Even with economists predicting an earlier-than-expected recovery for the U.S. economy, more and more banks and credit card companies are resorting to drastic measures to cut losses.
Recent studies have shown that card issuers are beginning to scale back on approving just about any card applications. In fact, most banks are requiring applicant to present proof of their financial health and good financial standing.
However, more American cardholders are seeing their credit limits slashed and monthly payments go up. Expert say that this is due to the new policies being implemented by card companies. With the full implementation of President Obama's Credit Card Act of 2009, banks are stepping up efforts to squeeze more profit from clients and cardholders. With the full effect of the new law in place next year, card issuers can expect fewer interest hikes and dwindling income from higher interest rates.
The nation's largest nonprofit counseling organization, the National Foundation for Credit Counseling, has recently published some suggestions on what to do when faced with unexplained charges and additional payments.
According to experts, all cardholders have the right to ask for an explanation from their card issuers. Most banks would cite the account's inactivity or the increased risk from the side of the cardholder. Other times, card companies would simply raise interest simply because their clients are no longer profitable. Specialists contend that consumers have to right to question any alterations to their terms of agreement.
For a cardholder with a clean record, getting the previous and more favorable terms can be easy. Card issuers would most often agree to revert clients to their previous terms provided, however, that they offer compelling reasons like good financial standings and spotless payment histories.
Gathering all relevant data and information can also help arm cardholders with what they need to start negotiations with banks. Loyal customers with good payment histories can often urge card companies to reconsider any changes to their terms and even convince them to bring back the old terms of agreement.
Having a good credit report can also convince card firms that a cardholder is worth keeping. Analysts say that card issuers are striving to keep loyal customers and getting rid of "risky" clients.
Most experts, however, agree that the key word is "negotiate." Banks and card companies are often open to the idea of re-negotiating terms. For example, they say, cardholders can opt for either lower interest rates or higher credit limits.