Use them right, or cut them up

That’s a haunting line delivered by comedian Amy Poehler in a 2006 “Saturday Night Live’’ skit also featuring Steve Martin and Chris Parnell. The sketch was brilliantly and simply titled “Don’t Buy Stuff You Cannot Afford.’’ (You can view it on Hulu.com).

So here we are in 2010, contending with a new law that assists many cardholders, now that they have used money from lenders who imposed policies that helped keep them in debt for stuff they couldn’t afford.

The second phase of the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (also known as the Credit CARD Act), which put into place a number of consumer protections, has now gone into effect. Many people have questions. Here are answers to some.

One reader asked: “Can banks still charge over-limit fees if you go over your limit because of monthly interest charges on your account?’’

First, the Federal Reserve has created a new interactive website (www.federalreserve.gov/creditcard) to help cardholders understand the new protections. On the site you will find a summary of the main provisions.

One of the best features of the over-limit provision is that companies can no longer push you over with fees or interest charges. Over-limit charges can be assessed only when a transaction or extension of credit, rather than a fee or interest charge, causes you to exceed your limit. Issuers are prohibited from conditioning the amount of available credit on the consumer’s consent to the payment of over-limit transactions. Issuers can’t charge interest on the fees themselves.

Most of the questions are from people who aren’t happy about changes to their cards because of the new law, and now they want to kick their card and issuer to the curb. They are worried about the almighty credit score, however.

Another reader asked: “Do I get penalized if I choose to discontinue using a company’s credit card? I was told that if you cancel a credit card, it will affect your credit score.’’

A third asked: “If I choose to opt out by closing an account that has a balance, and continue to pay down the balance under the current term, will that have a negative impact on my credit score?’’

In some cases, closing an account can have a negative impact on your credit score.

The key is how much of your available credit you’re using on each card. You need to calculate your credit utilization rate. What percentages of your credit line are you using? This will help you decide whether to close the account. What most affects your score when an account is closed is the presence of outstanding balances on other open accounts - not the closing of the account itself. The scoring system looks at how much credit you are using, compared with how much you have available.

If you have a large outstanding balance relative to your limit, then canceling a card could decrease your score. If you have multiple accounts with zero balances, you could close one or more.

Closing an account won’t affect the duration of your credit history. A closed account will continue to appear on your credit report, where it is accessible for the calculation of FICO scores. The FICO score, the one most lenders use, considers open and closed accounts.

If you use a credit card, make it your business to know the basics of the law. If you won’t take time to do that, pull out your credit cards right now. Get a pair of scissors. Cut up every card.

I’m not saying you need to close the accounts just yet, but stop using the cards. Otherwise, you’ll just be racking up debt that never ends.

Michelle Singletary writes The Color of Money for The Washington Post.