The economic pinch and new measures curbing the power of the credit industry are forcing many card companies to resort to less-than-desirable strategies, credit specialists say. To avoid the tougher regulations, issuers are raising interest rates and slapping on charges in anticipation of lower revenues.
Experts say that card companies are making good use of the period prior to the full implementation of the new law. Because the legislation's provisions will be implemented in stages, rather that all at the same time, banks and issuers have taken to raising rates several months ago. Card firms are also trying to make up for loss income by focusing on charges and penalties.
Aside from the sudden increases, consumer advocacy groups are also accusing card issuers of slashing credit limits. This restricts the cardholder's ability to maximize the benefits of a credit card. Lower credit lines also mean higher ratios of debt for consumers, eventually leading to lower credit scores.
Specialists say that cardholders have the right to demand explanations from their card companies about any changes to their terms. Card firms are known to change terms without notifying consumers. Many issuers also rely on their client's lack of knowledge, consumer advocates argue.
Many cardholders often get surprised when their accounts are cancelled because of inactivity. Card issuers also cancel cards of they feel that a consumer is becoming more of a risk. Specialists recommend researching other options or alternatives, instead of accepting the issuer's explanation. Most card companies do not disclose the complete reasons for cancelling an account.
Cardholders can also contact their card companies to get their previous terms reinstated. Consumers with good credit records and histories with the card issuers can usually get their previous terms back. Experts suggest regular communication with representatives of the firm. Cardholders can then plead their case instead of just accepting the new terms imposed by the card companies.
Solid credit records and good credit reports can also get cardholders better terms and rates when presented to their card companies. Issuers prefer clients that are able to fulfill their obligations on time and preferably in full. Consumers should also gather all relevant information before confronting their card companies about the changes in their terms. This will give them more ammunition to use, experts explain.
Americans with good jobs can also convince their card issuers to retain their terms, based on the fact that they are able to pay their dues.