More customers lately have been getting notices from credit card companies telling them that new rate hikes will be applied. Some experts say that with the way things are going, it is not going to be unlikely if in the near future a lot of people will abandon the idea of using credit cards altogether.
Cases of customers getting notices of rate increases from a reasonable 8 percent to 30 percent is no longer unusual or shocking.
Some customers disgruntled and upset with what they perceive to be an abusive and unjust business practice bailed out early and cancelled their credit card accounts.
Credit card companies argue that rate increases were necessary to cope with the challenging business climate and deteriorating economic conditions. Some consumers on the other hand believe otherwise, saying that financing institutions have already received huge bailout sums amounting to billions, more than sufficient to cover their losses.
One consumer, Vanessa Miller, is upset about the current practice of banks to raise fees, especially the penalties assessed for late payments. No one is spared and even people who are prompt in paying their bills are slapped with high interest rates. With the current trend taking place, households in the low-income brackets who cannot afford the new credit rates and fees maybe eventually eased out of the picture.
For now, there have been a number of legal remedies that are being instituted designed to protect consumers from such excessive business practices. Some legislation requires companies to give customers a 45-day notice before implementing a new rate hike. Affected companies, however, may respond by taking away some privileges and entitlements like reward cards.
Katy Hudson, a company executive in a credit counselling firm, cited cases of companies giving people a chance to opt out if they receive a notice of a rate hike. However, doing so would permanently cut one's access to his credit card.
Hudson hastens to add that consumers are partly to blame for the current situation as during days of plenty, people worked up their credit cards and lived lavishly.
In response to the times, Sharon Lesser, a shopper says that she no longer uses credit cards just debit cards. Another consumer, Mark Torres, says that he only uses cash now for transactions and is trying to wean himself away from using credit cards.
Hudson advices people to study the provisions in fine print found in statements. She also recommends people to save up and to avoid resorting to credit cards during emergencies.
Lastly, she says that if possible, settle debts as soon one is able and to keep purchases at least 30% below the assigned credit limit.