While the mortgage and financial crisis seems to be old news, Forbes points out that the next industry to have a crisis of it’s own is the credit card industry.
They said, “Capital One disclosed rising delinquencies and loan losses for the month of November because of unemployment and the weakening economy.”
This isn’t really surprising if you think about it, but we can be sure that the credit card companies will be changing some policies as they adapt. Apparently Bank of America, Citi, and AMEX have already begun to raise rates and minimize credit limits for many cardholders.
What you can do to keep yourself out of trouble with your credit card company
The Forbes article has a few suggestions…
- Experts advise reading the terms and conditions on your account statement every month, so you can pick up on any unexpected changes your card company slips into the fine print.
- Make sure you don’t use too much of your credit limit. Use no more than 30% to 40% of your available credit on one card and across all your cards. Going past that threshold is a trigger lenders to change terms.
A few of my own suggestions…
- Work extra hard to pay them off! I can’t tell you how wonderful it feels to not have to deal with credit card companies any more. I think this whole financial mess the U.S. has gotten in is really going to push a lot of people to want to get out of debt and stay out!
- If you have good credit, you will have some power to negotiate with the credit card companies. I am sure it may not be as easy to negotiate a lower rate than it used to be, but they still do not want to lose your business. It is worth a shot.
- Organize your bills so that you can make sure you pay your bills on time! With their revenues down, they are going to take full advantage of anyone who doesn’t play by their rules.
Watch out – they can raise your rates any time they want to
It is surprising, but it is still legal. You can be a customer who never paid a bill late, is using 40% of your credit limit, and did everything right, but see your interest rate sky-rocket overnight. I just watched a video yesterday about a guy who did just that and had his rate go from 7% to 30% overnight – for no apparent reason. And he can do nothing but suck it up and take it.
The good news is that there have been so many complaints over the last few years that the government has stepped in and is creating new rules to prevent credit card companies from doing this. Read more below…
While banks can raise rates for future balances, the new rules, which aren’t expected to take effect until 2010, won’t allow them in most circumstance to increase the rates consumers pay on existing balances.
The rules also prohibit banks from raising rates when a customer falls behind on other bills, say a utility payment, not related to their card account.
Card companies will have to give consumers 45 days notice of any interest rate changes, up from the 15-day notice period currently in force, and give them more time to make payments.
Have you had any nightmare experiences with credit card companies?
Related posts:
- How to negotiate with credit card companies
- Credit card rewards coming to an end?
- 3 new credit card fees you should know about
- 6 steps to reducing your credit card interest rates
- Make the most of Credit Card debt (part 1)
- Make the most of Credit Card debt (part 2)
- They cancelled my credit card
- Credit Crisis explained | Video
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There already is so many people in debt and it’s hard to imagine companies raising rates and making things more difficult for credit card holders. They should be more socially responsible as well and have programs set up to educate users, it will benefit them in the end.
yea, I never thought of that, but I would love to see the Credit card companies become more socially responsible. Sadly, I think they make large chunks of their profit from the ignorance of their customers…
@bob I agree, the sad thing is that they do. Like cigarette companies having disclaimers and having health classes, being socially responsible is taking a proactive response to a difficult situation and when seen as the leader in taking actions could only help the company. But it doesn’t look like they will start doing that. I don’t know, maybe a CC company sponsoring seminars for kids in HS. Doing the right thing, then when the kids get their own CC, most likely will go back to them. just a thought.