Keep Credit Your Friend

In the news recently have been several reports of rising or altering terms from credit card companies.  Many banks have changed their policies, raising rates by as much as 30 percent in the last 12 months or have increased minimum payments dramatically and decreased the number of days in a billing cycle- all of which can cause late or additional fees for customers who are unaware of these shifts.

Why is this? New customer protection laws are beginning February 2010, which prevent banks from charging over-limit fees. Also, under the new legislation, banks will not be allowed to increase interest rates unless a customer is more than 60 days late on payments.  These last few months pre-legislation changes are causing banks to move quickly with increases and charges that won’t be allowed later.

What can you do if your bank suddenly raises rates or you’re hit with charges?

1. Negotiate. Call your bank and try to work out reducing or eliminating charges or fees. While not always successful, an attempt to negotiate is always worthwhile. Some banks, rather than lose a customer will work with you.
2. Pay off or Reduce Debt: Credit cards can be beneficial tools for building your credit, but they are like an albatross hanging on your neck if there is a balance- especially now in light of these sudden increases. Make every effort to pay these down or off.
3. Switch: If you can’t pay them off, try changing to a card that offers an interest free period or lower interest rate for transfer. However, you must read the fine print to be sure you are later charged a higher amount than you are currently.
4. Read Each Statement Carefully: Keep on track of cards changes by reading every bit of information sent to you. Missing an increase of fees or a shortened billing period can cost you heavily in fees and affect your credit. Stay on top of these.
5. Contact Congressmen: Report your concerns to your local congressman and to the Better Business Bureau if you feel you’ve been treated unfairly.
6. Keep Your Credit Good: You’ll be prevented from obtaining the best rates and cards if your credit fails in other ways. Make every attempt to pay all bills on time and elect for auto-payments if possible to avoid late payments and fees.

One woman, Ann Minch, who went national with her complaints against Bank of America, did so in a large way, and obtained her reduction in fees. However, she just recently posted a video showing her response to another credit card company (Chase Bank) who raised her rates after the introductory period. If you need to, close your account and freeze the interest at a lower rate, as she elected to do.

Remember, credit is still your friend if you play the “pay-it-off-monthly” game and swap reward points for purchases. It’s when you carry a balance or miss payments that issues turn largely ugly.  Get rid of department store cards and cards with hefty fees and use a card that offers you decent rates and points to keep credit your friend.