Changing Credit Terms

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Changing Credit Terms

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Changing Credit Terms
September
25

When you fill out your first credit card application, especially if it is the credit card of your dream, you are so overwhelmed by the enticing terms that you cannot admit the mere idea of a possible change. However, it is common practice with most credit card issuers to send out credit terms changes notice to prepare customers for new requirements.

In most cases, the new requirements are set to benefit the creditor, not the customer and the customer's laxity about reading the notice stands in line with lots of other factors leading to debt.

A recent survey on customers' attitude to credit terms changes reveals that only about one-third of 900 cardholders who received the change-of-term notice realized the difference. Still fewer saw and understood the changed items. General ignorance or laziness, however, to comprehend and accept the new terms has evidently contributed to the extension of consumer credit card debt.

Cardholders do not open the change-of-terms notice and, consequently, do not react anyhow or reply to the credit card company. It means that a customer agrees with all the points but do not follow them, making a bad debt on his account.

A little more responsibility - and the credit card holder is in the driver's seat. All you have to do is to carefully read the new credit card agreement and either to reject the new offer or accept the changes and try to accustom to them.

If you do not like the new terms, you can refuse them and close the current credit card account. But you are still obliged to pay off the outstanding balance to the credit card company. If you continue using the credit card complying with the changes, you still lose something as, traditionally, the changed terms favor the credit card company and not the cardholder.

But don't you agree that losing some extra hundred in interest and fees is much better than sinking in unmanageable debt.

So, if you one day receive a change-of-term letter, try to pay a prime attention to the following key items most liable to alterations:

  • Rates and fees. What is the new interest rate applied to the outstanding balance you are carrying? What are the penalty charges - over-the-limit fees and late payment fees? How are they calculated when you go over the limit more than once or make a number of late payments?
  • Terms. How much time do you have before the low interest rate credit card offer expires? Usually the creditor allows 6 to 12 months before the expiration date.
  • Your rights. What are your rights as a credit card holder if you detect inaccuracies in the credit report concerning late fees or billing charges? Are you allowed to dispute and have the charges and fees corrected? If the credit card changes do not provide this legal right, then it makes more sense to reject the new offer as it is a bad offer, actually.
  • Defaults. Under what circumstances does the creditor recognize you to be in default and how does it affect your credit score?

It's up to the cardholder to accept the credit changes or refuse from them and there is nothing else the cardholder can do about them. It is a rule with most credit card deals that the creditor retains the right to change the terms whenever they wish to. And if you ignore the changes you will just come up with exorbitant rates and larger debt.

But you can negotiate a better deal in fact, if your good or excellent credit history allows you to or, on the contrary, your credit card debt has come to unmanageable. Ask the creditor to waive the fee or raise the credit limit as it is much wiser and safer than ignoring the changes.

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