Use your credit cards or lose them

Watch your wallet - and the mail - if you keep a spare credit card for emergencies. Another round of new credit card reforms, kicking in tomorrow, may snarl your planned financial lifeline.

Most of the changes are consumer friendly, Massachusetts regulators and other authorities conclude. What we don't know is what rate hikes or other changes credit card companies might make to finish molding their customer bases before some final and stricter rules take effect in February.

"Think Play-Doh," suggests John Ulzheimer, consumer education chief at Credit.com, an on-line consumer education and advocacy service.

Card providers basically will use the time between now and Feb. 23 to craft the most profitable customer bases they can, by cutting out slabs of their most likely-to-default overextended borrowers and their most unprofitable customers, who carry cards but seldom use them, Ulzheimer said.

Counseling, debt consolidation and other help abound for overextended borrowers. But hanging on to an emergency card you don't want to use requires different action. Your best bet will be to use the card enough to keep your account active but not enough to punch holes in your cash flow.

And if you do carry a balance, be conservative, authorities recommend. Two guidelines that are still good despite the change: Keep your total borrowing below 35 - 40 percent of your total credit limit. Keep your payments within 10 percent of your cash flow.

Keeping a card active won't take much, Ulzheimer said. Just a few transactions -and the fees they generate from merchants - will do the trick.

"We're not talking about buying a flat screen TV," he said. "Go out for dinner. Fill your tank. Then pay it off in full at the end of the month."