Keeping Ahead of Credit Card Changes
With the passing of new credit cards regulations come forced changes or practices from the credit companies.
Under the Credit Card Accountability Act (CARD), creditors can no longer increase interest rates because a consumer defaulted on a different card. Nor can the credit agencies force you to accept a higher APR without a 45-day notice of doing so.
But don’t expect the credit card companies to roll over and take these fee cuts without a fight. If you cannot beat them, join them is their strategy – with new rules and regulations of their own you must watch out for in the months ahead.
We recently reported one change is the surge in annual credit card fees. What else can consumers expect from credit card companies in exchange for more protection from the government?
Expect a reduction in your available credit lines. Keep a close eye on the available credit extended for your use: Were you once approved for $20,000 only to be reduced to just $8,000? This can hurt your FICO score as it skews your debt-to-credit ratio. Suddenly, you aren’t such a good candidate for a car loan because you now owe more than what was once available to you.
There could be a loss of reward points. Although issues now have to give you a 45-day warning before they raise your interest rates, this doesn’t mean you want to stick around and put up with it. Unfortunately, if you close out your account, you will likely not be able to transfer any accumulated points to a new card.
Gone are generous low-rate introductory APRs. Credit card companies are going to be less sensitive to the consumer in giving great rates. Unless you have stellar credit, they will be too busy looking for ways to reap back what they lost in the CARD Act than to cater to the okay creditor.
An increase in minimum payments due. One way to balance the books is for the issuers to place a higher demand on money we essentially owe them. Chase recently increased the minimum payment from 2% to 5% for many of its cardholders. This can actually be a good thing for the consumer as it forcefully inspires you to get out of debt faster.
New fees for commonplace services. How about a charge for checking your balance online over a set number of times a month? Or a service fee to pay your balance online? Bank of America recently increased balance transfer fees from 3% to 4% — Chase charges as high as 5% for this service.
November 18th, 2009 at 11:58 pm
I recently had a credit card issued to me as a fraud prevention measure from my bank stating a service or business I had used was compromised and they were issuing me a new card. When I called to see if anything had changed on the card they said my apr was upped to 24.9 percent. I promptly asked to close the card which they responded with an apr of 9%.
November 19th, 2009 at 2:01 am
Imagine if you had not asked … millions of card holders are unaware of how quickly the APR is changing under their nose. Unless you look at your statement carefully, you won’t see it. This also sounds like some kind of new bait-and-switch tactic.