On February 22nd, many provisions of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act took effect. The CARD Act’s main goal is to slow down credit card practices and limit fees. It puts a limit on the amount of credit available to consumers in the recession in an effort to protect them.

As a result, many card issuers and banks have changed their business models by actively diminishing risk. New ploys include tightening up credit lines, dropping or restricting some borrowers and marketing less. Credit-limit reductions are expected to have two main impacts.

One is the reduction of the average balance size of accounts that are placed for collection. It will also diminish liquidity from the market that will make it more difficult to collect. This coupled with the consumer behavior of the past years, when people generally spent their savings and maxed out personal loans and home equity raises concern, because for many consumers, credit cards are the only short term credit at their fingertips.

But the CARD Act includes one huge measure that consumers must take, warns Micheal J Koopmans, financial expert; they are not permitted to pay off a credit card debt using another card. Keeping this in mind, this will have a huge effect on the collection industry. Analysts like Koopmans claim that the best way to deal with the sweeping changes is to be flexible and innovative. Rather than telephone calls and collections letters, the internet is begining to be explored as one option to work with.

There are a few ideas that the collection agencies have to bear in mind. Excess payments are going to have to be put towards paying off the highest interest balances first. The CARD Act lets customers set their own credit limits that might be lower than those set by the card companies, and it restricts marketing to college students and severely restricts access to credit to people under 21.

Mallory McGuinness is employed by a (http://www.rapidrecoverysolution.com) debt collection company. She also writes stories on business, finance, consumer spending and (http://www.707creditscore.com/rapid-recovery-solutions) collection agencies.