The new credit card reforms that Barrack Obama has imposed bring some very good news to the table for all card users. Problem is that the banks are bound to fight back. While the reforms are major victories for consumers all over, the banks are going to suffer.
It is estimated that they will lose approximately $82 billion dollars by 2010 thanks to the current recession. Simply put, this means that they need to find new ways to make money, charge consumers, and try to claw back from their newly found deficit.
To put it bluntly, the government reforms are great news but they won’t keep you afloat by themselves. It is time for you to create some of your own rules in order to ensure you make it through these tough economic times. Here are some do’s and don’ts you should think about following to keep you in a better credit position as everything changes around you.
Do Show Your Cards Some Love
If you are like most people then you favor one card over another. However, if you have more than one card now is the time to be using it. Now more than ever credit card issuers are closing down dormant accounts. In order to cut down on potential expenses dust off your old card and use it, sparingly.
Do Show Restraint When Using Credit
On top of closing dormant accounts creditors are also going to start cutting limits on even the most used of cards. Banks are expected to reduce limits by close to $3 trillion dollars by 2010, and people are already feeling the heat. So be careful. The closer you are to your limit, the worse your credit score may become. Many experts suggest that you try to use just 10% of your available credit, however moving up to 20% should not do too much harm.
Don’t Sit and Wait for Rates to Go Up
APR’s are going up all around us at a steady rate. With the credit reforms that are coming in February you can expect banks to be quickly upping the rates before that time. So instead of just sitting there and waiting for it to happen you should make a move on your own. If you have a decent credit score of over 730 then you should designate your main card as a secondary option and consider using a regional bank card. These cards will offer lower rates. Consider this, usual bank cards run at an average rate of 13.76% while options such as the Visa Classic start at just 6.25%.
Do Reconsider Possible Rewards
It is nothing new that credit card issuers have been cutting back on rewards lately but the trend will definitely increase in the coming months. They won’t completely shut down rewards as they still need to bring in new customers, but there will be changes. So, in order to protect the rewards that you gathered so far, be sure to use them before changes come into play. This is especially the case when it comes to rewards such as Air Miles as it seems to be getting harder to redeem them with each passing day.
Do Keep up to Date on Changes
It is becoming increasingly important to stay up to date and pay attention to possible changes that may be coming about. Issuers have to provide you with a least a month and a half warning before changing their rates. However, even though they may notify you it still might be hard to notice. When it comes to interest rates and credit limits you need to pay close attention with each statement.
Just remember that while the new reforms are meant to protect you, it is still your job to keep yourself safe and informed. There is only so much protection that the government can offer, your financial stability is your responsibility as well.