New Standards for Old Cards

With the changing economy and credit crisis looming around the nation, the new year brings along with it some new standards for the same old credit cards. As account holder of a credit card, you need to be aware of what is going on in the world of credit cards. If you are new to the credit card game, you will need to be more aware than ever of what this means to you and your financial situation.

You Will Need a Darn Good Credit Score

In years past, a credit score of 700 was considered to be excellent – not true any longer. Credit card companies and other lenders will want to see at least a 730 to feel good about giving you a line of credit. In all likelihood, your credit score will even have to be higher as months go by. It is essential that if you want to get the best deals, maintain the best interest rates, and keep your credit standing strong, you will need to pay your bills on time and do everything you can to stay focused on an excellent credit score and positive report from the credit reporting agencies. For people with lower credit scores in the 600 range who in the past still qualified for credit cards or loans, it is likely there will no longer be approvals without upping your credit score. Whatever your credit situation, you need to get copies of your credit report and look for any incorrect information and get it corrected immediately. Keep working on improving your credit no matter what your score is.

Many people initially applied for a credit card in order to get the rewards offered by the credit card company. Expect to see some rewards programs cut out altogether or at least cut back. Credit card companies do not want to set themselves up for any losses and have had to restructure even some of their most popular programs. This mainly due to the proposed new legislation that would reduce the amount of transaction fees the credit card companies receive from a merchant for collecting the funds owed for credit card payments from their customers. These funds are primarily what fund your rewards program. There are changes on the horizon if the legislation passes. For instance, where you used to be able to earn cash back rewards on any purchase you made with your credit card, you may find that now only gas and grocery purchases earn you that reward. If you already have airline miles or rewards accumulated, it is advisable that you cash them in now and not wait until you lose them as a direct consequence of the proposed changes.

Expect Lower Limits

Even existing card holders will feel the pinch of the credit crisis. Loyal customers have seen a decrease in their overall credit limits due to the credit card companies need to cut their risk. In the cases of inactive cards, don’t be surprised to find your account closed by the issuer. The issue with reduced credit limits is not only the inconvenience of having smaller credit limits, but it also comes down to the fact is that the balances that you do carry may end up maxing out your credit limits, which in turn has a negative impact on your overall credit score. The good news is the reduced credit limits might help you prioritize your spending. You can contact your credit card issuer and ask for a restoration of your original credit limit but it is advised that you do not close your account if your request is not granted. Closing your credit card accounts can reduce your credit score.

Related Posts:

• Use Common Sense When Applying for Cards - If you have been reading this blog awhile, you know how important I think it is for you to protect and defend...
• Understanding the Many Pitfalls of Rewards Credit Cards - I’ve written a lot about the benefit of using rewards credit cards.  In a nutshell, they’re truly only beneficial to card holders who pay off...
• Debit Cards Are Popular But Credit Cards Still Needed - There are a lot of consumers who are intent on earning the maximum on their credit card rewards so they tend to...
• Is It Time To Change Your Card? - The recent changes that are making waves in the credit card industry may be the signal you need to investigate a new...

This entry was posted on Tuesday, January 20th, 2009 at 5:23 pm and is filed under Credit Card News, Tips & Advice. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.