to households in sub-prime status. The Consumer Federation of America is angry at the banks for targeting these people. So if you are in trouble and get these solicitations, look at them as a burden -- not a gift. The banks are trying to score money on your hard times. Compounding debt on top of more debt is not a path to wealth -- it’s more like rearranging the deck chairs on the Titanic. So which banks are the worst offenders? HSBC is tops, with its solicitations to sub-prime mortgage holders doubling year over year. Following closely behind is Capital One, with its solicitations up 20 percent; and Washington Mutual, which is up 35 percent.

Have you ever wondered about the best credit card in the country? The October issue of Consumer Reports turned its attention to a survey of this all-important industry. The single best card to have in your wallet is USAA Federal Savings Bank of San Antonio's MasterCard. This card is exclusively for members of the military, their families and in some cases certain retirees. This little piece of plastic was singled out because of its reasonable interest rates and cash back earnings. USAA also delivers the best focus on customers and problem resolution, according to the report. But what about a good card for those of us who aren't in the military? A card issued by Navy Federal Credit Union came in second, while cards issues by credit unions in general took third place. Credit unions offer their cardholders good problem resolution and better interest rates than a typical bank-issued card. Overall, the only big issuers who got decent scores were American Express and Discover. The other major companies, meanwhile, were in the toilet. Providian was named the single worst card issuer. Following right behind at the bottom were Capital One, Bank of America's MBNA division and JP Morgan Chase.

Clark recently spoke on the show about how what happens on Wall Street affects what happens on Main Street in America. One way you may feel a pinch is in the credit card field. Dow Jones recently reported that credit card companies are starting to tighten their standards. This will happen in a number of ways: Credit limit increases won't be so common; potential customers who may have previously qualified for a card may no longer qualify; and you'll probably be seeing less balance transfer offers.

Credit card companies have historically borrowed money short-term at very low interest rates. Then they turned around to lend that money to you via your credit card at an average interest rate of about 16 percent. But now their ability to borrow at ultra cheap rates -- what's known as commercial paper -- is being squeezed. Since they don't have such easy access to money anymore they can't offer their deals to you. The credit card companies are also worried about people's ability to pay their debts. A Dow Jones survey found that a number of banks are tightening their standards one by one. This is not being done across the board, it's more of an industry trend -- so you still may see some low-interest transfer offers in your mail.

The car loan field will also be clamping down too. You may be expected to have higher credit score, pay a higher interest rate or come in with a down payment on your vehicle if you want to qualify. All of these trends are signs that the pendulum is swinging back in the business world. For years we've had very low terms for borrowers. Now things are changing and some us are going to get pinched in the process.

In today's special edition of Clarkonomics, Clark looked at the increasing trend of credit card delinquency. While you are ethically obliged to pay your credit card debt, Clark thinks more people should start paying off their credit card last when they're facing other bills. Does that sound crazy? Well, think about it like you would triage: You treat whatever is most life-threatening first. Credit card creditors scream the loudest so people tend to pay them off first. But does it make sense to lose your home because you're paying your card instead of your mortgage? No way. So Clark advises people to pay their mortgage first and put the credit card bills on hold if need be. The same applies to your car loan; if you're struggling financially, put it to the side and pay your mortgage first. Then you can resume paying your credit card and car loan when you're back on your feet financially.

Clark despises debit cards -- or what he calls "piece of trash fake Visa and fake Mastercards." The banks love debit cards because they make huge profits on them. Most of us have had the experience of making a purchase with a debit card and being asked if we want to do it as debit or credit. If you go for credit, the merchant will pay $1.50 in processing fees. If you opt for debit, the merchant may only pay 17 or 18 cents. So the merchants are always battling with the banks over the use of these cards. Sometimes the banks will even assess you a fee when you select the debit option for a purchase. Meanwhile, the September issue of Consumer Reports' Money Adviser states that your account is 17 times more likely to be hijacked if you go the credit route versus the debit option. But the debit option has other dangers. Certain banks now allow customers to use it to cover purchases that exceed their balance. The banks are all too happy to collect interest of around 1,000 percent on overdraft charges. So ultimately, it's your responsibility to not overdraw your account. Clark advises people to deduct your debit purchase from your account ledger right after making that purchase. It may be a hassle, but it will save you in the long run.

There are a few scenarios where consumers really have to be aware about the dangers of using of debit cards. These include paying for gas at the pump, paying your hotel bill during check-out and doing a car rental. If you use a debit card in any of these situations, you have to know that the bank will put a hold on your account for an amount that exceeds the total of the bill. So though you may only get $10 of gas, the bank may hold $100 -- and if you don't have a lot in your account, you may start bouncing checks. Also, when you use a debit card to pay for something now that you'll get later, you have no recourse if the merchant goes bust or your purchase never arrives in the mail. However you can dispute the charge if you use a credit card. The only time Clark thinks it might be advisable to use a debit card is if you're someone who has been in trouble with credit cards in the past and you habitually go into debt using them. Then the benefits may outweigh the risks.

Do you remember when gas stations used to offer cheaper prices if you paid cash? Cash discounts at the pump are starting to make a comeback. This might seem like an odd thing, especially considering that people overwhelmingly fuel up using their credit cards nowadays. But the gas stations take a big hit on the credit card processing fees for every charge at the pump. These fees can be anywhere from several cents per gallon to a dime per gallon. So some stations now offer cash-paying customers anywhere from a nickel to 15 cents off per gallon to encourage cash transactions. The Los Angeles Times reports that cash discounts on the West Coast are spreading like wildfire. But this trend also raises a dilemma for stations. If people don't pre-pay via credit card, there's always the risk that they'll fill up and drive off without paying at all. Meanwhile, if you have to pay cash upfront, the stations may have to hire more staff or worry about losing business because of long lines at the pump. There's a balance that has to be struck. QuikTrip is trying to strike that balance by offering a pre-paid cash card. You have to register your personal info at the gas station -- to discourage you from driving off -- and then you're issued a card that lets you fuel up.

For the last few years, Clark has trashed Capital One -- one of the nation's largest credit card issuers and the purveyors of those memorable "What's in Your Wallet?" commercials that people either love or hate. Well, today the company gets some praise from Clark because it's agreed to change a policy about how it reports your information to the credit bureaus. In the past, Capital One would not report how much of your credit limit you were using. That way it always looked like you maxed out 100 percent of your credit, effectively destroying your score. According to Clark, this was an intentional move on Capital One's part because they wanted to hurt your credit and prevent other companies from poaching their customers.

Now the company has agreed to report credit limits to the bureaus. So some Capital One customers will have big score boosts and be eligible for better auto insurance rates, homeowner's insurances rates, mortgages and more. Capital One's change is huge because 30 percent of your credit score is based on how much credit debt you're carrying versus how much credit is available to you. So someone who has a card with a $5,000 limit and uses only $1,000 (20 percent usage) has a higher score than someone who has a card with a $20,000 credit limit and uses $15,000 (75 percent usage). Also it's important to know that when you change credit card companies you shouldn't close your old account. You need to keep it open -- even if you don't plan to use the card -- so that you can get a higher credit score.

Did you know there are new requirements for reporting debts or delinquencies? Clark recently had the chance to speak with two experts on the Fair Credit Report Act and the FACT Act (Fair and Accurate Credit Transactions Act). What he learned was illuminating. For example, if you have a credit card debt that went delinquent in January 2000, you might start getting calls from collection agencies in December 2006 -- one month shy of the seven-year expiration limit. What's probably going on is that the collection agency has put a new date on your account. By doing this the agency is breaking the law. If the debt has moved beyond the statue of limitations, you have no legal requirement to pay that creditor anything. Bear in mind that Clark is not talking here about the ethical obligation to pay up -- that goes on forever. He's only talking about your legal obligation.

So what can you do if your debt has passed the statute limit and the collection agency puts a new date on the account just to harass you some more? You can sue them in your own small claims court where you live. They have to come to you and answer for their actions! Just beware that these legal battles can be a two-way street. There are a lot of unsavory characters in the collection business who will try to sue you on expired debts. If you don't show up in court, they get a judgment in their favor when they didn't deserve it in the first place. Meanwhile, Clark also shared some personal anecdotes about working as a bill collector in graduate school, and trying to collect on past debts when he had his travel agencies. To do the latter, he often showed up in person to collect his money! He was always polite and calm. And you know what? It actually worked and he got a lot of money that way.

One crooked employee at Fidelity National Information Services stole the personal information from 2.3 million Americans, taking their checking account numbers, social security numbers, and more. He has since sold the information to a "broker." This is a big deal, because if someone gets your checking account number, unlike your credit card number, you could end up behind bars when the criminal writes checks pretending to be you. Criminals are able to steal information easily. You never know that they have it until it’s too late, and it's almost impossible to know where the breach in security originated. In 37 states, you can freeze your credit file so that if someone does steal your identity, there's nothing they can do with it. It's very beneficial, but credit bureaus are keeping this secret. This is because they lose all the money they make from your dossier if you freeze your credit. Clark thinks we need a fining system in place for credit card companies, banks, and lenders so that they are held responsible when something goes wrong and they give credit to the wrong person. You can check if your state has credit freezes at financialprivacynow.org

Look out for the advertised "deals" on reward cards: Clark saw one in a retail store. He opened the brochure and flipped to the "mice-type" in the rewards section. The 2% reward turned out to be only .5%! You only got 2% if you shopped at that store and ran a credit balance. It's not that all rewards cards are a bear trap, but there are enough duds out there that you just can't trust them without really looking over all the asterisks.

You have to be very savvy to even make airline reward cards work. You have to be doing a substantial amount of flying on the airline and charging on the card to get your rewards. And even so, the company might cap the amount of miles you can earn per year, or they may suddenly change the rewards on those cards! Look out for three things:
(1) be wary of annual fees;
(2) be aware of fake reward levels (like the 2% "deal" above)
3) these cards have awful interest rates.
For people with money, it’s hard to beat the deal from emigrantdirect.com! They have a deal where you put money with their savings account, and you get a MasterCard that earns 1.4% But you have to maintain $10,000 in the account. Other good deals include the CostCo "True Rewards" card: No annual fee, 1% back on all purchases, 2% on all travel, 3% on all restaurants. It's pretty simple and clear, but you must pay your balance in full each month to avoid high interest rates!

We are defaulting on our home equity loans more than ever, while simultaneously defaulting less on our credit cards. What's wrong with this picture? Credit card collectors are so aggressive that even if you're one minute late, they're all over you like a cheap suit. They know there's nothing they can really do to you, so instead they use bully psychology to force you into paying up. Contrast that approach with the one taken by your mortgage lender. If you're late on your home payment, they're very non-confrontational. Why? Because they can actually take your house away!!

Human nature dictates that people will pay the person who screams the loudest. But that's the wrong approach. Instead, try thinking about your finances like you would a triage room at a hospital: the doctor sees who has a life-threatening sickness and immediately treats that person. Similarly, it's important to prioritize your monthly bills. Your mortgage should always come first, followed by your transportation bill or car loan -- so you can get to work and keep earning! Try dropping your credit card debt lower on your list of monthly payments. People immediately say, "Well, I'll ruin my credit if I do that." But if you don't have enough money to pay your mortgage, chances are your credit is already being messed up. On a related note, many folks think you can just tell a credit-card collection agency not to call you. Unfortunately there's a special loophole in the Fair Debt Collection Practices Act that the banks got written in. It states that if the collector is an employee of the bank, he or she is exempt from many of the regulations. So they can continue to hound you day and night. If you're getting threatening phone calls where collectors are cussing you out, try taping it. Then bring the tape to your nearest TV station and they'll be more than happy to put the bank on the hot seat.

The Wall Street Journal isn't usually known for protecting the consumer. Yet the paper recently ran an article explaining how dangerous the use of debit cards can be for the average person. That's no secret around here at Clarkhoward.com, where Clark routinely refers to debit cards as a "piece of trash fake Visa or fake Mastercard." Sure it looks like a credit card, and it works similarly to one, but it can really foul you up in ways that a traditional credit card can not.

Say for example you buy a knife set that's being advertised on TV. If you pay for it with your debit card and it never arrives in the mail, you have no recourse. Had you paid with your credit card, all you have to do is dispute the charge. The same pitfalls can occur anytime you use your credit card to pay for something now that you'll be receiving later, such as airline tickets, cruises reservations and more. Other areas of danger with debit cards include the difficulty of refuting charges if your card is stolen, and the practice of hotels and some car-rental agencies that put a large hold on your account in advance of a transaction. Did you know that the latter practice can cause you to bounce checks even though the money is there in your account? The bottom line is that Clark believes the same protections enjoyed by credit-card users should be afforded to debit-card users. But the banks are making a fortune off debit cards, so there's no real incentive for them to change their ways. As Clark says, it used be that bank robbery involved a thief going to a bank and saying "Stick 'em up!" But today it's you that's getting robbed by the bank when you use a debit card.

Did you know that if a criminal gets your credit card number, they can show their "generosity" by donating money to charity using your credit card? Why are criminals doing this? This is happening because the charities will let the criminal know if the card is verified and still active. More importantly, it's a great way for criminals to test if the card will be reported stolen, according to a story Clark read in Newsday. Criminals can then sell your verified card number for three times the value of an unverified card! If someone steals an unverified number, it's worth $6; if it is verified, it sells for $18. The Red Cross has reported 700 fraudulent donations using stolen cards last month alone! Therefore, if you see a small unauthorized charity donation on your bill, be alert. Clark says the solution to this problem is so easy. The credit card companies should do what is done in Europe by inserting a smart chip in the card which requires a secret code. So even if someone steals your card, if they don’t know your code the card can’t be used. The result in Europe is that credit card fraud is nowhere near the problem it is in the United States. So why are we still using '60s technology to print out credit cards here? It seems like the banks would rather deal with the fraud that occurs and then clean up the mess after the fact, rather than spend the money proactively to get things done right in the first place.

Roughly 1 in 7 Americans are carrying credit card balances exceeding $25,000. Since the average income is around $50,000 a year, that means that 1 in 7 have a debt amounting to about half their salary. Once you get to that point, you've dug yourself a hole that's pretty hard to get out of. When financial counselors ask people what their debt level is, most don't know, or pretend not to know, because the real figures are just too frightening. And what's troublesome is that not only is the amount of average debt rising, but the number of debtors is rising too. Only 31% are paying off their monthly balance now, down from over 40% not too long ago. So if you're carrying a debt load, Clark is assigning you homework: redefine how you deal with money. Think about the interest you're paying to credit card companies and imagine what else you could do with those funds. Nobody gets rich paying Visa or MasterCard interest. If you are carrying a credit card balance, here's what Clark would like you to do: women, go to your closet of clothes, and guys, head to your closet of "stuff." See how many things there are in there that you bought but don't use. If there's a lot, it could be an indicator of a problem. And while your debt was built up slowly, the answer is quick: cut up your credit cards. if that's too tough of a chore, how about putting the credit cards in a bag of water and freeze them in your freezer...then your credit will be truly frozen! And if you have extra stuff, sell it on ebay or Craigslist, and use it to pay off your balance. It won't make a significant difference, but you will start to heal yourself of the habit of buying things you thought you wanted but didn't really need. He promises you'll feel much better. What if you have a huge debt? You stand a chance to whittle that away if you go on a budget and give yourself a cash allowance each pay period. Contract with yourself to take out only what you'll really need, then stick to it. It will amaze you how much less you spend. Sure, you may have to eat at home or take a sack lunch to work at the end of the pay periods, but so what? Clark wants you to be strong and take hold of your financial future. If you feel burdened by debt, think of the calls he gets from those that got out from under, and how liberated they feel. Be inspired by that. If you still feel overwhelmed, get yourself a credit counselor at nfcc.org. Most affiliates have counselors you can talk to for free. Time's a-wastin', so take control.

If you are late paying your bills it can really hurt your credit score. The amazing thing is that if you have a company credit card, and your company is late in paying the bill, that can affect you too. It can happen through bureaucracy or just plain laziness on their part. If you rely on your employer to pay the bill, monitor the card online to make sure that they aren’t dragging their feet and hurting you in the process.

The US Senate has introduced legislation that, if passed, will curb many of the corrupt practices of the Credit Card companies. The banks are playing dirty pool. Pay your bills in full, when you don’t owe them money it makes you strong and the banks weak. When they try to push you around, tell them you are going to call your Senator’s office. You have the power, don’t get pushed around.

The Federal Reserve has issued new rules for credit card companies and Clark couldn’t be happier about it. First of all, credit card companies won’t be able to change the terms of your contract in just 15 days. Companies could jack up your interest rate to an ungodly amount and they were only required to tell you 15 days a head of time. Now, they must give you 45 days notice before changing a rate. That gives you time to switch cards or plans if you want. Companies will also have to tell you what kind of penalties you could face if you pay a bill late or makes some other error. You will be informed about what rewards the card offers and it must be written in a way you understand. In addition, when you transfer a balance, companies must tell you how the rates apply on transferred money and remaining balances. Right now, when you make a payment on a card with different rates, the money goes toward the lowest interest rate. From now on, the money will go toward the highest rate. Credit cards are going to fight this until the very end but Clark wants you to know what will probably happen.

Clark has talked in the past about a credit card that helps save money for college. It was offered by Fidelity Investments and it paid 2 percent of all your charge volume into a college savings plan. Well, that program is no longer available to people other than those who already have the card. Now, the company has reduced the benefit to 1.5 percent. And there is now a cap on how much you can earn each year for your child’s education. This is a sign of the times. Credit card companies are reducing benefits and rewards more often these days. Or, for some specific charges, you don’t get rewards. So, it may be time to find a better card. That doesn’t mean you should close the accounts you have. Keeping them open helps your credit score. Just don’t use that card anymore. On another note, Fidelity has a new Visa card that gives you 1.5 percent back into a Fidelity investment account. There is no limit on earning power. Capital One has a card that earns you 1 percent each month, plus an additional. .25 percent at the end of the year. Of course, that could change too. Always keep your options open.

When you visit a retail store these days, you probably didn’t notice the war going on behind the scenes. Banks and retailers are going at it over debit cards, and we – the customers – are the pawns in the game. Basically, banks are trying to get people to use their debit card like a credit card because they make more money when you do it that way. Banks are offering all kinds of rewards and trips if you’ll sign for a charge instead of entering your pin when you make a purchase. Banks get just pennies when people enter their pin number. In turn, retailers are livid and are doing all kinds of things to get you to punch in your PIN. According to the Wall Street Journal, retailers are reprogramming their registers so the code option automatically pops up and customers are more inclined to do it that way. So, what’s it all mean to you? Eventually, banks will get more of your money if you swipe your card like a credit card. Merchants will start charging more money for items to make up for their cost, and customers will suffer for it. If you use a debit card and you’re being asked to punch in a code, it will help you in the long run. You can ask to use your card as a credit card; that is your option. But it may end up hurting you more in the system. Clark hopes the whole system breaks up and debit cards become a thing of the past. We’ll keep you posted.

A criminal ring based out of California has been moving around the country, stealing people’s debit and credit cards by taking over the card swiping machines incheck-out lines at retailers. Oftentimes, the cardholder never knows they've been a victim. What happens is the criminals either pretend to be technicians or they work in groups to distract cashiers, allowing time to install a small device on the card-swiping machine at the counter. Then, every time a customer swipes a card, the criminals capture the number and secret code entered. Within minutes, they have pulled hundreds of thousands of dollars out of accounts. It’s a very big, very efficient ring. So what can you do? Well, the greatest risk comes to those using debit cards because that money may not be replaceable. At least if you’re using a credit card you can file a dispute and get your money back. Other than that, make sure you check your statements religiously every month. If the criminals have created an exact duplicate of your card, it’s going to be hard to prove it wasn’t you making those charges. So, keep an eye on your accounts – always. And, if you can, use cash!

If you have a Capital One card in your wallet, you need to listen up! Capital One uses an analysis program to figure out which customers are near their limit and likely won’t be able to stay under it. The company then sends another card to that person in the hopes that you’ll charge that card beyond the limit. Capital One will keep sending cards to people who are beyond their limit as a way to generate ‘over limit’ fees. These can add up to $350 a month. And the more cards you have, the higher the fees. The Federal Reserve has refused to comment about the practice so far, but it has basically said nothing is wrong with it. If you are with Capital One and you’re getting close to your limit, know that this is not a safety net the company is throwing you. It’s meant to sink you. Turn down the additional cards as soon as you get them.

Clark read in USA Today that families are taking on just under 80 percent in credit card debt these days. That number has gone up over the past 10 years and it means that - over time - people are getting poorer and poorer. Yes, those people will have possessions. But they will have no financial security. The only reason you want to wrack up that much debt is if you are opening or starting your own business. Inflation is not up 80 percent, so there is no way consumers can live comfortably with that much debt. Think before you spend for lifestyle!

Clark often gets calls from people who have never established credit and need to know how to do it. It’s changed over the years, starting with secured credit cards and transition periods. Now, there is another way to establish credit through General Electric. That’s right. In addition to making appliances and jet engines, GE is also a huge lender. The company does a lot of store credit programs and plans, including Wal-Mart, J.C. Penney and Circuit City. GE has factored in the risk of default on these cards, and even calls people who apply to offer a little consumer education before they start using the cards. The program is called, “The Road to Credit,” and it’s available at seven different retailers. Clark wasn’t able to find the list of all seven, but ask about it when you’re in one of the stores we mentioned. It’s a great way to get started and establish credit.

You’ve probably heard about the Capital One lawsuits going on. Clark has talked about the system Capital One has to damage your credit. Well, now Capital One has stubbornly refused to modify its position. What happens is Capital One does not report the credit limit on your card. Why? It lowers your credit score and therefore destroys your credit image with other potential credit card companies. So, you’re more likely not to get approved for another card and will continue to use the Capital One card. By not reporting your limit, the credit bureaus guess your limit and that makes you very risky. Now a new lawsuit has been filed against the credit bureaus for reporting erroneous information on our reports. TransUnion, Equifax and Experian have some responsibility here, for sure. But it would be simple if Capital One just behaved itself. Clark has given Capital One the chance to come on air and talk about this, but they haven’t responded. So, you have to decide if you want to be their customer. If you’re currently a customer and you want to stay with them, you should charge a bunch of stuff to the card and pay it off. Then, moving forward, the credit bureaus will see and use that credit limit, sending your score back up. Clark will keep trying to come up with ways to manipulate the system, but for now that’s the only way you can turn the situation around.

The credit card industry was patting itself on the back when the new bankruptcy law it has been pushing for finally got passed recently. But the banks and credit card companies may soon regret what they wished for. The new bankruptcy law has gotten so much publicity that people are scared and they’re paying down their credit card bills at an unprecedented rate. People are realizing that there is no second chance with this new law. If you borrow a lot of money, you’re going to have to pay it back now. And people don’t like paying money back, so they’re being more careful with credit. MBNA, for example, has already had a decline in profits of 94 percent. Capital One has also seen its outstanding balances decline. As a result, these companies are going to flood your mailbox with solicitations for cards. It’s a move of desperation, and you don’t want to get involved. So, keep paying down your debts and let the credit cards reap what they sow.

If you are a merchant and you own your own business, Clark has a warning for you. Research from CardWeb.com shows that merchant fees – the fees charged to business owners when customers use a credit card - are rising rapidly. Purchases of $5 or less on credit cards now add up to $13.5 billion a year. Charges under $10 now represent $35 billion in credit card volume. So, many consumers, including Clark, use their credit cards for everything they buy. Some stores have fought back by posting signs requiring a maximum for using a credit card because the fees are so high. That’s why it’s important to shop merchant fees out there. A number of services have much lower fees for businesses that have low average charges. That’s why fast food restaurants now take credit cards. Even parking meters take charge cards these days because it boosts money coming into governments so much. People just seem to end up spending more when they use a card. And credit card companies calculate merchant fees based on the average amount people charge at your store. So figure out what your average charge is and find a service that benefits you.

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Speaking of credit cards, you may already know that Costco Wholesale, BJs and Sam’s Clubs all offer credit card services for businesses. They offer great rewards cards for business owners, so check them out. In addition, Wal-Mart is now offering a Discover credit card. There is no annual fee, and there is a 1 percent rebate for anything you buy. In addition, there is a 3 percent rebate on gas, which equates to about 5 cents off a fill up. It’s got the major oil companies quaking, and we’ll see how it works out.

When was the last time you checked your credit card statement line item by line item? Most people do not and it’s simply not smart in today’s identity theft ridden society. Channel 14 in Evansville, Indiana proved that even further in a recent story about credit card scams. The station found that consumers' credit cards were being charged $29.99 for no reason. Most often the charge showed up as “Pluto Data, ” which neither Visa nor MasterCard knew the meaning of. So, if you see a charge you don’t recognize, challenge it. There is obviously a failure to provide proper transactions and information to customers, so it’s up to you to protect yourself.

It’s important that you shut down credit card pre-approvals in general to prevent identity theft, but it’s even more important if you’re planning to move. That’s because the companies continue to send pre-approvals to your address even if you move. Identity thieves can simply grab those forms out of your old mailbox and fill them out, pretending to be you. They then rack up all kinds of charges on “your account.” So, be sure you OPT OUT of those pre-approvals now! When you do, you can either opt out permanently or for five years. You can either call 1-888-5-OPT-OUT or go to optoutprescreen.com. It won’t eliminate every pre-approval. Frequent flier cards and hotel points cards are not blocked, for example. But it will take care of most of the offers you would have received.

One of Clark’s credit cards was frozen lately because there was activity in several states in one day. It’s a common security move, especially with all of the ID theft going on. That’s why it’s a good idea to call the companies of the cards you’re planning to use and tell them when you’re planning to leave and come back. It’s also important to remember that banks and credit card companies are going to start questioning you more severely, in and effort to prevent fraud and ID theft. One woman in Rhode Island had her credit card shut off recently. When she called to get it reactivated, they asked her several “unusual” questions. They asked her for her ex-husband’s name, her ex-husband’s sister’s name and what county she lived in. Enough criminals know your credit card number, social security number and your mother’s maiden name, which is a common security question. So, most questions aren’t protecting you from criminals anymore. As long as you’re aware of that, you don’t have to get offended when they ask you all kinds of questions. It’s for your own good.

Capital One, one the nation’s largest credit card issuers, is not reporting your credit limit to credit bureaus. Clark has offered Capital One multiple opportunities to come on the air to discuss this practice, but Capital One has continually not responded. By not reporting your credit limit, Capital One makes it look like you are spending money that your don’t have. This ends up lowering your credit card score tremendously. One customer’s score dropped 66 points. Another customer’s score dropped 43 points. Besides lowering your credit score, it also harms you from being able to move to another credit card. Not reporting your credit limit also hurts you when you are trying to get a mortgage or a car loan. Capital One is really doing its customers a disservice. If you have a Capital One card, do not close your account. Pay the down balance and then don’t use it anymore. This is key because paying down your balance will automatically increase your credit score. Hopefully, Capital One will realize how harmful this is to customers and turn this problem around. Until then, every time you see a commercial with a crazed Viking running around a mall and yelling, “What’s in your wallet?” remember that Capital One is really harming their customer’s wallets.

Interest rates are now rising on anything with variable rates. You would think, as a result, that interest rates on savings accounts would rise too. But that’s not the case. Some banks are still paying less than a half a percent on savings accounts. The exception is online banks, which are paying 2 to 3 percent on savings accounts in some cases. The problem is that very few people have accounts with online banks. Many think it’s not safe, but that is simply not true. These banks are FDIC insured just like bricks and mortar banks. You can find online banks on bankrate.com under the Savings area. For a checking account, you want to be able to go into a branch. But for savings accounts, it’s just fine. Also, Charles Schwab is again making it easier to do business with the well-known brokerage that has experienced some turmoil over recent years. Ameritrade has also launched a new $5 stock-trading program, which is a great deal.

Vending machines have started accepting credit cards instead of cash. A study by USA technologies has discovered that when vending machines accept credit cards then spending goes up 76%. Since credit cards are becoming the dominant payment choice, then in the future all vending machines will probably accept major credit cards. How many times have you tried to force a crumpled dollar into a vending machine? How much easier will it be to just insert your credit card? The reason that spending has increased so much is that when customers use credit cards they don’t really feel like they are spending real money. Are you one of those people? Are you spending money you don’t have? If you are, then try leaving the credit cards at home, and paying for your expenses in cash.

Clark got a call from his credit card company recently, telling them that his card had been shut down from use. He had gotten stuck traveling during a winter storm and had to buy new clothes in three different states before he got back home. So, the company blocked his account until he could prove that he’d been in all those places in one day. It’s a good benefit on the one hand because it prevents you from losing money if your card is stolen. But it’s also sort of a hassle when the card is blocked. Just be sure to call your credit card companies ahead of time to let them know you will be out of town, especially if it’s an international trip. That way, you won’t be blocked from using your card when you need it most.

It’s important that you shut down credit card pre-approvals in general to prevent identity theft, but it’s even more important if you’re planning to move. That’s because the companies continue to send pre-approvals to your address even if you move. Identity thieves can simply grab those forms out of your old mailbox and fill them out, pretending to be you. They then rack up all kinds of charges on “your account.” So, be sure you OPT OUT of those pre-approvals now! When you do, you can either opt out permanently or for five years. You can either call 1-888-5-OPT-OUT or go to optoutprescreen.com. It won’t eliminate every pre-approval. Frequent flier cards and hotel points cards are not blocked, for example. But it will take care of most of the offers you would have received.

Timing is becoming much more important in the credit card industry these days. The penalties people suffer for late payments are unbelievable, according to cardweb.com. One company, for example, charges a $155 late fee. Most fees are $35, but some base the fee on how high your balance is. What’s considered “late” has also changed. Some companies only count your payment as “on time” if it’s received by a certain time of the day. So, even if you get your payment in on the due date, it’s still considered late. And if you’re late on one card, it can trigger penalties from another company. Credit card companies are doing this because the industry has changed drastically. Very few people pay annual fees and about 40 percent of people pay their balances in full every month, meaning they don’t pay any finance charges. So, the other 60 percent are carrying the load for everyone else. If you pay your balances in full, you may be getting airline, money or gas rewards and you probably aren’t paying any fees. But if you’re part of that 60 percent you are getting gouged. You need to get out of that group as soon as possible. And you do that by not using your credit card until you can pay off your balance in full.

Capital One, one the nation’s largest credit card issuers, is not reporting your credit limit to credit bureaus. Clark has offered Capital One multiple opportunities to come on the air to discuss this practice, but Capital One has continually not responded. By not reporting your credit limit, Capital One makes it look like you are spending money that your don’t have. This ends up lowering your credit card score tremendously. One customer’s score dropped 66 points. Another customer’s score dropped 43 points. Besides lowering your credit score, it also harms you from being able to move to another credit card. Not reporting your credit limit also hurts you when you are trying to get a mortgage or a car loan. Capital One is really doing its customers a disservice. If you have a Capital One card, do not close your account. Pay the down balance and then don’t use it anymore. This is key because paying down your balance will automatically increase your credit score. Hopefully, Capital One will realize how harmful this is to customers and turn this problem around. Until then, every time you see a commercial with a crazed Viking running around a mall and yelling, “What’s in your wallet?” remember that Capital One is really harming their customer’s wallets.

Visa’s check card is supposed to help elminate debt by drafting money directly and immediately from your account that has money. But there are some problems with the cards. First, criminals can empty your checking account if they get their hands on your card. Who pays the bounced checks charges if your check card has been stolen? YOU DO! Also, on a real credit card, if you order something you have the right to dispute the charge if something happens to your order. Until now, you could not dispute an order problem on your check card. Visa is now offering modified dispute rights for check card customers. If you have a check card, look on the back and see if it says ‘enterlink’. If your card does say this, then you might be covered under Visa’s new policy. Make sure you check with your bank to see if you are covered before you begin ordering on your check card.

Have you ever gotten convenience checks in the mail from your credit card company? They usually come in a batch of three and are offered as a “convenience” for those bills you’ve accumulated after the holidays. But they’re not convenient at all because each check has different terms and conditions than the other two. For example, one check might have zero percent interest while another is 9.9 percent for an unlimited amount of time. The big gotcha is what happens when you use one of the checks and continue to use your card at the same time. Let’s say the regular rate on your card is 15 percent and the convenience check carries 5 percent interest. When you send in money, you probably expect that it’s going toward the 15 percent balance. But the credit card company applies it to the 5 percent balance so that more of your outstanding money is at a higher interest rate. So, when doing convenience check offers make sure that you have no outstanding balances on the account and that you don’t use the credit card until you’re done paying off the “convenience” charges.

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A similar situation is happening to consumers who own Lowe’s or Home Depot cards. These two competitors are in legal trouble because of their store credit cards, which are operated by GE. Both companies told customers that if they used their store credit cards, and spent a certain amount of money, they would have no interest for six months. The problem arose when people sent in their payments. GE applied the payment to the zero percent balance and no money toward higher-interest balances. Home Depot and Lowe’s have now reached an agreement, whereby people can choose which account they’d like the money to be applied to. Also, avoid “No, No, No” plans when buying things. Companies that do these plans avoid telling you when the deadline is for your free interest period. That’s because the interest on that purchase is retroactive (usually at 22 percent to 25 percent) to the date of purchase if it’s not paid off by the deadline. Also remember to send every payment by Fed Ex or UPS tracking.

Tens of millions of people have damaged credit or “thin file credit,” which means they have never had credit. If you are one of those people, you may get solicitations from credit card companies offering you all kinds of cards. The problem is that the offers are either a not worth it because of the upfront costs, or they are scams that could clear out your checking account. They are known as “advanced fee loan” credit cards, and they require you to pay money up front to get the loan. It can be an offer to expand a business, an offer to get your first credit card or others. But, in many cases, you pay the money and there is no card or company. It is just a scam to get to your bank account. The worst part is that most of the time the scam artists are from another country. So, it’s next to impossible to get your money back. The fee is usually a couple hundred bucks, which may not seem like a lot. But it adds up. And for people with already-damaged credit, this kind of decision can be devastating. It’s the No. 1 crime on the Federal Trade Commission’s list of scams, so warn your friends and family if they are thinking of applying for one of these cards.

Do you have a credit card that gives you bonuses? There are some amazing things coming in the credit card business over the next 24 months for people who pay their credit cards in full. People are applying for cash reward cards because they offer such good deals. And now more people will be able to acquire American Express cards more easily. To give some background, banks haven’t had a choice about which credit card they can offer you. It’s been either Visa or MasterCard. But now, because of an anti-trust case headed for the Supreme Court, Amex is about to break the Visa/MasterCard monopoly. So, if you pay your bills in full every month, you will hit the sweet spot with credit card offers. Visa is in such fear of Amex that the company is promoting a premium program known as the “Signature Program” that competes with some of Amex’s premiere programs. So, over the next year, open up the credit card offers coming in the mail. They could be worth it. Clark prefers the cash reward cards, which offer you between 1 and 1.5 percent cash back on your purchases. If you are able to redeem airline rewards often, you are better off with airline cards. But you have to be flexible because airlines have so many rules with those deals. With cash, there are no rules. If you’re not getting anything in return and you pay your bills in full, you are losing out. You could be making easy money.

You may have heard that the credit card industry is trying to create a card that allows people to deduct money from 401k plans. When Bank One first came out with this idea, there was a lot of heat and Bank One walked away. But it appears that the banking industry doesn’t want to give up on the idea. According to the Washington Post, it’s being presented in Washington D.C. tomorrow and, if all goes as planned, will available in Connecticut first. It would allow you to do instant borrowing from your 401k account, and it’s got to be one of the worst ideas Clark has ever heard. Not only does the card cost $50 a year, but also the creators encourage you to use it on a daily basis. About one in five people already borrow against their 401k accounts and have outstanding debt. We don’t need anyone else doing this. Your 401k plan is for your retirement. You don’t want to tap into it before you reach that act. It’s not a smart thing to do, and it will also cost you tons in taxes. About 40 percent will be taken out if you do an early withdrawal. So, leave your money alone and let it grow. Participation in these plans and the amount people are putting in are both declining, statistics show. You want to start contributing if you aren’t already, and it’s best to put in at least six percent. That usually guarantees a company match if there is one, and 401k plans with a company match is a complete no-brainer. It’s free money! Don’t treat your 401k as a piggy bank. You will regret it.

Clark has great news for you if you carry a credit card, or two or three. The U.S. Supreme Court has busted up a monopoly when it decided not to decide something. Sound confusing? To give some background, there has been a shared monopoly between Visa and MasterCard in the banking industry. Basically, banks have been prohibited from issuing any credit card other than Visa or MasterCard to its customers. Banks fought to keep this monopoly in place for years, with appeal after appeal. Well, the banks took it all the way to the Supreme Court, and the high court shot them down, too. So, essentially, by agreeing with all the other court decisions, the Supremes have decided once and for all that the monopoly should not exist. Now, there will be far more competition in the credit card industry. For example, Diner’s Club is now going to offer a Diner’s Club MasterCard. American Express will soon issue cards through MBNA bank. Creative ideas are going to come out of the box. It creates a new playing field, and you and I will benefit. What matters after that is that you come up with a plan to pay down your debt.

The Federal Reserve is in the process of raising interest rates right now. The Feds actions directly affect you if you have outstanding balances on credit cards. Roughly 60 percent of us have balances on cards, and many of these are variable rate cards. So, as the Fed keeps raising rates, the interest you pay on variable rate cards will go up. The same is true for home equity lines of credit. Many home equity lines have gone from 4 percent to 4.75 percent. If you have variable rate debt, you need to pay it off. The inflation rate over the past 12 months has been about 2.7 percent. So, if you’re paying anything more than that, your money disappearing from your pocket! Most credit cards have interest rates of more than 14 percent. So, if you have this problem, you need to come up with a plan. The No. 1 objective is to stop using your credit cards the cards. Put them in a bag with water and throw it in the freezer. By the time it melts and you can get to the card, the urge to use the card will have passed. If your balances are aggravating but manageable, figure out what you need to do to pay off that debt in two years. Then, get it done!

How frustrating is it when your credit card company suddenly raises your interest rate without your knowledge? Some people don’t even know it’s happened. According to federal regulations, credit card companies can change the terms on your credit card agreement on 15 days notice. Even worse, many banks wait until you’re deep in debt to increase your rate. But the Office of the Comptroller of the Currency is finally doing something about this travesty. First of all, they have made it illegal for banks to entice people with low rates and high credit lines that change down the road. Also, when credit card companies solicit for cards, they have to tell you the truth about when they can raise the interest rate or raise the fees. But it’s up to you to read the card member agreement and find out. It applies to most new credit card companies and new solicitations. So if you already have the card, it doesn’t apply. What happened to these banks to make it okay for banks to lie and cheat you? And what took the federal government so long to do something about it?

If you pay your credit card balances in full, these are the best of times for you. On the other hand, if you only pay the minimum, these are not good times for you. Basically, the industry is splitting into three different business models. The first group is geared toward people who charge a lot and pay balances in full. The second group has maxed out their credit cards, can only pay the minimums and has outrageous interest rates on the cards. The third group pays more than the minimum, but can seem to pay off the cards. The industry used to abhor those people who paid balances in full because they didn’t make any money off of them. But now they are the favored group because they are making a lot of money off the charges they make through “merchant’s fees.” It’s led to an amenities war between cards from which you will benefit. The hottest amenity is the cash back rewards card. American Express has just introduced a new one that is, right now, only available to Costco members. It’s called the “True Earnings” card and you get 1 percent on anything you buy, 3 percent on dining and 2 percent back on any travel-related expenses. The target market for this is business people who travel a lot. Amex was worried how much this would cost the company, so decision makers capped the amount you can charge at $100,000 a year. That may sounds like a lot, but people who own businesses charge a lot on these cards. Another Costco/American Express card is the “Cash Reward,” which offers 1.5 percent on all expenses. Check out a full list of rebate cards at cardweb.com.

When you use a credit card, how do you use it. In some parts of the country, you simply wave your card and the amount is billed to your card. But what about using your finger to charge items. Credit card company, Discover, is experimenting with biometrics as a way to charge items on your credit card. All customers would have their fingerprint scanned. Each fingerprint would be assigned a number. And when your finger is scanned at the store, your card is charged. It’s a bit creepy, but it’s a great way to prevent identity theft.

Do you have a credit card that gives you bonuses? There are some amazing things coming in the credit card business over the next 24 months for people who pay their credit cards in full. People are applying for cash reward cards because they offer such good deals. And now more people will be able to acquire American Express cards more easily. To give some background, banks haven’t had a choice about which credit card they can offer you. It’s been either Visa or MasterCard. But now, because of an anti-trust case headed for the Supreme Court, Amex is about to break the Visa/MasterCard monopoly. So, if you pay your bills in full every month, you will hit the sweet spot with credit card offers. Visa is in such fear of Amex that the company is promoting a premium program known as the “Signature Program” that competes with some of Amex’s premiere programs. So, over the next year, open up the credit card offers coming in the mail. They could be worth it. Clark prefers the cash reward cards, which offer you between 1 and 1.5 percent cash back on your purchases. If you are able to redeem airline rewards often, you are better off with airline cards. But you have to be flexible because airlines have so many rules with those deals. With cash, there are no rules. If you’re not getting anything in return and you pay your bills in full, you are losing out. You could be making easy money.

There are some very smart people in the world, including one IBM employee Clark read about today. The man, whose name is Ed Kelly, had his calling card number stolen, and criminals were using it all over the world. So, after working through the problems and hassles of the crime, he and another IBM man came up with the idea for a secure credit card. The credit card has a secret code and what looks like a built-in calculator on it. You must enter a secret code into the calculator in order to use the card. How brilliant is that? It would also be a great solution for the risky debit cards that people often steal and use. Clark also thinks people should have the option of using a secret code when using credit cards at retailers. It would help prevent identity theft and would be completely up to the customers about whether or not they want to use it.

There is a change coming in health care right now that may affect you this year. As most of us know, dealing with insurance paperwork is a nightmare. Reconciling the provider’s bills, the insurance company statements and getting it all straight is quite confusing. So, what’s the answer? Well, the credit card industry may have a solution. The industry is creating credit cards that are only used for medical purposes. In many cases, they’ll have a Master Card or Visa logo on them, and United Health is one company already doing it, according to Business Week. These plans tie in perfectly with flexible spending accounts. Instead of filling out all kinds of paperwork for reimbursement and then getting a check, the money is deducted directly from the card account. Depending on the health provider, the cards will serve different purposes. But they will become more common because they are so convenient.

How many credit cards do you have? Clark carries two personal credit cards and three corporate cards. He’s happy with the number. According to CardWeb, the average person is carrying 4.5 cards. Of those, how many do you use often? Clark does not use the three corporate cards very often because technically they’re not his. Joni, on the other hand, has five cards that she uses often. She’s come a long way, though. She used to have 17 cards. If you have three cards but you only use two, take that third one out of your wallet and leave it at home. Why? If your wallet or purse is stolen, you’ve brought all kinds of problems into your life unnecessarily. Take some time to clear out your wallet or purse and lower your risk.

Clark carries a company credit card that he uses when he's travling on business. The bill for this card goes directly to the company and gets paid without Clark ever knowing. So, what is he liable for if something goes wrong with that card or if the company goes bust? First of all, if you have a corporate card, you need to know if the cardholder agreement says you are liable. So, ask the company for those terms before you agree to take the card. In most cases, you will have to pay even if the expenses were for the business. MasterCard issuers do not hold the cardholder liable, but American Express does. And it reflects directly on your credit report. Many people are also getting hit with late fees because they are waiting for the company to pay the bill and it’s getting paid late. So, keep track of this account even though it’s supposed to be your company’s responsibility.

Pre-approvals for credit cards probably arrive in your mailbox pretty often. Clark received one the other day for a card with no annual fee, 3.49 percent APR and $100,000 line of credit. Sounds pretty good, right? Well, it depends on whom it’s being offered to. The one Clark found in the mailbox the other day was addressed to his 4-year-old daughter, Stephanie. She would have to do almost nothing to receive it. So, if kids get a hold of these offers, it would be very easy for them to get cards and start charging. Banks are targeting teens from eighth grade on up because they know that if kids can’t pay the bill, their parents will. It’s very important to educate your children early about money for this very reason.

Home Depot is facing several lawsuits over alleged mail fraud and wire fraud involving its credit card operation. Home Depot’s credit card operation brings in about one of every four dollars that the company makes, according to Bloomberg News. And the company recently switched the bank that handles its account. They moved their account from a division of GE to a division of Citibank. And when Citibank took over, the company changed how it charges customers interest. If you buy something from Home Depot and use the credit card, the new operator takes any payments you make and applies a lower interest rate to that amount. But any existing balance you had from before gets charged a much higher interest rate. Now, people are lashing out against Home Depot, saying that the company never disclosed information about this change. The company has gone into hiding and hasn’t said much about the lawsuits. As a result, Home Depot will probably get a black eye and will probably go back to the old way of charging interest. But you need to remember that credit card companies routinely do this. They will reel you in with a low rate and then apply payments in the method that is most favorable to them. That’s why you have to compartmentalize your credit card use. If you get a special offer of no interest or low interest for a year, it only applies to the charges fitting that specific condition. Do not use that card for any other purpose and pay off the balance before you do a transfer. And Clark thinks Home Depot should step up to the plate and own up to what it’s done.

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In addition, some credit cards are upping their late fees to $50. If you are a second late with your payment, you could suffer huge fines and your interest rate may jump up. Clark doesn’t know if there is a limit on these fess, so make sure you make your payments on time every month. It’s so important!

When people see something they consider a “deal,” they pull out their plastic and buy without hesitation. We don’t make a connection as to whether or not we can actually afford that item. But when the credit card bill comes, we may not be able to pay it. Clark saw a story from MapInfo about how we spend money, and how often we spend it on things we can’t afford. Turns out that people in the Southeast are willing to spend more money than they have. There is no explanation for it. It just is. And, two other places where people spend money like crazy on credit are Alaska and Hawaii. But bad habits with credit can happen anywhere. And 60 percent of us are using credit in the wrong way. Traditionally, people bought things when they could pay for them. Today, we have no qualms about charging when we have no money in our account. Clark likes the idea of using something similar to a check registry with credit cards. If you don’t have money in your “account” you don’t charge. Roughly one-third of us are struggling to hit the minimum payment. If you just keep paying the minimum, it will take about 40 years to wipe out the balance. Slight lifestyle changes will get you out of debt quicker than you think. Putting yourself on an allowance for "walking around money" is one way.

Clark mentioned recently that delinquencies on credit cards are at an all time high at $2 trillion. So, we’re carrying a heavy debt and we hit a rough patch. Either we lose our job or we’re having a hard time in our relationship. The debt on top of that can push us over the ledge. So, banks and credit card companies are really nervous. They have been profiting by shoveling more debt out there and writing it all off. So, now they’re using a new device to pick us apart. Credit card companies are now checking your credit report every month. Bankrate.com reports that 40 percent of banks have also already added “universal default” clauses to their agreements. These clauses basically say that if you pay nine out of ten bills on time, the one “late” payment translates to all banks. And you are considered “late” on the on-time payments. Under the clauses, if you’re late on one card, another company can jack up your interest rate. So, make sure you’re paying your bills on time every month. And work to pay off your credit card bills in full every month. It will make you stronger. Using electronic bill pay is also a great way to avoid being "late."

A number of statistics have come out in the past 24 hours about the amount of debt we consumers are taking on. Delinquencies on credit cards have hit an all time high, and consumers have been unable to make even the minimum payment each month. In addition, delinquencies for auto loans and home equity loans are up. And bankruptcies will reach 1.6 million families this year. That’s one in every 65 families filing for bankruptcy in just one year. It all ties back into the fact that we, the American people, have drowned ourselves in debt. Debt creates so much stress and weakness in our lives that it is all consuming. Over the last ten years, consumer debt has more than doubled. It’s up to $2 trillion now. So, on one hand we’ve taken on tons of debt. On the other hand, the average person is saving about two cents on each dollar of income. Positive and negative habits build over time and you’ve got to keep them under control. Maybe it’s not a big problem for you, but the average debt is $7,000 per household. And, if you pull out the 40 percent of people who pay their balances every month, it’s actually $12,000 on average. Many people have been able to play successful games moving credit card debt from one card to another, which lessens the pain. But the average interest rate is still 15 to 17 percent. And credit cards are able to charge that rate of interest because people play tricks on themselves thinking they can pay the charges plus interest with no problem. So, if you’re carrying large amounts of debt, take your credit cards and put them where you can’t use them. Clark used to recommend cutting up credit cards as a way to stop using them, but that turned out to be harder than people thought. So, now he suggests that you put the cards in a bag of water and put them in the freezer. That way they’re not gone completely, but it’s easier not to use them.