Mar 1, 2009
It may have happened to you or to a close friend. Unexpectedly, for no apparent reason, the terms and payments on your credit cards has dramatically changed! You always paid your bills on time-you always paid more than the minimum payment and were a long time customer. Suddenly you go to the mailbox and find that your credit line has been cut in half, even as your interest rate doubles or triples! Recent surveys are saying this could be happening to as much as 30% of Americans with credit cards!
So what are your options if the credit card companies do this to you?
- Call the credit card company directly to see what options you have. If you have a solid payment history with this creditor, voice your disagreement regarding the reduced limit or rate change. Argue that you have always made your payments on time, emphasizing that you are a long-term customer
- If you are in good credit standing, you could have the luxury to shop around for a card with an even better interest rate. You have the ability to take advantage of the fact that banks are lending again. Balance transfer credit cards can provide time periods with low or 0% interest rates.
- People are either hesitant to borrow or have too bad of a credit situation to qualify for a new card. If you are unsure of where your credit stands, sign up for free credit monitoring. There are a few websites that compare credit cards based on credit score requirements. You can use the Federal Reserve website for more information about what to look for when credit card shopping.
- Do not close your current credit card accounts. Doing so can actually affect your credit score negatively, limiting your ability to borrow if your situation gets worse. You also have no idea if the cards you keep will one day change their terms and limits.
So how do you know if your credit card company will spontaneously change your terms and payments? Honestly, you don’t. While there is a law that governs consumers’ rights with credit cards, unfortunately, most of us sign a contract with the lender that gives them the right to make these changes to our credit lines and credit cards. Continue to monitor your monthly statements and online accounts to see if changes are coming. Aside from rate and term changes, pay attention to news of your bank being acquired by another.
We should take action to lessen our dependency on credit cards. We need to learn to live within our limits and buy only what we can afford. Altered payments and interest rates is the first sign that times are changing; as a result, our old spending habits have to change.
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- Credit Card Debt – The Worst Things You Can Do
- Credit Score and Credit Rating – Weekly Round-Up
- Your Credit Score and Borrowing Money
- Credit Card Regulations – Senator Dodd’s Push
- FICO Score – Is it Still Reliable in Today’s Economy?