New Year Rings in a Financial Triple Threat for Consumers, Consolidated Credit Offers Advice
Higher minimum payments, reduced credit limits, and increased interest rates equal financial land mines for 2009. Revolving consumer credit is over 973 billion according to the latest Federal Reserve data. The debt figure is actually down 3.4% – the largest single monthly decrease since 2004. While this seems like a positive step it can be attributed to credit card issuers tightening credit limits.
According to a Federal Reserve report, nearly 60 percent of banks have tightened standards on credit card loans, with both prime and nonprime cardholders seeing their credit limits cut over the last few months. Banks aren’t in great shape these days and they are overwhelmingly aware of the problems they face. The mortgage-default crisis has set in motion bank failures and buy-outs between weak banks and less-weak banks. The changes creditors make in 2009 will force people to examine their credit situation even more carefully and the idea of ‘wants vs. needs’ may change drastically.
When consumers’ credit limits drop it can have a negative affect on the person’s credit scores and ratings. Many consumers who call Consolidated Credit for help have incurred over the limit fees because they were unaware that the credit card company had lowered their limit and consequently their interest rates were raised. Often consumers’ automate charges for services/goods and the lower credit limits have been causing problems. Creditors alert consumers of the changes to their credit, but problems occur when the consumer does not read the credit card statements or special offers/changes that are mailed or emailed to them.
Consolidated Credit warns about credit card changes consumers should be looking for:
- Interest rates on credit cards ticking higher
- Fees on balance transfers going up
- Credit lines cut up to 50% in some cases
- Reward cards carrying more strings
- Card issuers closing credit cards if they haven’t been used frequently enough
Tips from Consolidated Credit:
- Don’t throw away junk mail from credit card companies. It’s very important that consumers read everything because the credit card issuer can change terms and conditions of credit cards at any time and without reason.
- If a person finds that their interest rate has increased, or their credit line was cut, the best thing they can do is complain. Consumers may get the chance to opt out of a rate or a fee increase.
- People may have to threaten to leave the credit card company and generally credit card companies don’t want to lose your business because it is expensive to replace it.
If people find themselves having trouble paying their credit card debts, they should contact their creditors to let them know that they are have trouble making higher payments and request to work something out. Credit counseling agencies may be able to help some consumers work out a budget allowing them to make their payments.
Consolidated Credit urges consumers to seek help if they fear they will fall behind on any debts that they owe. Seeking advice from a reputable credit counseling agency can be the difference between consumers crashing and surviving these difficult economic times. Consolidated Credit is dedicated to helping Americans understand how to survive the recession and teach the value of long term financial planning to avoid personal financial calamity in the coming years. See attached booklet “Does Your Financial Situation Scare You” for more advice.