Do Your Part To Get Credit Under Control

Donald Kohn, Fed vice chairman, with Fed governor Kevin Warsh, at a meeting about cracking down on deceptive credit-card practices. (By Brendan Smialowski -- Bloomberg News)

· A ban on the widespread practice of imposing higher interest rates on balances incurred before a rate increase went into effect, unless the cardholder is more than 30 days late in making a minimum payment.

What you can do:

· Automate your bill-paying. Absent extenuating circumstances, you'd better believe the banks are going to stick to the new rules and impose late fees whenever you falter. If you're 30 days behind, they'll pounce on the opportunity to raise your interest rate. And by the way, the banks will still be able to raise your rates on new charges if your credit profile changes for the worse.

To avoid getting hit with a late fee or a rate increase, now's the time to get used to online banking. If you have a phobia about using technology, get over it. It's not really that difficult. There's the initial set-up time, which includes entering all your information, but after that, all you have to do is download the information. Online banking allows you to set up a system in which you are alerted when your bills are due.

In another rule change, banks will have to stick to the promised fixed rate they offer. Advertisements may refer to a rate as "fixed" only if a time period is specified for which the rate is fixed, and the rate can't be increased for any reason during that time. When you open a credit card account, banks will have to disclose all of the interest rates that will apply. There's a prohibition on increases in those rates, except under certain circumstances.

· Get serious about paying off outstanding balances. Make a habit of charging only what you can pay off in the following month.

Don't hang onto debt figuring you'll be able to roll existing debt onto new cards with no or low interest. We're already seeing significant reduction in available credit. You won't see many -- if any -- zero percent interest or extremely low interest rate credit offers. Because the new regulation increases the chance that banks will actually have to honor those offers, fewer customers will get such deals.

If you haven't handled your credit card well, make it one of your financial New Year's resolutions to change. The government has offered some help, but it doesn't arrive for a while. Until then, you'd better do everything in your power to handle your credit perfectly to avoid the unfair practices still allowed.

· On the air: Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and at http://www.npr.org.

· By mail: Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.

· By e-mail: singletarym@washpost.com.

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