Time has a way of changing things in subtle ways that often go unrecognized until they affect us personally. Just as an isolated health concern may turn into a full blown chronic condition, seemingly minor money missteps here and there have the potential to dismantle your well planned financial future. Changes in financial laws and regulations are having a rippling affect on how finance companies are doing business, including lowering different fees, credit limits, and canceling accounts.
One area of finance that has gone through a titanic shift is credit cards with federal mandates intended to protect consumers. Much of the changes are good news. For example, gone are the days of instantaneous penalties, a late payment that could throw your account over the limit again and again until you pay enough to be below your authorized limit. Instead, you will be assessed a $25 penalty with no additional penalty if it would push you over your limit. The rule also means that a consumer can’t be charged multiple penalty fees for one transaction.
New Rates for Previously Free Services
The new rules have forced banks to come up with new sources of revenue; two options were devised – charging for services that were previously free and finding ways to lower default accounts. In either case, while consumers enjoyed more transparency regarding their accounts, the need to maintain revenue has the potential to impose new headaches on some card holders. Here are several ways banks are looking to earn more through fees.
- Impose monthly checking accounts fees
- Raise the minimum savings for free checking
- Increase ATM transaction fees
- Impose maintenance fees for inactive accounts
- Charge a fee for bank employee transactions
- Push reloadable, prepaid cards that don’t fall under current laws
Lowering Default Rates
Credit card customers may see changes in their accounts, as banks look for ways to lower default numbers. Consumers at the top of the credit score range will be excluded, but anyone in the mid-to-low range may experience one of three situations. Inactive accounts will be closed by the issuer, requests for an increased credit limit will be denied or the issuer will reduce the credit limit.
Preventing Credit Limit Reductions
During times when the economy is struggling, many people with an average credit score may depend on their credit cards to pay for emergencies and to fill the gap between paychecks. Lowering limits or closing accounts can be a hardship. Luckily, there are ways to prevent losing available credit by following these three steps:
- Step One: Know your credit scores and the health of your credit reports. Your ability to negotiate is dependent on how well you’ve demonstrated your ability to manage credit. Now’s the time to request copies of your major three credit reports and examine where you may be falling short. Any errors or discrepancies can negatively impact your score, so follow through to have them corrected.
- Step Two: If you’ve already made a few missteps, don’t fret over what’s in the past. Begin today by taking steps towards building a better credit score. Pay every bill on time; don’t expect to be forgiven because the payment is only a day late. No excuses! Pay off as much of your outstanding debt, as possible. Set up automatic bill payments to reduce the chances of making an error. These actions will demonstrate a new attitude and be reflected in your score.
- Step Three: Keep all credit accounts active by making a small purchase every few month; pay off when the bill comes due. In some cases, the company will claim that due to your inactivity on the account, they’re reducing your limit. If this happens, call the company to discuss the decrease and be prepared to provide viable reasons why you need your rate to remain at its current level.
Putting the time into ensuring the health of your physical body is the perfect analogy for overseeing your financial health. You’ll need to put in place responsible money practices and make changes to your lifestyle to protect your financial future. It may take time, but in the end you will enjoy the credit you need along with a positive view from lenders who will recognize your credit-worthiness.
About The Author: Vanessa May is a contributor to Wowcreditcards.com and a variety of other financial websites. Hoping to educate consumers, she uses government and other reputable sources to provide informational articles on credit cards, debt, saving money and many other financial topics. For additional credit related articles written by Vanessa and others, click here.