Have you noticed any changes with your credit card accounts lately? Sure, they may look the same, but the terms may be changing without you even knowing it. Because of the troubled economy, financial experts are warning that lenders and card issuers are tightening the terms and conditions of their card holder agreements in a number of ways, changes which have the potential to drastically affect cardholders. Here’s a look at just a few of the changes that card issuers are making in an effort to get through the current economic turmoil and maintain some level of profitability.
While it’s not news that the credit card companies have been issuing increasingly lower credit limits over the past several months, many don’t realize that card issuers are actually lowering the limits on already established cards. By law, card issuers are required to notify their customers before they reduce their credit limits. But, if you don’t pay close enough attention to your card statements or if you don’t read all of the fine print in the disclosures that are slipped in with your statements, you may not realize that your credit limit has already been lowered. Of course, this can prove to be pretty costly if you go over your limit without realizing it.
It’s important to keep in mind that card issuers generally don’t need to have a reason to lower your credit limit. Even if you’ve been making your payments on time and managing your account respectably, the company may cut your limit simply because of the current troubles with the economy in order to reduce its perceived risk.
Closing Your Account
Some card issuers will actually take this a step further and will close your account. If you have a card that you rarely use, you’ll be at an even greater risk of having your account unexpectedly cancelled. It’s widely understood within the industry that inactive accounts are not profitable so the company may close the account in order to eliminate the extra costs associated with maintaining your account. Even if you do use the card, however, your account may be closed if the company determines your customer profile falls within the higher “perceived risk” category. This cancellation can have an adverse effect on your credit score and can come as quite the shock when you reach for that card that you hold for “emergencies” and suddenly find that it’s no longer active …. (Awwwwkward!)
Making You Pay
Another change you may have noticed recently is that card issuers are much less forgiving than they were in the past. As these banks try to tighten their belts, they are less likely to give you a second chance if you make some sort of payment mistake. If you miss a payment or make a late payment, the issuers are much more likely to quickly raise your APR or to charge you with penalties or fees than they have been in the past. In the “good old days,” you could call the company, apologize for your mistake, and if you were a long term customer who’s account was in good standing (aka, a profitable customer) you could very often get those fees credited back to your account.
These days, card issuers are MUCH less likely to roll over on those fees – so, make sure you get those bills paid on time, keep your credit score unaffected and keep those pesky fees off your statement.
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