November 25, 2008
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News: Credit Card Crunch Conundrum.
With the abrupt changes in the credit card industry, consumers will likely find themselves playing a new game, and very soon. How can we keep on top of these changes and what should we do next? A good place to start is to learn the new ground rules. Expect interest rates to jump and lending limits to fall very soon. Those who have good terms and manage to keep them may well want to keep those credit cards and nurture them, because new accounts are going to be more difficult to secure anymore. The new breed of credit card will not offer the sweet deals of the past to very many people.
Credit card ratings will become more dear. They'll require more nurturing then before. Already, ratings are being lowered across the land. If that's not enough, credit card lenders are also raising the standard of what they'll accept. These two movements both work against the consumer from two different directions. Many American consumers will find themselves spending more time maintaining (or building) better credit scores. For some good tips in learning how to accomplish this, please refer to the recent article series' entitled: "Your Credit Rating(101)", "Boost Your Credit Rating(201)", "Credit Card Tips: 101" and "Credit Card Tips: 201".
As a result, debt will rack up much quicker, as finance charges will consume a greater portion of our monthly credit card payments. In some cases, we will find that minimum payments will increase to compensate for this (mostly by government pressure). But in the past, many credit lenders have been known to keep these minimum payments low, so as to keep a consumer paying on a debt forever without really paying it down.
Expect some surprises soon. Things like finding that your credit card doesn't work any more at the counter. You may find that your lending limit has been drastically reduced and you didn't take time to realize that you're nearly maxed out without even using the card. Now you're attempting to ‘over-draw' without even suspecting.
Others will find that their accounts have been closed at the bank and they no longer have a credit card.