No, you’re not imagining it—just as everyone in the country is more strapped for cash, lenders have been raising interest rates and fees on credit cards. Miss a payment and your interest rate could rocket to 30 percent; continue to carry a balance and you could be slapped with a $10 charge.
That’s bad news in the best of times—and we know very smart people who managed to get themselves into heaps of credit card debt during the boom. If you’ve been laid off, those are extras you simply can’t afford.
We’ve already shared the latest and greatest information on handling your mortgage, especially if you’re in a financial crisis. Here’s the most current advice on controlling your credit cards. Get out before you become a victim of what some see as the next wave of the economic downturn.
As we suggested last time, do an inventory of your finances first. (Motley Fool)
This is a great time to negotiate with companies—especially if you’ve been a good customer. Asking for things like annual fees and penalties to be waived. (Chicago Tribune)
If your rates get jacked up, you may be able to decline the new card terms and pay off your balance under the old agreement, but you’ll probably have to close your account. (Wall Street Journal, last paragraph)
In recent years, there’s been an endless supply of credit, and some people might be thinking that their cards could carry them through a rough patch. Don’t count on it—lenders are tightening up, canceling cards, reducing credit lines and sending out fewer offers. (Wall Street Journal)
To save money, transfer balances to lower-rate cards, but make sure you can pay those bills on time and don’t put any new charges on those accounts—they will likely be nailed with a higher rate, and will be the last portion of debt the company credits payments to. (Motley Fool)
If you’re carrying any sort of balance (or think you might), renegotiate your existing rates. Here’s what to say. (Bankrate.com, Motley Fool)
In a pile of debt and considering having a debt relief service negotiate for you? Watch out for scams. Call the National Foundation for Credit Counseling for referrals to reputable shops. (MainStreet)
If you are able to pay off a balance with American Express quickly (and don’t want an account with them anymore), they might incentivise you with $300. (CreditMattersBlog)
Finally, credit card companies are cutting back on their rewards programs. Some are being terminated, others being made less appealing. Check that you’re not being shafted, and don’t bank your points for some big purchase down the road. (US News & World Report)
--Posted by Sara Clemence, RecessionWire.com
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