Bank of America raise a flurry of criticism this week when it announced that it was going to start charging its customers a $5 month fee for use of the debit cards that are issued with checking accounts. Bank of America and other banks have initiated these new monthly fees in response to the new lower transaction fees that retailers pay banks when accepting debit cards for consumer transactions. These so called “swipe fees” used to average 44 cents a transaction and now they are half that. Retailers will benefit the most from the lower swipe fees, and all it takes is a few of them to pass on the savings to consumers for everyone else to benefit. Banks, however, aren’t taking the change sitting down, because they got used to making huge profits from high swipe fees.

According to the Washington Post:

Perhaps the bank’s decision simply reminded us all over again that we are living increasingly in a fee-littered world, where companies continually seek out new ways to nibble away at our wallets by charging for the smallest of once-free services, leaving many customers feeling nickel-and-dimed.

“The proliferation of a la carte fees has inundated the economy,” said Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group. Companies “are inventing new fees; they are making it harder to avoid fees; they are increasing the fees. . . . It’s much more complicated to be a consumer”

Banks like Bank of America got used to racking up big profits from the debit card swipe fees, and rather than accept less (some would argue reasonable) profits, they are looking for ways to profit through customer fees.

Many people are fed up with fees for everything. They especially hate sudden large price increases like Netflix announced. And people notice when something was once free, like luggage on airlines, are suddenly seen by businesses as new areas for profits.

After announcing the debit card fees, Bank of America saw its stock drop 9%. It is threatening to lay off thousands of its employees. It calculated that some of its customers would leave the bank and find a new bank that does not charge a monthly fee for debit card use. However, prepaid cards are a good alternative for them.

Prepaid Cards Offer an Alternative

While prepaid cards have always had monthly fees, those fees are straightforward and perceived as necessary to cover the business costs of the prepaid card companies. They are not on top of other fees, like minimum balance fees on checking accounts, or overdraft fees.

More and more people are getting rid of their checking accounts, to avoid annual fees, and minimum balances, and the risk of overdrafts, and the costs of printed checks. These people like prepaid cards, because they can still pay with plastic, manage their finances without going into credit card debt, and get cash when they need it from ATMs, or cash back on purchases.

With the holiday shopping season fast approaching, both online retailers and bricks and mortar stores are hoping consumers are finally ready to buy. Amazon continues to grow at a fast clip by taking sales away from the Big Box stores. Indeed, Borders finally went bankrupt, because the chain just couldn’t compete. Stores like Best Buy are counting on people wanting to browse physical items and perhaps get help in their buying decision from a store clerk. Yet, some shoppers will visit a store, get help from a clerk, look at all the items on the shelf, do their research, and then go home and order from Amazon.

Some retailers are fighting back by pushing for legislation requiring Amazon to collect sales tax. They have successfully had laws passed in Illinois and New York State that online retailers must collect sales tax on purchases for customers who live in those states. Walmart’s executive vice president of global e-commerce said in the Wall Street Journal: “The rules today don’t allow brick-and-mortar retailers to compete evenly with online retailers, and that needs to be addressed.” Historically Amazon hasn’t had to collect sales tax unless it had physical operations in the state trying to collect the tax. California recently passed a law to collect sales tax from Amazon due to the thousands of bloggers who get a small percentage of every sale that they pass via a link onto Amazon. Amazon decided to end its affiliate program in California rather than pay the tax.

Walmart and other large retailers such as Target, Best Buy, Home Depot and Sears are backing the Alliance for Main Street Fairness, a Virginia-based organization that is helping to lobby in all states for the collection of sales tax by online retailers.

Big Box stores if they want to survive can’t continue to do business as they have always done and expect to compete against Amazon. Amazon can stock far many more items than any physical retailer. Thus, big box stores have to make sure they have the right products at the right time and at the right price. They have to get better at managing their supply chains, to reduce inventory so that they do not get stuck with obsolete product. They also have to make sure their price is close to Amazon’s price.

Chains like Target have long understood the value of having a pleasant shopping environment, with spacious aisles. Target is also fighting back by pushing its own store brands like Archer Farms. Sears for years benefited from having a strong brand in Craftsman tools. People would come to Sears just to get a Craftsman wrench. Similarly, Best Buy, Barnes and Noble, and other Big Box stores will have exclusive deals with manufacturers to have a ton of low priced hot products from a brand that is not the top tier but perhaps second tier. Think Vizio LCD tvs, not Sony, stacked up in the front of the store.

It still pays to visit your Big Box store for your holiday shopping, to get a sense of the trends, and price points. Then you can either buy while you are at the store, or whip out your smart phone and price check Amazon. There are bar code scanning apps that make it effortless to check the price of any product with a bar code on Amazon. Just take a photo of the bar code with your phone, and let the app call up the Amazon price.

Some day, we may buy everything on Amazon, but then, what will happen to all those retailing jobs?

Preparing meals at home has always been more cost effective than eating out. And in this economy, eating in a sit down restaurant may seem like a splurge. That’s why it’s important to feel like you are getting your money’s worth when you do eat out. Here are some ways to save money on your next restaurant meal.

#1 Avoid the specials

Have you noticed that when wait staff tell you the day’s specials they fail to mention their price. That’s because specials are usually priced higher than the menu items. Often, they are 50% higher. The wait staff is encouraged to “push the specials.” They are meant to entice you with special ingredients–”reduction of this” and “compote of that.” The wait staff is counting on the natural response of not wanting to sound like a cheapskate by asking about the price.

#2 Ask for extra bread

Most restaurants try to fill you up with baskets of bread before your first course arrives. Don’t be shy about asking the wait staff to bring you more bread so you can eat copious quantities of it while eating your soup or salad or main entree. Sometime restaurants can be stingy about the complimentary bread.

#3 Go easy on the appetizers

Some waiters trick you into ordering too many appetizers by prompting you to order more than one appetizer. You might order one appetizer, and they raise their eyebrow and ask, “Is that all?” Or they say that another appetizer is also good, implying that each person at the table should eat their own appetizer. Some restaurants also offer appetizer samplers which combine two or more appetizers on the menu, but these samplers inevitably are priced higher, sometimes three times higher than any one appetizer. Unless you are making a meal of just appetizers, save room for the main course.

#4 Or make it a meal of appetizers

It’s perfectly acceptable to just order from the soup, salad, and appetizer sections of a menu and not get a main entree. Don’t let the wait staff make you feel bad. It’s your meal, not theirs. Spanish tapas restaurants, which give you a bunch of small appetizer plates by design, are paving the way for this trend.

#5 Split plates with a friend

Again, don’t be shy about asking to split a salad before the main course, or to split a main course. Just tell the waiter with a straight face, “we’re grazing.”

#6 Skip dessert

Do you really need that $7 piece of pie or scoop of ice cream on a brownie? Hold off on desert until you get home, where if you want to splurge, split a pint of Ben and Jerry’s with your date.

#7 Drink water

Drinks are pure profit for restaurants. Often, you can be perfectly content having a fine meal, and washing everything down with ice water, instead of iced tea. Ordering a bottle of wine or beer can increase your restaurant tab by 30%-40%, so don’t do it unless you want to. Waiters hate it when everyone around a table orders water instead of iced tea, cokes, or beer, because they just see a lower bill and a smaller tip.

#8 Order the cheapest bottle of wine

OK, let’s say you see five bottles of white wine starting at $18 and ending up at $60. Somewhere in the mix is a $27 bottle of wine which is the most popular seller, because the restaurant knows that you won’t splurge on the $60 bottle unless you are trying to impress someone, and you won’t order the $18 for not wanting to look cheap. Don’t worry about it. Get the $18, because it’s really a $9 if you were to get it at the grocery store.

#9 Eat at a restaurant that lets you bring your own bottle of wine

Often, new ethnic restaurants that don’t have a liquor license, like that cute Vietnamese place off the main drag, encourage you to bring your own bottle of wine. Find those places and frequent those places.

#10 Wash dishes

As crazy as this sounds, sometimes you can set up a deal ahead of time with a restaurant owner to trade a meal for a service. If you literally don’t want to wash dishes, and you have a skill like marketing, you might offer to design a flyer for the restaurant or set up a Facebook page in exchange for a meal.

#11 Complain about anything that was wrong with the meal.

Meal too salty? Let the waiter know and odds are the chef will want to make you happy so you will come back. Sometimes you can get a complimentary dessert out of it.

#12 Ask for a take out box for any leftovers

If you can’t finish your meal, sometimes you can eat the leftovers for lunch, saving money by not buying that lunch.

So there are 12 money saving tips to consider the next time you eat out. Know that MiCash MaserCard is accepted at any restaurant that accepts MasterCard debit cards. Just look for the MasterCard logo.

If you really want to save money, try to recreate your favorite restaurant meal at home.

Do you have too many credit cards including department store cards? If you want to cut up a credit card, make sure you understand how to cancel a credit card without hurting your credit score. Just follow these steps.

Step 1: Pay off the card in full. This means you bring your balance down to zero.

Step 2: Check to make sure the balance is zero by calling Customer Service or checking your account a balance online. Call Customer Service to make sure the balance is really zero. Interest may have still been accumulating.

Step 3: Cancel the account over the phone—not by email or online—once you confirm that the balance is zero. At this point, the credit card company may try to entice you to stay by offering you some special deals like a lower interest rate. Funny how they don’t offer these deals to you even if you ask for them, until you announce that you want to close your account

Step 4: Confirm that the account is closed by writing the company and asking for written confirmation that the account is closed. Be sure to keep a copy of whatever communication the card company sends you. File it away, because you never know when you might need it.

Step 5: Check your credit report after a few weeks to be sure that the account is really closed. It can take a while which is why you should wait a few weeks. You can check your credit report for free, by law, once a year. Be wary of companies that want to overcharge you to get your credit report from one of the three credit reporting agencies. Experian, Equifax, and Trans Untion. The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. The FCRA promotes the accuracy and privacy of information in the files of the nation’s consumer reporting companies. The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the FCRA with respect to consumer reporting companies.

It’s a pervasive myth that closing a credit card account will automatically lower your credit score (also known as a FICO score). This is not necessarily true. It’s only true if your credit utilization ration is affected. This ratio is calculated by taking your total used credit and comparing it to your total available credit; the higher this ratio is, the more it can negatively affect your FICO score. Essentially, by closing an old or unused card, you are eliminating some of your available credit thus increasing your credit utilization ratio.

“To close card accounts and not affect your credit score, you need to only have zero balances on your credit report for all of your active credit cards. If you have zero balances your credit utilization rate is zero, and you can’t raise it — and potentially hurt your score — by closing one or more of the active card accounts.

But you may be asking yourself: if I can bring the card to $0 balance what would I really gain from closing it? It’s not like the credit card company will charge interest on a $0 balance card. Also, one barrier to keeping a card active without a balance is the annual fee. So, if you want to avoid an annual fee, then go ahead and close it. Finally, in closing, let me say that having 1-20% of credit utilization ratio is the best. So simply make sure that after closing the card you don’t want, your credit utilization ratio is still between 1-20% should do the trick.

There are literally millions of plastic credit cards and debit cards produced each year in America, and most all of them end up in a landfill (unless you burn them). Currently most credit cards are made from polyvinyl chloride (PVC) which is a petroleum-based plastic, currently non-recyclable. The Association of Post Consumer Plastics Recyclers declared efforts to recycle PVC a failure and labeled it a contaminant in 1998

If you are a die-hard environmentalist, there are a few cards out there made of PET, which is recyclable. You have to look for the PET recyclable logo on the back of the card.

The type of plastic made of corn starch will break down after 84 days, but only if left out in the sunlight. It doesn’t do any good to make credit cards or debit cards out of this plastic because they will wind up in a landfill and not break down.

The future of money is digital, and eventually, we won’t have to carry around plastic cards to make purchases. Instead, our account information will be in a computer chip than can reside in a cell phone, or perhaps our wallets. We will just wave and pay instead of swiping plastic. However, it may be another 20 years before this is universal.

In the meantime take comfort in the fact that the card in your pocket uses very little plastic relative to all the other products you buy made of plastic. As oil becomes more expensive, perhaps card manufacturers will switch to a more eco-friendly plastic.

The Consumerist blog reports of a waitress who used a device to steal the credit card and debit card numbers of customers she didn’t like. These devices are known as skimmers. They are used by criminals to swipe debit and credit card numbers and then create phony cards. The waitress in question would take customers cards in a back room out of site, and then use a skimmer to snag the account numbers and address associated with the card. This data is stored on the magnetic strip on the back of the card.

“During the interview, she identified the people she skimmed were the ones that ran her around, made her work real hard,” a detective tells WTSP-TV about the waitress. “Maybe she’s scared of a hard day’s work.”

The waitress got the skimmer from a cousin. She would swipe the cards, give the purloined information to the cousin and his ex-girlfriend who would use the bogus cards to buy thousands of dollars worth of goods at Radio Shack and Walmart. These purchases were then sold for cash.

The waitress, in Port Richey, FL, got caught when a customer was hit with thousands of dollars of charges to her card, and remembered the waitress’ suspicious behavior.

What You Can Do To Protect Yourself

One thing you can do is not let a wait person take your card out of site. Many restaurants swipe your card in view, at a cash register. Ask if you can accompany them to their station where they swipe the card.

If you choose to let your card out of your site, then be sure to go on line and check your transactions for any that seem suspicious. With the MiCash Mastercard you can check your transaction history and balance any time you want by going to MiCash.net and using the cardholder log in link.

Keep your restaurant receipt and compare the total to your transaction history. Some unscrupulous wait persons secretly tack on money to your tip. It happened to me. I split an $80 dollar restaurant tab with a friend. We each expected a $40 charge on our card plus a $6 tip. The waiter changed the $6 tip to a $20 tip from each of us. When I complained to the manager he corrected my bill and fired the waiter.

In Europe, cards with magnetic strips are rare. Instead, your information is encrypted on a computer chip inside the card. Because the card readers for these chips represent a new investment across the retail supply chain, they have been slow to catch on in the United States, but eventually they will.

Are there downsides to owning a prepaid debit card? While we know that prepaid cards are a great way to manage your money, especially if we’re talking about the MiCash MasterCard, there are a few pitfalls you will want to avoid, should you decide a prepaid card is right for you.

Pitfall One: Fees

The only way a prepaid card company can afford to stay in business is to have some way to earn revenue from issuing prepaid cards and supporting customers. Typically, card companies charge a monthly fee, however, MiCash does NOT charge a monthly fee. The primary fee structure for prepaid cards is a transaction fee for every purchase at the point of sale. For MiCash cardholders, this fee is 95 cents added on to your purchase. MiCash charges $2 for an ATM withdrawal. Tip: when making a purchases, for example at the grocery store, add some cash back on your purchase, and you can avoid having to go to an ATM for cash. There’s no extra charge for this, so you just pay the 95 cents.

A MiCash cardholder making 20 purchases a month (which is average) will expect to pay about $20 a month. Compare this to carrying a $2,000 balance on a credit card at 15% interest, which translates to spending $25 a month on interest.

MiCash is proud of our low fee structure. If you go with a different brand card, make sure you understand any hidden and unusual fees. Some cards in addition to point of sale fees also charge a reloading fee and even inactivity fees.

Authorization Holds

When you pay for gas at the pump, typically a $75-$100 credit authorization hold will be placed against your card. This means that the gas station temporarily authorizes that amount, plus your gas purchase, to make you have enough money to cover the purchase of a full tank of gas. This preauthorization is cancelled upon purchase, so you aren’t charged it. However, you need to have that much cash in your card account or otherwise the card will be denied. Similarly, a hotel might put an authorization hold on your card of as much as $500, and unless you have that much on your card to cover the temporary charge, your card will be denied. So, it pays to keep a larger balance on your card, at least for gas purchases, to avoid this inconvenience.

Acceptance

The MiCash card is accepted wherever debit MasterCards is accepted, which is literally millions of merchants around the globe. Just look for the MasterCard sign. Occasionally, however, a vendor will only accept credit cards and not prepaid cards. Some stores and restaurants don’t accept either credit cards or prepaid cards.

Lost or Stolen Prepaid MasterCard

If your prepaid card is lost or stolen, you need to report it right away. If a missing prepaid debit card is reported within 48 hours, cardholders are not responsible for more than $50 in unauthorized charges. Yet if reported two to 60 days afterward, cardholders could be held accountable for up to $500 dollars in unauthorized charges. After 60 days, users face losing their entire balance. With a lost credit card, in comparison, users face a maximum $50 liability, regardless of when the loss is reported.

Under MasterCard’s Zero Liability policy, available for MiCash cards, you cannot be held liable for unauthorized signature-based transactions when you report the suspicious activity within 90 days. Exceptions to the 90 days will be made if you can provide evidence of special circumstances such as a prolonged hospital stay or trip. However, if

Zero Liability protection is provided by MasterCard under these conditions:
a) Your account is in good standing,
b) You have exercised reasonable care in safeguarding your card (****To safeguard your card, make sure you REGISTER it as instructed by your card issuer****), and
c) You have not reported two or more unauthorized events in the past 12 months. Zero liability does not apply if a PIN is used as the cardholder verification method for the unauthorized transaction(s). It only applies to signature-based transactions. Visit MasterCard’s Web site for more details.

Building Credit History

When you use a prepaid card, because you are not using credit but rather your own funds in the card, the credit reporting agencies don’t have a way to test your credit worthiness, and hence you aren’t building credit history. Don’t be fooled by prepaid cards that tout “build credit history” because they are actually touting a loan program, not use of the card itself. If you want to build credit history, you need to have and pay back loans, or credit card balances over time.

Card Declined

With a prepaid card, if you don’t have enough funds on your card, and you try to make a purchase, your card will be declined. This is actually a benefit because you can’t get overdrawn. The pitfall is that you have to stay on top of your balance, and you have to periodically add more funds to your card as you use it. The best way to add funds automatically is through a payroll direct deposit straight to your card account every pay day. With MiCash it is easy to go online and check your balance and transaction history for free.

In Conclusion

While prepaid cards have some pitfalls to look out for, it’s a great choice for people who don’t want to amass credit card debt, or who can’t get a checking account, or who simply want a convenient way to make purchases safely without carrying around a lot of cash.

The press reports that the American public’s opinion of congress has never been lower (since pollsters started asking the question in 1977). The rating agency Standard & Poors just lowered the U.S. triple A credit rating. Other agencies are taking a wait and see approach but may also lower their AAA credit rating on the U.S. if congress doesn’t get its act together and address chronic over borrowing.

But how do the budget problems at the federal level effect your pocket book? “Joe” or “Judy” Consumer?

Effect on Your 401K

You do have a 401K don’t you? Conventional wisdom says that congress will eventually move on tweaking social security benefits downward to ensure that the program doesn’t go bankrupt. So having some sort of retirement package to supplement social security will be more important than ever. If age you can start receiving social security benefits creeps up to 68 or 70, what are you going to live on if you try retiring before then?

Historically, the stock market supposedly averages about a 7% return annually. However, the ten year flat-line of returns in the 1970s and the flatline of our current recessionary era suggests that maybe it will return far less over the next 50 years.

When Canada lost its AAA rating in April 1993, to look at an example of what the downgrade in the US AAA credit rating may mean, the country’s stocks gained more than 15% in the subsequent year. The Tokyo stock market climbed more than 25% in the 12 months after Moody’s downgraded Japan in November 1998. So, hopefully, the downgrade will not torpedo the stock market in the short term.

It’s hard to predict where the stock market is heading day to day, or even month to month. If you have stocks mutual funds, the best thing to do is ride out the current financial storm by not selling off and converting to cash or a money market. Studies have shown that when people cash out after the market has dropped, they usually fail to time their buy back in at the right time, and hence “lock in” their losses. It’s better to do nothing and wait for the market to recover.

If you feel compelled to adjust your portfolio, large cap stocks and mutual funds with focus on large multinational companies are your best bet. Blue chip companies like IBM and GM tend to weather economic downturns better than small and midsized companies.

Whatever you do, don’t invest in gold. Since gold as risen in value by about 50%, it is likely topped out in value and is poised for a sharp downturn in value. You wouldn’t want to buy gold at the top of a bubble and see your investment collapse by 40% within weeks of buy it?

Debt

A downgrade in the safety of Treasury bonds means a hit to bond investors’ overall confidence. This makes the price of bonds other than Treasures go up. The federal funds rate could go up, and this rate is tied to the prime rate, which is a benchmark rate that other interest rates are pegged to.

Credit card interest rates are tied to the prime rate, which moves with the federal funds rate. If the prime rate goes up, consumers could see a sharp uptick in credit card rates. Even if the rate doesn’t go up, card issuers spooked by a credit downgrade could raise your interest rates anywhere from 1% to 5% if you’ve had your credit card more than a year (so that you are out of the introductory rate window).

Price of Goods

So far during this recession, inflation has remained low. However, as the global economy has begun to expand, demand for oil is rising. Eventually, rising oil prices cause fuel prices to rise. Higher fuel prices translate to higher transportation costs for trucks trying to get food and other goods to market. More expensive petroleum means higher prices for fertilizers that are largely derived from petroleum, higher fuel costs to run farm tractors, higher feed prices, which lead to higher prices for meat, eggs, milk, bread, and other staples. During the recession of the 1970s we had stagflation, inflation with a stagnant economy. If we see that again, your take hope pay won’t rise as fast as your daily living expenses.

What to do? Think about substitutions. Eat more chicken instead of beef. Bike across town instead of drive your car. The new money saving habits you form now can add up to a lot of savings over the rest of your life.

Have you ever browsed Borders Books or Barnes and Noble and then bought the book you wanted on Amazon? The same goes for electronics at a Best Buy or department store. If so, you are not alone. With Borders announcing the closing of all remaining 399 store locations by September, Barnes & Noble remains the sole big box book store. But how long can their reign last? Five years? Just as record stores (or do you know them as CD stores) went the way of the dinosaur, so too are chain book stores. Hopefully, independent booksellers will have a little breathing room to figure out how to stay in business long term, as more and more people switch from printed books to eBooks, and people continue the trend of researching products at a store where they can get their hands on them, and then buying them online to save money.

Retailers are trying to get states and congress to pass laws requiring Amazon and other online retailers to collect sales tax. If they succeed, it may help level the playing field and throw a lifeline to bricks and mortar retailing in America.

So what’s wrong with the big box store concept today? After all, it worked so well for so many years. Shoppers appreciated the variety and selection found in the 20,000+ shopping environment. They appreciated the easy access of the stand alone store in the suburbs, where you just drive up to the store and park versus the mall, where you roam around a vast complex, searching for a place to park, and then walk half a mile within the mall to get to your destination. Certainly some big box concepts are still doing well, like Dick’s Sporting Goods.

Malls on the other hand are experiencing very high vacancy rates. Some of them look like ghost towns. Traditional department stores like Sears and J.C. Penney’s seem tired.

The Apple Model

One only need to look at the success of Apple with its iPhones and iPads to see a model for how retailers can thrive in the future. Apple storefronts are much smaller than a Border’s in size, but they are usually find in prime locations such as busy shopping districts in major cities, or in high end retailing malls where people are eating Stone Cold Creamery ice cream before they duck into an Apple store. Apple stores are as much about marketing Apple products as they are selling them. Steve Jobs really doesn’t care if you buy your iPad at an Apple store, on Amazon.com or at Best Buy, so long as you buy one. Chances are, if you’ve had a positive experience trying out the iPad at an Apple store, with the very knowledge store clerk, then you will feel good about your purchase. Apple stores leave plenty of space between display models, which are all in working order and connected to the Internet. No sales clerk will bother you but wait for you to approach if you have a question. Instead of waiting to check out at a cashier, any store clerk can check you out by swiping your credit card with an iPhone and emailing you a receipt.

Finally, the Genius Bar at Apple is sheer genius. Apple owners know that if they ever have a technical problem they don’t have to waste time and energy on the phone trying to describe their problem or product failure to a technician. They can just go to Genius Bar and get immediate help. Mobile phone providers emulate the Genius Bar with robust on site support at their storefront locations.

Retail space is expensive by the square foot. Labor is expensive too. So, to succeed now and in the future, stores need to work on the consumer experience. That means great furnishings, perhaps a coffee bar, don’t crowd the place with products, and have exceptional sales and after-the-sale support. And if what you sell can be digitized, make sure you have a Web strategy to support your bricks and mortar operation.

Consumers lamenting the loss of Borders, consider supporting your local independent bookstore by actually buying something there. After all, you can’t yet buy a hot cup of coffee on Amazon.

According to Credit Cards.com, the average rate for new credit card offers have reached record highs. It’s tough to find an offer of less than 14.9%, even for people with good credit. As more banks have gotten out of the credit card business and the biggest banks have consolidated their domination of the credit card industry, high rates have stubbornly remained.

Why are rates so high now? No doubt the recession has played a part. With fewer people increasing their debt load, the credit card companies are looking to maintain their profits. Given the fact that the prime interest rate is at nearly 0%, you would think interest rates would have also tracked low. But they haven’t. Summertime is vacation time for many families, a time when people use plastic to reserve cars, pay for plane tickets, or check into hotels.

According to National Foundation for Credit Counseling spokeswoman Gail Cunningham, banks and issuers may be looking to bolster profits from customers’ vacation spending.

“Vacations are definitely a large-ticket expense, and if you have a rewards card, you’re inclined to charge every purchase in order to earn points or miles,” Cunningham said.  “People are well-intentioned and don’t intend to overspend, but so often get caught up in the moment and do exactly the opposite of what they’d planned.”

So what to do? If you already have a credit card at a lower rate, your best bet is to never miss a payment, to keep your rate where it is. However, the credit card companies still have the right to raise your rate at any time, and there is little you can do about it. Credit card reform laws have made it difficult for banks to jack rates up exorbitantly, yet with advanced notice they can still raise your rates. If you are carrying a lot of debt on your card you have two choices to avoid paying the higher interest rate: close your account to freeze the balance (which you still have to pay off), or pay off your balance before the higher rate kicks in a few weeks later.

Prepaid Cards to the Rescue

MiCash MasterCard holders of course have the option of “prepaying” for a family vacation on their prepaid card. This is a great way to avoid going into debt, avoid paying high interest rates, and tracking vacation spending. You simply put a big enough balance on your card to cover all of your vacation expenses, plus the temporary hold when paying at the pump (typically $75). Hotels may place a bigger hold of the equivalent of 1 or 2 nights stay on your card. The way to avoid a hotel hold is to hold the room with a credit card but pay for the stay with a prepaid card.

Of course, restaurants, theme parks, and many other destination places accept prepaid cards just as they accept credit cards. Just look for the MasterCard and Visa logo.

Once your vacation is over, with MiCash, you can simply log into your online card account to see all of your purchases listed by amount, transaction date, and name of the merchant. It’s a great way to evaluate whether you stayed in budget for different budget categories like food, entertainment, lodgings, and travel.

Watch Out for Low Introductory Rates

It’s common for credit card companies to offer 0% interest on purchases for new cards for a limited time period, say six months or a year. Some card offers have extended this time period out almost two years during this recession. But don’t take the bait. In the past, it was possible to shift balances away from one card to a new card to avoid the sudden surge in interest at the end of the introductory time period. However, credit card companies now charge transfer fees when trying to move a balance from one card to another.  Many of these temporary low rate cards are actually high rate cards in disguise. The unsuspecting consumer sees the 0% introductory APR rate and fails to recognize the 19% actual APR which kicks in after the introductory time period. Some cards also retroactively charge the full APR over the time period you carried a balance, if the balance is not paid off in full before the regular rate kicks in. This is especially common with store cards from department stores, hardware stores, and so on.