Thursday, October 29, 2009

Trouble in Credit Card Paradise

I am one of those people who is in favor of using credit cards over debit cards (IF YOU PAY OFF YOUR BALANCE EVERY MONTH). By paying in full by the due date, you improve your credit score by showing you're a responsible consumer, and with many cards, you gain rewards like points, miles or cash back that you usually don't receive with your debit cards. As long as you can keep spending in check, credit cards (to me) are a pretty great way to get the things you need and get something back as well.

Stop the presses - because the good customers out there are being responsible, credit card companies are not making enough money on us. Usually when interest rates go up, it doesn't affect those of us who pay in full every month. But now, they're getting sneaky. Some lenders are imposing a new users fee, anywhere from $25-$75 a year and some are reducing rewards programs. But even more ridiculous, some banks will be issuing fines for customers who pay their bills on time. Yep. Other sad changes - you could be charged for not putting a certain amount on your credit card every year or you could be charged for having an inactive card. It's almost like they want people to stay in debt...

What to do about this? Well, before you think about cutting up your cards, do a little bit of research.

*Check with your bank and see if there are any changes that would affect you. Your bank may not be imposing anything on good customers.

*If they are, maybe do some shopping around. If you have a good credit score, you'd probably be able to get a good credit card with low or no annual fee. Typically, I've found that credit unions offer good cards with low fees and APRs.

*Check if your rewards are worth any annual fee you might incur. Maybe you have a card that gives you miles but you don't really fly. Look into switching to a cash back or points card that would be worth the fee.

*Consider closing newer cards. The older the card is, the more credit history it has and the more it will impact your credit score if you close it. However, it may be worth closing a new card that you don't use if you're going to be charged to put nothing on it.

Has anyone already noticed changes to their credit card fees? What did you do about it?

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