With all of the banks in a panic to reduce their losses to their mostly fraudulent practices, many of the larger lenders are putting into place more restrictions to yet again deter the hard working citizens from escape of the debt trap. Recent news coverage and yet more to come are announcing changes that will affect life as we know it- even for the responsible card holders and especially for the predatory lending practices for high interest consumers today. So be on the lookout and be very wary of up and coming changes to your credit, may it be bad or good.
With all of the banks in a frenzy to reduce their losses to their mostly fraudulent practices, many of the larger than life lenders are putting into place more restrictions to yet again deter the hard working citizens from escape of the debt trap. Recent news coverage and yet more to come are announcing changes that will affect life as we know it- even for the responsible card holders and especially for the predatory lending practices for high interest consumers today. So be on the lookout and be very wary of up and coming changes to your credit, may it be bad or good.
• Use it or lose it policies: Big name credit card companies have been closing accounts for "inactivity". Which means, even if you have great credit and keep cards around for emergencies, these accounts can be closed without notice due to the liability that the are "dead wood" clients. This may drop ones credit score dramatically- up to 40 points.
• Limits being lowered below current balances: Lets say you have a credit card with a $5000 limit and you have $4000 in charges on that card. Soon these companies can reduce the available balance to lower than the balance that you currently owe. What does this mean for you? #1 It will show you being maxed out or even about your credit limit, which could include over the limit fees but further more increases your debt to income ratio. Yet another drop in your credit score.
• Retroactive increase in interest rates: This is the only industry that is able to retroactively increase rates imposed on a person's credit (even if the consumer has never missed a payment.) Pay very close attention to your statements.
• Universal default laws: Although this has been in practice for a few years now, more and more frequently it is being enforced. Credit card companies raising interest rates simply because a creditors rating has gone down, even if they have never missed a payment with that company.
• Late penalties: These are being challenge by senate but how is it they can charge excessive late fees after even one day late on a payment... what if the mailman delivers your envelope one day late? Should you pay excessive fees for that? And does that give these BILLION dollar companies the right to raise your interest then to over 30%?
Put your cards on ice-literally! Freeze them in a bowl of water for emergency use only (and don't microwave them for easy access- you'll ruin the card). This is one of my favorite methods to deciding whether I really need to use it. After the 30 minutes it take to run under hot water I usually can find something more important to spend my hard earned dollar. If you are experiencing difficulty managing your bills or even making the minimum payments; NOW is the time to begin a debt free life.
Jamie hribal is a senior debt counselor for a private firm. Helping individuals and families with financial hardships or facing foreclosure which benefit from debt settlement and mortgage modification. For more information please visit http://www.mydebt101.com/
