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American consumers had enjoyed the benefits of too easily available credit until the global financial and economic crisis broke out, urging banks and card companies to restrict access to credit and scale back their rewards programs, introductory rates and extra privileges. However, the situation is not as black as it is painted, and you can easily preserve your ability to get credit at most attractive terms. Keep on reading to learn why.
While it is true that many major banks claim they are going to continue tightening lending standards and eliminating rewards in 2009, there are some smart credit card moves that you can make to guard yourself against these measures.
First, you should know that the best rates, fees, credit lines, as well as rewards programs are still widely available to creditworthy customers. Hence, your first smart move would be to improve your FICO scores through responsible credit card use, which involves reasonable card spending, as well as consistent and timely bill payments.
Keeping a good score rating is especially important now that the minimum score level required to qualify for a credit card has increased. Today you need to have a FICO score of at least 730 to get the lowest APRs and extended credit lines. You can be sure there are myriad of such credit cards out there, and you can easily find and fill out online applications for them at one of the numerous credit card websites.
Your next smart move would be to make a balance transfer to a lower rate card if your bank has raised your APR. Unfortunately, hiking rates have become a too frequent measure used by issuers to preserve their revenues at a time of increasing defaults and charge-offs following them. Thus, if you're not satisfied with your interest rate, just try a balance transfer card or go to a smaller bank or credit union, which often have more consumer-friendly credit terms.
Then, it is very important to avoid having your credit line slashed because it can increase your debt-to-credit ratio, thus hurting your score. It is predicted that credit lines for sub-prime, as well as for prime borrowers will continue to be cut throughout 2009, which is explained by issuers' intention to reduce risks posed by irresponsible cardholders. Under the circumstances, your smart credit move is to prove yourself a good risk by making all your payments on time and keeping balances below 30% of the spending limit available. If you do get a notification mail stating that your credit limit is being slashed, you can close your account and search for a more attractive deal with another issuer.
Finally, if you have a rewards card, you may run a risk of losing your rewards before you have a chance to cash them in. So do it right now. Cash in your points or miles even if they are of too small value yet to redeem for free travel or a gift card. Remember, you can add them with your own funds to become eligible a major reward.
Following these simple tips on a smart credit card use, you're sure to remain a valuable customer for your bank, thus preserving most of your privileges and lowest rates.
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