Learn about Credit Cards

Today we will be talking all about credit cards. Everything that you need to know.

We’re Consolidated Credit, and our mission is to assist families in need. When debt is the problem, we are the solution.

Let’s start off with some statistics. Nerdwallet conducted a study in 2017 regarding credit card debt. The study found that Americans’ total credit card debt continued to climb in 2017, reaching an estimated $931 billion — a nearly 7% increase from the previous year and the average household that was carrying credit card debt, had a balance of $15,983.  The study showed that several major spending categories have outpaced income growth over the past decade; many Americans are putting medical expenses on credit cards; and the average indebted household is paying hundreds of dollars in credit card interest each year.

A credit card –  A card issued by a financial company giving the holder an option to borrow funds, usually at point of sale or for cash advance. Credit cards charge interest and are primarily used for short-term financing.

A credit card is different from a charge card: a charge card requires the balance to be paid in full each month – for example, an American Express Card.  In contrast, credit cards allow the consumers a continuing balance of debt, subject to interest being charged.  A credit card differs from a charge card also in that a credit card typically involves a third-party entity that pays the seller and is reimbursed by the buyer, whereas a charge card simply defers payment by the buyer until a later date.

Pros & Cons of Using Credit

A credit card is not an invitation to spend money you don’t have.  Let’s say you run up $500 on a credit card that charges 15% interest and requires a 2% minimum payment each month. Even if you never charge another item and pay the minimum on your account , it will take 6 ½ years to repay your debt.  When you finally paid your debt, you will have paid nearly $300 in interest on your $500 purchase, making your total cost $800.

Advantages:

• Able to buy needed items now
• Reduce a need to carry cash
• Creates a record of purchases
• More convenient than writing checks
• Consolidates bills into one payment

Disadvantages:

• Interest (higher cost of items)
• May require additional fees
• Financial difficulties may arise if one loses track of how much has

been spent each month

• Increased impulse buying

Before You Sign Up for a Card

• Shop around for the best terms. Bankrate.com is a great resource for finding the best available deals.
• Read and understand the contract.
• Don’t rush into signing anything.
• Once a contract is signed, keep a copy of it.
• Figure out total price when paying with credit.
• Make the largest possible monthly payments.

Comparing Credit Cards

Cost of Credit:

• Know the penalties for missed payments.
• Annual Percentage Rate (APR); interest rates can vary greatly. One card issuer could offer you a 5.99% rate while another could offer you a 21% rate. The difference in what items will end up costing can be astounding.
• Annual fees; some cards have no annual fee while others can be

up to $75.00.

• Transaction fees; if you do a balance transfer – what will it cost you?
• Grace period; how many days after the due date do you have to pay your debt before you are assessed a late fee? Most cards no longer have a grace periods.

Credit Card Features:

• What’s your credit limit?
• How widely is the card accepted?
• Think about the advantages of a major credit card verses a store credit card.
• What services are available?

How do lenders choose whom to give credit to?  How do they decide what a person’s credit limits

should be?  They use the Three Cs:

Character

• Will you repay the debt?
• Have you used credit before?
• Do you pay your bills on time?
• Do you have a good credit report?
• Can you provide character references?
• From your credit history, does it look like you possess the honesty
• and reliability to pay credit debts?
• How long have you lived at your present address?

Capital

• What if you don’t repay the debt?
• What property do you own that can secure the loan?
• Do you have a savings account?
• Do you have investments to use as collateral?

Capacity

• Can you repay the debt?
• How long have you been at your present job?
• Do you have a steady job?
• What is your salary?

Building Your Credit History

• Establish a steady work record.
• Pay all bills promptly.
• Open a checking account and don’t bounce checks.
• Open a savings account and make regular deposits.
• Apply for a local store credit card and make regular monthly payments.
• Apply for a small loan using your savings account as collateral.
• Get a cosigner on a loan and pay back the loan as agreed.
• The trouble is, you often need a credit card to start building a good credit history. If you can’t get approved for a traditional credit card, a secured credit card is a better option.
• What’s a Secured Credit Card?
• A secured credit card is different from “regular” credit cards in that you’re required to make a deposit to get the credit card.
• This deposit serves as collateral for the purchases your make using the card. If you default on your payments, the card issuer keeps your deposit.
• Your card will have a credit limit between 50% and 100% of the deposit. You can use the secured credit card just like you’d use any other credit card – swipe it for purchases and pay your bill on time.
• 5 Good Things About Secured Credit Cards
• You can get approved for a secured credit card when you can’t get approved for a traditional credit card. Paying the security deposit gives the card issuer incentive to accept your application.
• They typically report to credit bureaus. Unlike a prepaid credit card which lets you spend like a credit card, a secured credit card reports your payments to the credit bureaus to be included on your credit report.
• A secured credit card can help you establish or re-establish your credit. Since payments are included in your credit report, paying on time will help improve your credit score.
• Your security deposit is used if you default on your payment. Unless you spend over your deposit, you won’t get sent to collections for defaulting on your payments. Though the card issuer will keep your deposit, you don’t have to worry about debt collectors hounding you for missed payments on the card.
• You can earn interest on your deposit. Some secured credit cards place your deposit into an interest-bearing savings account. Depending on the interest rate, you might be able to earn a few bucks.
• Drawbacks to Using Secured Credit
• True, there are several benefits to using a secured credit card, but there are a few disadvantages, too.
• You have to pay the security deposit. It might be difficult to come up with $500 to $1,000 for the secured credit card. If you do have that money, it might be better spent paying off some outstanding debt.
• There are fees in addition to the deposit. You might have to pay an application fee, processing fee, and annual fee to have your secured credit card. This increases the cost having the card.
• Higher interest rates. Secured credit cards don’t usually offer competitive interest rates because of the risk of default. To avoid high finance charges, pay your balance in full each month.
• Is It Worth It?
• Despite the drawbacks, a secured credit card can go a long way in helping you build a good credit score. When you can’t get a traditional credit card, a secured credit card may be a good choice for improving your credit.
• Now remember a secured card, when used has to be paid back. This is not the same as prepaid card.
• Never borrow more than 15% of your yearly net income.

Note: Housing debt (i.e., mortgage payments) should not be counted as part of the 15%.

Example:

• If you earn $2000 a month after taxes, then your yearly net income is: 12 x $2000= $24,000
• Calculate 15% of your annual net income to find your safe debt load.
• $24,000 x 15% = $3600. So, you should never have more than $3600 of debt outstanding.
• Note: Housing debt (i.e., mortgage payments) should not be counted as part of the 15%.
• Monthly payments shouldn’t exceed 10% of your monthly net income.

Example:

• If your take home pay is $2000 a month: $2000 x 10% = $200.
• Your total monthly debt payments shouldn’t total more than $200 per month.

Credit Card Do’s

• #1: Know your payment due dates
• Paying on time is the single most important thing you can do if you use credit cards. Juggling multiple due dates can be tricky as you open more accounts. It’s important to note that you may be able to change the due date by calling customer service. This can help you spread payments out throughout the month so everything doesn’t come due at the same time.
• Also think about setting up either auto pay or bill payment reminders through your financial institutions. This can help you avoid late or missed payments. You usually set up auto pay through your credit card account. This automatically deducts the money needed to cover your bill. If you prefer to have more control over your payments, you can set up bill pay through your bank or credit union. Then set bill payment reminders so you don’t miss the due date.
• #2: Check your statements every month
• Even if you set up auto pay and use paperless billing, don’t just ignore your credit card statements. You should review your statements every month to look for:
• Transactions you don’t recognize, which could be a sign of fraud
• Statement inserts that tell you about important changes to your account, such as changes to your interest rate
• Estimated interest charges on your current balance
• #3: Always try to pay more than the minimum payment
• Minimum payment schedules are not designed to pay off debt efficiently. In fact, the idea is to keep you in debt as long as possible to maximize the credit issuer’s profits. But there’s nothing holding you to the minimum payment schedule.
• Always try to pay more than the minimum required payment on your monthly statement. Paying off your debt faster minimizes interest charges. It essentially costs you less to use credit.
• #4: Know when you need to pay to use credit cards interest-free
• If you start and end a billing cycle with no balance, any charges you make are interest-free. This means that if you pay off balances in-full every month you don’t pay any interest charges. It’s the most cost-effective way to use credit.
• Some credit cards offer a “grace period” that extends the time limit for paying without interest charges. It’s usually about 15-20 days after the payment due date. If you pay off the balance of the previous billing cycle before
• #5: Call your creditors to negotiate lower APR
• Unlike fixed-rate loans, APR on credit cards can change. Most credit cards have variable interest rates. That means the rates change when the Federal Reserve increases or decrease the prime rate. Fixed-rate credit cards do exist, but they are rare.
• The good thing about variable credit card APR is that it can work in your favor. You can call your creditors to negotiate lower APR. You should do this regularly, particularly if your credit score has improved since you opened the account. Simply call to speak with the customer service department and tell them you want to negotiate a lower interest rate.
• #6: Only get credit cards when you have a strategic need for them
• Credit cards can be a useful tool when used correctly. But that means you should only open a new account when you have a strategic use for it. For example, if you travel frequently, you may need a travel rewards credit card. You may have a specific card for gas or groceries, because an account offers rewards for certain purchases.
• #7: Keep your accounts open and in good standing
• “Credit age” is one factor used to calculate your credit score. It depends on how long you’ve had accounts open in good standing; that means you are current with your payments. The more old accounts you have, the more it increases your credit score.
• If you open an account, then take steps to keep it open and make all your payments on time. If your need for the account goes away, see if you can find another use for it.
• #8: Use your lowest APR credit card for big purchases
• If you make a big purchase that will take a few billing cycles to pay off, don’t put it on a rewards credit card! It only takes about 1-2 billing cycles for interest charges to offset any rewards you earn. So, big-ticket purchases that take time to repay should always go on the card with the lowest APR. That way, you reduce the cost of paying them back.
• #9: Keep your payments around 10% of your income
• In general, credit card payments should take up no more than 10% of your take-home income. If you have extra cash on hand to pay more, that’s fine. But if the minimum payments on all your cards add up to more than 10% of the income you bring in, you’re charging too much.
• If you hit this threshold, stop charging, balance your budget and seek debt relief.
• #10: Use credit card reward programs to your advantage
• Reward programs are one of the best advantages you get from using credit cards. Cash back, free gas, airline miles, and point reward programs are just some of the perks you can earn. And once you get used to using credit, strategically using rewards can help you save money.
• Say, for instance, you have a card that offers 3% cash back on groceries. You can use the card to make all grocery purchases throughout the month. Then you use the income you would have spent on groceries to pay the bill in-full. You earn 3% and use your credit card interest-free. This is the type of strategy that uses credit in the most effective way.
• #11: Take advantage of extras, like credit score tracking
• Many credit cards offer extra features outside of reward programs. This can include fraud prevention services and credit score tracking. Use these services to your advantage! For example, credit score monitoring services usually cost $20 per month or more. Getting that type of monitoring for free is a huge benefit, so use it!
• #12: Understand cosigning before you get into it
• This tip is especially important for college students. If you’re under 21 then you can’t get credit without a cosigner unless your emancipated and employed. But most college students don’t really understand how cosigning works.
• A co-signer is responsible for the debt if you don’t pay, but they usually can’t make charges on the account. This is different from an authorized user or a co-applicant on the account. An authorized user can use the account to make charges, but they aren’t responsible for the debt. Co-applicants mean both people can use the account and both people are responsible for the debt.
• If your parents cosign so you can get an account, don’t abuse it! If you don’t make the payments and it goes to collections, they’ll get the calls, too.
• #13: Eliminate credit card debt before you apply for loans
• Credit card debt can easily mess up loan approvals. When you apply for a loan, the underwriter checks your debt-to-income (DTI) ratio. It allows them to make sure you can afford the debt before they give you the loan. It measures total monthly debt payments versus your total monthly income.
• In order to qualify for a loan your DTI must be below 41% with the new loan payments included. If it’s not, you get rejected. So, it’s a good idea to pay off some debt before you apply for loans. This can also help improve your credit score, so it’s easier to qualify.

 

Credit Card Don’ts

#1: Don’t run up your balances to the limit

This is extremely bad for your credit and your ability to manage debt. Credit utilization is the second most important factor used in credit scoring. It measures how much credit you have in use versus your total available credit limit. If you want to maintain a good score, you should never utilize more than 30% of the credit you have available. Less is always better. But maxing out your credit cards is bad and should be avoided.

#2: Don’t use reward credit cards when you can’t pay off the balance quickly

Everyone loves earning rewards, but sometimes we’re not smart about it. If you earn 1.5% cask back on a purchase, but you pay 20% APR for several bills cycles, you don’t actually earn anything. In fact, it ends up costing you. If you put the same purchase on a card with low APR, you pay less interest charges even if you pay it off in the same amount of time.

Reward credit cards are best used when you pay the balance off in-full every billing cycle. Don’t use a rewards credit card just to earn rewards. It’s a costly strategy that could run you into financial hardship.

#3: Never use credit as a substitute for income

This is a huge mistake with credit cards that will put you on a slow road to financial distress. If you use credit to cover daily expenses because you don’t have funds, you’re only covering up the problem. And, in reality, you’re making it worse. Credit cards are revolving debt, which means the minimum payment requirement increase with your balances.

As you charge daily expenses, your credit card bills increase, leaving less cash flow. That means you’ll need to make more charges to cover next month’s expenses. It’s a downward spiral that usually ends up in bankruptcy court.

If you see this happening, stop charging and make a budget.

#4: Don’t miss a payment by more than 30 days

Really, you should always make every effort to pay your bill on time to avoid late fees. However, if all else fails, make sure to pay before your next bill is due. If you don’t pay within 30 days of the due date, you technically miss the payment. This results in the credit issuer reporting the missed payment to the credit bureaus. Missed payments appear on your credit report and stay there for seven years.

Credit history is the single biggest factor used to calculate your credit score. Missed payments have a significant negative impact on your credit score. Once you miss a payment, you have 6 months before the creditor moves the account to charge-off status and closes it.

#5: Avoid cash advances

A cash advance is where you use your credit card at an ATM to withdraw money. This is not like a debit card ATM withdrawal where you only need to worry about fees. Credit card cash advances mean you’re borrowing against your available credit line. Not only do you pay fees, you also pay special cash advance APR on the charge. This rate is much higher than the purchase APR you pay on regular transactions. This is an expensive way to get cash and it’s best avoided.

#6: Don’t apply for too many new credit cards in a 6-month period

Each time you apply for a credit card, you authorize a credit check that creates a hard inquiry on your credit report. These stay on your report for two years, but they count towards your credit score for six months. If you authorize too many credit checks in a 6-month period it hurts your credit score.

So, don’t apply for too many credit cards or loans at once. This will also help you get accustomed to managing new debt before you take on another account.

#7: Never open an account just because you received an offer

Credit card offers are endless, even when your credit score isn’t the best. When you have good credit, the offers pour in. But just because you receive an offer in the mail, it doesn’t mean you need to open an account.

If you receive a credit card offer that piques your interest, go online to research the card. You can also compare it to other similar cards to make sure you get the best deal. Make sure you need the card and can afford to add in the bill. Then, and only then, should you open a new account.

#8: Don’t close old accounts

People sometimes believe that you should close old accounts that you don’t use any more. However, this can actually hurt your credit score. “Credit age” is not the biggest factor used in scoring, but it does count. So, closing your old accounts decreases your credit age and may also decrease your score.

If you have an old account that’s always been in good standing, find a use for it, even if it’s a small use. If the APR is high, then call to negotiate a better rate.

#9: Don’t let accounts close due to inactivity

This follows off the point above. Old accounts in good standing are good for your credit. But if you don’t use a credit card, the creditor may close it for you. They’ll usually notify you before it happens. But ideally you want to avoid that potential entirely.

It’s important to note that a closed account in good standing drops off your credit report after about 10 years. So, the decrease in your score may not happen immediately. But it could come at a time where you want your score to be as high as possible. So, it’s best to keep your accounts open to avoid this type of senseless damage.

#10: Don’t ignore fraud protection calls

Many credit cards offer built in fraud protection. If your account gets flagged for suspicious activity, you will receive a phone call. Many of these calls are automated, so you hear a recording instead of a live person. However, don’t hang up! It only takes a few minutes to verify your purchases. It will list purchases and you simply confirm that you made them. If you don’t recognize a transaction, they’ll deactivate your account so no additional charges can be made.

Using a fraud protection service correctly could help ensure you’re not out any money. Credit card fraud has a liability limit of $50. But if you respond promptly to fraud verifications, you might be off the hook completely.

#11: Don’t carry balances from month to month

Some people think that it’s bad for your credit score to pay off your balances in-full. They believe you need to carry balances over from month to month to maintain good credit. This is a myth.

Credit utilization is better when it’s lower. A net utilization ratio of 0% is the best ratio you can maintain. This effectively means you don’t carry any debt over. Anything higher than 30% is bad for your credit, but you don’t get penalized for going lower than 30%. So, pay off balances quickly and try to keep them at zero to maximize your score and avoid debt problems.

#12: Never take on more credit than you can afford to pay back

Sometimes people treat credit as a way to make ends meet when they don’t have enough income. But if you can’t afford your bills now, you won’t be able to afford another bill for debt repayment.

Always make sure you can afford debt payments before you take on new credit. As far as loans go, lenders will help you ensure you can afford the payments by checking your debt -to-income ratio. However, you don’t have the same safeguard with a credit card. You can get a new card and run up thousands of dollars in debt. But that could put you in a situation where you can’t afford your bills.

If you’re going to make a big charge or series of charges, you should check to see how much it will increase your bills.

Note: Federal regulations require credit card issuers to disclose on your credit card statement how long it will take to pay off your estimated balance if you make minimum monthly payments. Estimates may be rounded up to the next $100. This debt calculator uses your actual credit card balance, so the results may vary from the estimate shown in your credit card statement.

#13: Don’t hide from your creditors if you’re having trouble

You shouldn’t treat your creditors like they’re debt collectors. People hide from collectors to avoid harassment and demands for payment. So, if you fall behind on your credit card payments, you may be inclined to do the same to your creditors. Don’t!

Credit issuers generally want to help when you run into trouble. They don’t want your account to be charged-off or discharged for less than the full amount you owe. They also want to keep you as a loyal, active customer. So, they’re usually willing to help you work things out.

If you can’t afford to pay your bills and creditors start to call, pick up the phone and ask them to help you find a solution. They may offer forbearance, where they suspend your payments until you can catch up. Interest rate negotiation may also be an option, and they may set up a payment plan to help, too.

I am going to go over what you will find on your credit card statement.  Aside from your name, address, name of the credit card company

Annual Percentage Rate (APR) – The APR is a measure of how much your debt is costing you.  It is expressed as an annual rate or by the amount of interest you would pay annually.  Remember, the APR is a major key to calculating your monthly finance charges – the higher the APR, the more money that will come out of your pocket to use this card

Minimum Payment Due – The amount of money you must pay on your credit card each billing cycle to remain in good standing with your creditor

New Balance – The unpaid amount or what you still owe

Finance Charges – This is what you pay the lender for borrowing money from their credit card.  The finance charge on your monthly statement is the interest you pay on the balance of your account

Payment Due Date – The date your payment is due

To name a few…..

The back of your statement will have:

Cash Advance Fee – This fee is charged if you use your credit card for a cash advance

Lost or Stolen Cards – As soon as you realize that your card is missing, report it immediately.  The number to call will be on the back of the statement.  If you don’t contact them right away you may be liable for charges incurred

Other Fees –  Some credit card companies charge a fee if you pay by phone.  They may also charge a fee to cover the costs of reporting to credit bureaus, reviewing your account or providing customer service.  Some examples are:  Reward redemption fees, foreign transaction fees, reward recovery, payment protection and paper statement to name a few.

It is very important to understand what is on your credit card statement. Knowing what to look for will benefit you in the long run.

Truth In Lending Act (1968)

Ensures consumers are fully informed about cost and conditions of borrowing. This landmark piece of legislation guarantees that creditors have to state the cost of borrowing in a common language so that you

— the customer — can figure out exactly what the charges will be, compare costs, and shop around for the credit deal best for you. Fair Credit Reporting Act (1970) Protects the privacy and accuracy of information in a credit check. Under the federal Fair Credit Reporting Act, credit reporting agencies

are not allowed to report any information that is too old, incomplete, or wrong. While positive or neutral information can be reported indefinitely, negative information can only be reported for the followinglength of time:

Bankruptcy Filings: Ten years from date filed, not discharged. The three major credit bureaus, and many smaller ones, have agreed voluntarily to remove Chapter 13 bankruptcies — a bankruptcy where debts are paid back over several years — seven years from the date of filing. If that doesn’t happen automatically, you’ll have to ask. Civil suits, civil judgments, records of arrest: No longer than seven years from the date of entry, or the current governing statute of limitations*,whichever is longer.

Paid tax liens: Seven years from the date satisfied (paid). Unpaid tax liens: Indefinite until the lien is paid (see above). Collection or charge-off accounts: Seven years unless a US Government insured or guaranteed student loan, or National Direct Student Loan (NDSL). If those types of student loans are in default and you bring them current for an entire year, your previous late payments will be deleted. Any other adverse information (including late payments): Seven years. Adverse information is any data that may cause an unfavorable action result for the consumer, for example being turned down for credit, employment or insurance; or being charged a higher rate than applied for in the case of credit or insurance. Warning: Beware of collection agencies that tell you they have ways of reporting the collection account “forever” to the credit bureaus if you don’t pay. That’s simply not true. Equal Opportunity Act (1974) Prohibits discrimination in giving credit on the basis of sex, race, color, religion, national origin, marital status, age, or receipt of public assistance. This law applies to any business that grants credit to consumers, including banks, finance companies, retail and department stores, credit card companies, and credit unions.

Fair Credit Billing Act (1974)

Sets up a procedure for the quick correction of mistakes that appear on consumer credit accounts. When you purchase goods or services with a bankcard or a retail store charge card and you discover an error on your account billing statement, you have the right to have the problem resolved through the dispute resolution process established by the federal Fair Credit Billing Act (FCBA). The FCBA applies to such errors as:

• Your account is not properly credited for a payment you made or

for a refund you are entitled to.

• Charges that you did not authorize appear on your statement.

The law limits your responsibility for these charges to $50.

• You are charged the wrong amount for a purchase.
• There are mathematical errors on your account statement.
• You are billed for goods or services you did not accept or that

were never delivered as agreed.

• Your account billing statement arrives late because it was sent to

your former address even though you provided the creditor with

written notice of your change of address at least 20 days before

the end of the period you were billed for.

• Your account statement reflects charges for insurance or for

another type of service or product sold by a credit card company

but you did not authorize the charges.

Fair Debt Collection Practices Act (1977)

Prevents abuse by professional debt collectors and applies to anyone employed to collect debts owed to others; does not apply to banks or other businesses collecting their own accounts. Here is a summary of what debt collectors covered by the FDCPA cannot do when they are trying to collect from you:

• Call you at an inconvenient time or place such as before 8AM

or after 9PM unless you give them permission to do so.

• Call you at work if they know that your employer does not want

you to be called there. Also, they cannot contact your employer

about your debt.

• Contact you by postcard or use an envelope that makes it clear

that a debt collector sent it.

• Try to scare you into paying a debt by sending you a letter that

appears to have come from a government agency or a court of

law.

• Call you repeatedly within a short period of time—every hour

during an afternoon, or day after day for example.

• Contact your neighbors, relatives, friends or other people to get

information that can help them collect the money that you owe.

• Use profanity when communicating with you.
• Threaten to ruin your reputation, harm you or your property, or

throw you in jail unless you pay your debt. However, debt

collectors can threaten to sue you assuming they are willing to

follow through on their threat.

• Order you to accept their collect calls or pay for their telegrams.
• Collect more than the amount that you owe, unless it is allowed

under your state’s law.

• Deposit a post-dated check before its date.
• Take your property or threaten to take it unless they are legally

entitled to.

Credit Card Accountability, Responsibility, and Disclosure Act

(2009)

The Credit Card Accountability, Responsibility, and Disclosure Act or the Credit CARD Act may make it more difficult to acquire credit from banks and other lenders. They have lost some of the leverage they used in the past to raise interest rates or because of a “default” on another bill. The banks and lenders won’t be able to accumulate as much profit as they did before because the industry will have to be more transparent. So they will probably be spending some of their time and brain power on discovering different methods, or reintroducing older methods to make up for lost profits. Certain measures have been taken to help protect the card holder

and it’s your responsibility now to become acquainted with them. So let’s begin. Now that the Credit CARD Act has passed, the credit card industry is going to change. As always, be frugal with charging on your card; the less debt you have the better off you will be. Credit card companies aren’t as focused or interested in high credit scores, loyal customers, or timely monthly payments, as they used to be. They are concerned with risk levels and likelihood of defaults, especially if you are carrying a large balance from month to month. If you pay off your balance each month they still might be unhappy because they won’t be making any money off of you in interest charges– so it’s a Catch – 22 situation. Shop around for a good interest rate; there will always be competition in the credit card industry, but the low interest rates may be gone for good. Even introductory rates, which were once the teaser to bring in new business, will not be as attractive. Great balance transfer rates are also going to disappear. Remember when your mailbox was flooded with offers to transfer your balance to a new card with an ideal introductory rate and no fees? Now the rates will be higher and transfer fees won’t be low and they may not have a cap on them. So do your homework; if you want to transfer your balance find a card that has a lower interest rate when the initial offer rate is finished. Annual fees were once a thing of the past, now they are the future. The huge profits garnered from late payment and over the limit fees will not be as easy to accumulate for the credit card industry. So annual fees, and maybe some other “new” fees, will take their place. Retail cards that offer incentives such as 15% off or a free product if you sign up and buy today with our card – such as Home Depot – may go the way of the dinosaurs. Banks simply aren’t as trusting as they used to be and the new laws want the issuers to be more certain of a consumer’s capacity to make payments. Many people would look at these deals as an excuse to make large purchases, without thinking about their ability in the future to pay off the debt. That irresponsibility led to delinquent payments and worse. Reward cards may also suffer. There won’t be as many big ticket items and the rewards themselves won’t pack the punch that lured so many consumers to purchase more to gain their rewards.

 

Just to recap…….

Your Credit Responsibilities

• Avoid buying on impulse.
• Borrow only what you can repay.
• Read and understand the credit contract.
• Pay debts promptly.
• Notify creditor if you cannot meet payments.
• Report lost or stolen credit cards promptly.
• Never give your card number over the phone unless you

initiated the call or are certain of the caller’s identity.

Thank You!