The Senate passed a bill for credit card reform and this populist idea may end up costing the good credit managers more as they shoulder the burden of those with poor credit problems. In the next two years, government stress tests indicate that companies will chargeoff 82 billion in bad debts and that money is coming from somewhere. Today on Neil Cavuto, here is what I suggested:
What Consumers can expect:
- Annual Fees - 50 million of you are paying no fees but I believe you'll be charged in the future while existing annual fees are likely to rise
- Higher APRS - beware that in many cases, using your card after the APR has been raised is the same thing as accepting the higher APR
- Reduced limits - if your limit hasn't changed yet, it probably will and if you are not aware of the limit change, this could result in an over-the-limit fee
- Altered Grace Period - your new due date could be sooner than you thought and the result is a hefty late fee
- Hidden Fees - When it comes to recovering 82 billion in chargeoffs and 20 billion in lost revenue from fees, credit card companies will get creative in what they'll charge you for!
What Consumers can do about it:
- Call in -- When you receive notification of higher APRs, lowered limits or annual fees be prepared to call the credit card company and do what you can to try to get back what they have taken away from you. Read my blog on what to say and what not to say in my tagged consumer debt label.
- Caution - Do NOT cancel your major bank card just because they've added an annual fee--this could hurt your credit score in a significant way! If you've had the card for 5 or more years and cancel it, then your longevity is affected in your credit scoring. So be strategic in what you cancel and when.
- Control - Make sure you are in control, in terms of knowledge, of your card's changes. If you receive any kind of notification about grace periods, credit limits or higher APRS, then read the fine print in order to understand what limitations are being placed on your card. If you don't understand the fine print, then call the company and ask them when your new due date is, what your credit limit is, what your new APR will be and if using your card constitutes acceptance of the new APR. Also ask them if there have been any other changes to your credit card agreement (this is where you may discover some hidden fees.)
- Creativity - With the reduction of reward perks and cash back savings, it may be time to look outside your own credit card for rewards on the items you purchase. For example, at the site Upromise.com you sign up free and get anywhere from 1% to 25% deposited into a 529 savings plan for items purchased. Also be sure to check bankrate.com in the future ( a few months from now) in order to compare what other credit card companies are offering in terms of rewards and perks. There may yet be something left for those of us with good credit!
Ellie Kay
America's Family Financial Expert (R)
www.elliekay.com
