Credit CARD Act rewards faster balance pay off, boosts credit scores

Paying more than the minimum amount on your credit card balance has always been a prudent way to reduce account balances faster and save money. New federal regulations make that tactic even more rewarding.

Under the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009, when you pay more than the minimum, not only will you shrink your balance more quickly but you could boost your credit score as well, thereby reducing future credit costs.

The Center for Responsible Lending (CRL) says a little-known provision of the CARD Act focuses on how payments are applied to your credit card balance. In its report "Capitalizing on New Consumer Protections," the CRL says many consumers are unaware a credit card can have several balances at different annual percentage rates (APRs) -- a promotional or "teaser" rate for initial purchases, a cash advance rate and a rate for subsequent purchases.

Before CARD Act provisions took effect in February, credit card issuers applied all payments to the lowest APR balances first, leaving you and higher APR balances hanging.

This year, that changed to benefit consumers who want to pay down their balance faster and boost their credit score.

You've got news!...News that really hits home! Here: "Faster Card Balance Payoff Boosts Credit Scores".

Image: Gift Card (Petr Kratochvil, PublicDomainPictures.net)