In the “battle” of the credit crunch, consumers had better come armed – with facts and figures.
Wary of additional financial losses, banks have been quick to cut consumer credit lines, raise interest rates or drop card users altogether.
Is there a method to this credit term madness?
“Credit card users can be blindsided by unexpected changes to their credit card terms,” points out Ben Woolsey, Director of Marketing and Consumer Research for CreditCards.com, the leading online source for credit card information. “There are, however, particular ‘red flag’ consumer behaviors that prompt banks to change terms. Consumers who learn to think like the banks will stay one step ahead of the game.”
The experts at CreditCards.com have identified six behaviors that consumers can employ to protect their credit card standing:
Observe the “30 Percent” Rule: Don’t use more than 30% of your credit line on any one card, or more than 30% of your total available credit.
Use Them or Lose Them: Dormant accounts are most likely to be closed by card companies. If you have cards stashed in your wallet for emergencies, keep them active by using them at least once a quarter.
Don’t be Late: The easiest way to lose credit or to have your APR raised is to miss or be late on a payment. Be sure to pay on time!
Pay Cash at Discount Stores: New projection models have banks analyzing where customers shop, as well as card users’ payment patterns. When shopping at dollar stores – especially if it isn’t your norm to do so – using your credit card may make banks wonder why you can’t afford to pay cash.
Location, Location, Location: Consumers living in geographical areas with high foreclosure rates are at higher risks of having their credit card rates raised. That’s because foreclosures also damage the property values of homes around them, making all occupants of high-foreclosure areas less wealthy due to overall reduced home equity. Less equity means fewer resources to fall back on in hard times. So card issuers, who base their pricing on risk, view high-foreclosure areas as riskier and therefore, charge more.
Seek Recourse: Even though times are tough, the squeaky wheel is still most likely to get the grease. Valued and profitable customers who find themselves with a raised APR should call their card company and speak with a manager. A computer program most likely automatically increased an APR or removed a credit line, but human interaction is required to get it back.
Customers who maintain good credit are still eligible for credit offers. For more information on credit card rewards and for a profile of the “ideal credit card customer,” please visit: http://www.creditcards.com
CreditCards.com is a leading online credit card marketplace, bringing consumers and credit card issuers together. At its free Web site, consumers can compare hundreds of credit card offers from America’s leading issuers and banks and apply securely online. CreditCards.com is also a destination site for consumers wanting to learn more about credit cards. Offering advice, news, features, statistics and tools, these features are all designed to help consumers make smart choices about credit cards. In 2008, more than 12 million unique visitors used CreditCards.com to search for their next credit card.