This guest post comes from Michael, a contributing editor of the Dough Roller, a personal finance and investing blog, and Credit Card Offers IQ, a credit card review site.

If you had to guess how many credit and debit cards were in circulation today, (active) what would your answer be?

With an estimated US population of 308,500,000 people, would it be safe to assume one card per person? Maybe two cards? Well, guessing aside, the actual number of credit and debit cards in circulation today is 2.1 Billion! (2,180,000,000). If you break it down to cards per person, everyone is responsible for an average of 7 cards, including kids born in the hospital yesterday. That’s a lot of plastic!

The average credit card weighs a fifth of an ounce (0.20oz) so the total weight of these 2.1 billion cards is a whopping 2.7 million pounds. Just thinking about that amount of plastic will ruin the day of eco-activists, but the demand will surely increase year after year and the supply will need to be met.

So how are these light but powerful pieces of plastic made? The entire process is fairly simple and tens of thousands of cards can be made in a matter of minutes. Depending on the issuer of the card, a special series of inks and dyes are used that are specific to plastic and the use of magnetic ink ensures the coded strip on the back of every card works every time. The actual manufacturing takes place in the following four stages:

1. Compounding and Molding – Credit or debit cards are created in sheets and the plastic for the sheet is made from melting PVCA (polyvinyl chloride acetate) with other materials. The mixture is then placed on a flat surface so it can be pressed down to the appropriate card thickness.
2. Printing – After the sheet has cooled down, it’s time to send it to the printers. Silk screening is used to print each card and the design on every card is the same so the process is seamless.
3. Laminating – That beautiful gloss that you find on every credit or debit card is created after the card has been printed and every credit card sheet that contains 63 total cards is laminated.
4. Embossing and Cutting – Finally, the last step in creating a credit or debit card is embossing it with a name and a card number then cutting it from the sheet of 63. It is in this step that a credit card becomes unique and is embossed with a number to verify its legitimacy. Each card endures a quality control check to make sure it can withstand normal wear and tear, it’s magnetic strip works and the information printed on the card is accurate.

The American National Standards Institute defines the quality that a credit or debit card must have before it is mailed to customers and with the change in technology every year; the quality standards for credit cards are updated regularly. Some issuers like Bank of America take the production of credit and debit cards one step further and include a picture ID on the card that can be used to identify you when purchases are made.

Thankfully, these credit cards can be recycled if you want them to be and many of the guitar picks and plastic key rings you use are made from old credit cards.

The next time you have an expired credit card in your wallet you have a decisions to make… do the financially smart thing and cut that card into shreds and toss it in the trash or be green and recycle it.

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A few of the new credit card rules which were part of the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 took effect yesterday.

• Card issuers must give 45 days notice before increasing fees or changing (raising) interest rates
• Card issuers must send out monthly bills at least 21 days before the due date-which hopefully will help some people avoid paying late fees.

The rest of the CARD Act credit card rules are set to go into effect in February of 2010.

What will the effect of the changes in credit card rules be?

Although the rules seem to favor the consumer or credit card user by not allowing credit card issuers to change the rates on a card to quickly, and possibly decrease the amount and frequency of late fees being charged to individual card holders, we all know that the credit card companies will try to make up the lost revenue some how.

According to this article discussing the new credit card rules from Business Week, penalty fee income rose 43% between 2003 and 2008, and was $19 billion dollars last year. The article also discusses how the average credit card rate has increased recently, in part likely sue to a need by credit card companies to make up for the lost revenue.

Overall, I think forcing the credit card companies to be more transparent about the penalties and fees they try to impose on a card holder, as well as placing restrictions on the frequency or interest rate hikes is a good thing. It should make the fine print from credit card companies that most people don’t read and even fewer can actually understand- a little easier to follow.

But it may cause people to pay a little more, which may be a wash (hopefully it would not result in more money to the card companies-but it could). Some people may pay more in interest but not get nicked in fees, but someone who always pays their bill on time may be paying more overall.

photo credit: Andres Rueda

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The Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 has been passed by both the House and the Senate, and was signed into law by President Barack Obama on Friday.

What will the ramifications of the CARD Act be?

It is supposed put a limit on credit card companies frequency of rate increases, make the credit card companies be upfront when raising rates, as well as limiting the severe penalties frequently place on  people who are occasionally late by a day or two on their payments. The bottom line is that it should be good for credit card users. However, credit card issuers are going to find other methods to keep their income from decreasing, so there is the possibility that rates could go higher (even though they may not be increased as frequently as they are sometimes right now). Annual fees could become more frequent, and rewards could be reduced. It is too early to predict if  or to what degree these will happen though.

Some of the highlights of the Act include:

• Credit card companies  must provide consumers with a 45-day advance notice of changes in rates and other significant changes to account. (Rate changes due to changes of prime rate are exempt.)
• Credit card issuers cannot increase the annual percentage rate (APR) during the first 12 months of opening up a new account.
• Promotional rates must remain in effect for at least six months from the beginning date of that promotion.
• Credit card issuers are prohibited from charging a finance charge based on the double billing cycle method, except in limited circumstances.
• If two or more different APRs apply to different portions of an outstanding balance, the amount of any payment above the required minimum payment needs to be applied to the balance with the highest APR first and then to lower APR balances.
• Card issuers are required to send credit card statements at least 21 days before the due date of the outstanding balance.

New Credit Card Rules for College Students

• Cards cannot be issued to those under 21, unless they have a parent or guardian co-signer, or proof of  independent means of repayment. For college students without a co-signer, the maximum amount of credit extended will be limited to the greater of 20 percent of the student’s annual gross income or $500 dollars.
• Inducements to college students prohibited-  No card issuer or creditor may offer to a student at an institution of higher education any tangible item to induce such student to apply for or participate in an open end consumer credit plan offered by such card issuer or creditor.
• No extra fees for making payments over the phone or internet- unless it is an expedited fee on the day before or day of the payment due date.

Read the full text of the 2009 CARD Bill approved by the House and Senate.

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I didn’t get into a whole lot of credit card trouble (i.e, credit card debt) when I was in college. I applied for 1 card, and used it rarely, throughout my time in college. My problem with credit card debt came a bit later, after I graduated and started working. So I know that not all college kids who get credit cards use them unwisely and run up debt.

But the statistics on college students and credit card debt is alarming. The average college student has $2500 to $3000 in credit card debt upon graduation, according to a University of Wisconsin-Madison news article.

It can be very difficult for some students, with the lack of financial education available at both the high school and college levels, to steer clear from the allure of getting your first credit card.

Why are credit cards so enticing to college students?

It can be seen as a sign of being an adult- College is a period of transition, you start not being able to drink or vote, for example, and when you graduate 4 years later (hopefully!) you are considered old enough and responsible enough to do those things. Getting a credit card can be seen as one of the steps to becoming an adult as well.

A credit card is a status symbol to some- It’s easy to want to impress your fellow classmates or friends by plunking down a credit card to pay for dinner, drinks, or something else. Adults still “pick up the tab” to try to impress co-workers or clients, so it is not difficult to see why students want to do it too.

Peer pressure can influence your desire for a credit card- Peer pressure can be a very powerful force when you are in your late teens or early twenties, surrounded by thousands of people your own age. Even seeing a line at a table with Visa or Mastercard reps. trying to sign students up can make someone want to “join the crowd”.

A credit card can represent freedom- Until the bill comes in, a student no longer has to make that phone call to Mom or Dad and say “Please Send Money!”. When the bill comes in, however, it can be a different story.

How Can College Students Avoid Credit Card Debt?

Don’t sign up for more than one card-One card is plenty when you are going to school, especially if you are not really working. Resist the temptation and free T-shirts you might get for signing up for multiple cards.

Better yet, don’t sign up for one at all- If you can, avoid signing up for one at all. You have plenty of time once you graduate and start earning an income to build up your credit history.

Use it wisely, for necessary expenses or emergencies- Using it for expenses such as books, or true emergencies, like car repair. Don’t use it when you are going out on a Thursday night.

Use it for convenience, when you already have the cash-If you are using it to build up your credit history, be smart and pay for things when you already have they money-and then pay off the bill quickly.

Resist the temptation to use it in front of friends- Don’t try to impress others by paying for dinner or a night out. If you or they don’t have enough money, find a cheaper alternative.

Leave it at home- It’s a simple strategy, but it works. If you leave it at home most of the time, you can’t use it, obviously.

Pay the bill in full every month- Once you start making the minimum payments instead of paying off the balance, you are setting yourself up for a long, expensive lesson. Trust me, I know.

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Very significant changes in credit card rules and regulations were passed last week, by the Office of Thrift Supervision, a division of the Treasury Department, as well as the Federal Reserve.

These were the most significant changes in decades, and will affect many credit card users one way or the other. The rules were based on feedback from the general public, and over 65,000 comments were received on the initial proposal back in May.

The most significant of these rules, which will take effect in July 2010, may help those in credit card debt (like myself).

• Credit card companies will be required to apply any payment above the minimum to the part of the balance with the highest interest rate.

• The new credit card rules will allow credit card companies to raise interest rates only on new credit cards and future purchases or advances, rather than on current balances.

These two rules could help people from sinking deeper into debt, even if they are not acquiring new credit card debt. Companies often raise rates on current balances, causing cardholders to get deeper into debt due to the very high rates they are sometimes charged. Any by applying payments to the lowest interest rate purchases on cards as they do now, the higher interest portions are paid off last and accrue interest for the longest period of time.

I am glad to see these common sense changes being made- although I believe everyone is responsible for the debt they incur-it will be nice to see a little more fairness in the way the system operates.

Additional changes to credit card regulations include:

• Card issuers must give cardholders a reasonable time to pay, such as 21 days
• Credit card companies cannot put exorbitant fees for a card user exceeding his limit
• Card issuers will not be allowed to unfairly compute balances, such as by double cycle billing
• Credit card companies cannot make deceptive credit card offers

But according to a study by by the law firm Morrison & Foerster, the new credit card regulations could cost the banking industry $10 billion a year.

Now, I certainly don’t feel sorry for them, but you and I both know they will try to recoup that loss, probably by raising interest rates even higher than they are now. But the changes do seem like a good thing in general, by making the rules more clear, and eliminating some of the “credit card companies dirty tricks“, so to speak.

Do you think that the new credit card rules will help the consumer? Or will the credit card industry just think up new ways to keep gouging card users?

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As part of my credit card debt elimination plan, I mentioned I was going to look into 0% balance transfer options, in order to reduce the amount of interest I am paying and help speed up the payoff process. Well, shortly thereafter, low and behold, I found a Citibank Citi CashReturns card 0% transfer offer in my mailbox (surprise, surprise- I get about 1 cc offer per day these days). Well, after a few days of deliberating (Do I really want to sign up for another card?) I signed up, and I got 12 months at 0% on my transfers, so I transferred about $9,000. If I spend $100 on the card by the end of September, I get an additional 3 months at 0% as well.

So what should you look for when transferring a balance?

What to look for:

Credit Card Terms

• How long is the offer for? 6 months, 9 months, 1 year?
• What is the Annual Percentage Rate (APR)? The current rate for purchases is 10.99%, but I don’t really plan on making any. If you get a card to use for a balance transfer, the APR may be on the high side for purchases.

Transfer Fees

• How much are you charged to transfer the balance? 2%, 3%? You need to subtract this from the amount you anticipate you will save by lowering your interest rate. The transfer rate on the Citi CashReturns card is 3%, so it was about $270. I did get $15.00 cash back. Even after the transfer fees, I will save about $600-$700+ in interest payments if I pay the card off in 9-12 months.

Conditions

• What is the default APR? This is the APR you will pay if you are late on your payments. Don’t be late! The rate on the Citi card is 23.99%, so I plan on scheduling my payments in advance to be extra careful that I am never late.

Before making a balance transfer, you need to investigate how long the offer is for, what the APR is, and what the fees may be, if any. You then need to run the numbers to see if it is a good deal and worth doing. Then pay that debt off!

Check out this list of credit cards with low introductory rates!

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As part of Mrs. Micah’s Single Step Personal Finance Challenge, I have decided to get aggressive with paying down my credit card debt. I recently built up an emergency fund, and I have been paying more than the minimum on my credit cards, but it does not feel like enough. I have a pretty significant amount of credit card debt as well, about $13,500 as of a few days ago. It was a little higher several months ago, but I have been taking steps to reduce it, by paying off more than the minimum and not using them except for gas purchases.

So how do I get this credit card debt “monkey” off my back?

Looking deeper in my situation, I have come up with 3 potential “plans” for eliminating my credit card debt:

Plan 1- Normal Payment Schedule – Paying a little above the monthly minimums (which is about what I am doing now)-$500/month.

Plan 2- Above Average Payment Schedule (Stretching it) – By tightening up my budget, trimming expenses, I could probably pay about $1000/month.

Plan 3- Aggressive Payment Schedule- paying over $1000/month, hopefully averaging about $1200-$1500/month.

Since debt elimination is a priority, I am going to follow Plan 3- an aggressive payment schedule, in order to try and eliminate this debt as quickly as possible. I plan on implementing a form of the debt snowball to accomplish this.

So how do I plan on achieving this goal? It is easy to say I want to do it, but where am I going to get the extra money?

First, and most critical, is not to incur any additional credit card debt. This is key.

Work Overtime-I have the opportunity at my job to work some overtime in the coming months, and I plan on taking advantage of this to boost my take home income.

Micropayments or Snowflaking- Taking any additional money,and applying it to my credit card balances as soon as it is available. I plan on selling some items on Ebay, cutting some expenses, and I have a few other ideas on generating more income.

Consider a 0% balance transfer- About $10,000 is on cards with interest rates between 10% and 15%. A 0% balance transfer could save me significant money over the course of the year, but I am not to keen on signing up for another credit card. I will have to look into and think about this one.

By combining the above actions, and following an aggressive plan, if I average $1500/mo in payments, I will have the balances paid off in appx. 9 months. I am going to chart my progress and provide regular updates here on my blog.

Any comments or suggestions?

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