Newest credit card tricks exposed

Those who claimed banks would halt zero percent interest rates on credit cards upon adoption earlier this year of tough credit card regulations were wrong.

We just received a zero percent credit card offer from the Discover Card. But there is a major catch that many recipients of this solicitation are apt to overlook.

Transfer balances to take advantage of this deal, and you get zapped with a 5 percent balance transfer fee. Not only that, but if you make a late payment or your account is overlimit twice, the special rate ends, and that zero percent interest could rise to a "default rate" of up to 29.99 percent.

You need to be a detective to track all this down. The balance transfer fee is reported underneath the "Schumer's Box," a grid that's supposed to provide key credit card pricing information.

Yet, that balance transfer fee is critical. A 5 percent fee on a $5,000 balance transfer costs $250.

Dead on arrival: Our interest in this zero percent deal.

Discover spokeswoman Laura Gingiss says a footnote at the bottom of the solicitation's front page directs cardmembers to the important information. "That said," she says, "based on customer feedback, we have taken steps to improve disclosures in the copy of the letter itself to make it even more transparent…"

This confusing solicitation, Consumer Federation of America indicates, may be the tip of the iceberg. Sleazy credit card practices — despite the economic plight of our families — continue. Credit card reform, so far, has proven little help.

Consumer Federation of America claims credit card companies are indiscriminately raising interest rates on existing and future credit card balances. They're hiking annual fees and balance transfer fees. Banks continue to raise rates on borrowers with a supposed problem with another creditor-even if they're making timely payments.

They're canceling cards without warning – especially to those with low usage, raising minimum monthly payments without notice and posting outdated information on credit card pricing on their web sites.

Plus, they're still requiring cardholders to accept binding mandatory arbitration, and failing to disclose that you can opt out of changes to the terms and conditions of your credit cards.

So what can you do?

Check the most important terms of a credit card offer. Fees may come under a variety of names, warns the Federal Trade Commission. They may be termed "annual," "activation," "acceptance," or "participation" fees. They may be assessed monthly, periodically or as one-time charges, and can range from $6 to $150. "What's more, they can have an immediate effect on available credit. A card with a $250 credit limit and $150 in fees leaves you only with $100 in available credit."

Watch for higher cash advance rates and fees.

All balance transfer offers are not the same. Besides a possible balance transfer fee, you also could be charged interest retroactively if you pay late or fail to pay off your transferred balance before the introductory period ends.

Use your card to make new purchases, and any payments will go toward balances with the lowest interest rates. Finance charges at higher interest rates will be assessed on the portion of your balance that came from new purchases.

"If you don't understand how your balance is calculated," the FTC advises, "ask your credit card issuer."

Spouses Gail Liberman and Alan Lavine are syndicated columnists. Their latest book is "Quick Steps to Financial Stability" (Que/Penguin). You can contact them at www.moneycouple.com.