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Crafty Creditors Are Making Changes

by The Happy Rock on January 14, 2009

This is a guest post from Tisha Tolar is a freelance writer providing content for CreditCardAssist.com, where she regularly writes about credit cards, rewards programs and general consumer finance issues.

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credti-card-offer-mail-lettersAs the economy remains rocky and the credit card industry works through the crunch, it is important for consumers to take heed and pay more attention to what they are getting in the mail. Per law, credit card companies can change the terms of their issued credit cards provided they send notice 15 days prior to alert customers of the impending changes.

Due to the credit crisis, many credit card companies are resorting to different tactics to reduce their risks and increase their income in order to survive.

The Tactics

Some card companies are steadily analyzing customer accounts and dropping credit limits for the riskier clients, those who have been late with payments or have other debt. Even good customers are seeing their higher credit limits slashed up to half the original amount. Another tactic is the increase of interest rates. Back in the day, a customer was subjected to higher interest rates when they missed several payments. By today’s standards, a good customer can simply be late paying a debt other than the credit card and find their interest rates skyrocket, sometimes as high as 30%. It does not take long for debt and charges to accumulate, leaving you in even greater debt. Credit card companies rely on the fact that you don’t pay attention, thus making it easier to make money off of your lack of knowledge.

The Expectations

Credit card companies are fully aware that many customers will disregard written notices sent through the mail. It is common practice for people to skim over a contract, skip the fine print, and sign off without so much as a question. In keeping with that theory, the same people will likely toss privacy statements and notices beyond their monthly bill into the trash, without a second glance. It is only after that things have changed for the worse do customers sit up and take notice. Credit cards send out term changes and privacy policy changes essentially knowing the customer will not be looking very closely.

The Lesson Learned

The information we throw away often contains the important details about how the credit card company collects and uses our personal information, how our interest rates are calculated, and the regulations on fees and charges for late or missed payments and default. The statements also reveal the details of how the company reports your information to the major credit bureaus. It stands to reason that each and every customer would want to know and retain this information for future disputes. If you have to initiate a correction or an argument, it is best to know what you are talking about before jumping too far ahead. You can also help stop the sharing of your personal information with third-party sources.

In the world of credit, ignorance is not bliss. It can cost you dearly if you don’t know what is going on with your finances at all times. All too often we read of stolen identities or excessive debt brought upon by miscommunication or a misunderstanding. It’s your finances and your responsibility. Live up to them and live debt-free – or at least fool-proof.

{ 4 comments… read them below or add one }

Ernie Small January 15, 2009 at 2:51 am

it’s true: credit card companies are surely tightening their belts at this time.: i got a letter from one of my many maxed-out credit cards lately, and i was about to do exactly what you wrote about in this post: ignore it as usual.

“yeah, yeah…”you’re account is 2 months overdue, blah blah”” i thought to myself, but for some reason opened it anyway.
and to my surprise the letter was (for once)not informing me of money i owed them, but instead letting me know that all the cards issued by this particular company had been “discontinued”, including mine.

i stuck it up on my refrigerator as a reminder that in this economy, it’s not just the borrower who can easily get in over their head in debt!

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sixwise January 16, 2009 at 12:24 am

That is totally true. Everybody is affected of the financial crisis. We should always be aware of thing going on around us. Check financial statements and spend wisely to survive.

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VC January 21, 2009 at 10:30 pm

People seem to underestimate the importance of credit and how much money a small infraction can cost you. This is definitely a good post on the importance of being aware and actually looking at these things.

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Rachel January 28, 2009 at 12:22 pm

Cutting the credit limit is fine with me. I mean really good. right know i’m using my head. unlike before every time i saw something that i want i use my credit card to purchase it. then suddenly i realize that i’m making the credit card company richer. that’s why i decide not to use it anymore in case i really need it.

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