Credit card companies making subtle but critical changes to terms
In spite of the sluggish economy, market researchers say consumers are saying "charge it" more than any time since the start of the economic downturn. And those charges are likely to ring up extra income for your credit card company.
Since Congress passed new laws to regulate billing and rate increase practice, a new study by research group Synovate shows the "average" credit card interest rate has jumped from just over than 13 percent in the second quarter of last year, to just under 15 percent this year. According to Synovate, that's the highest average rate since 2001.
To make up for the millions they're losing because of the new restrictions, credit cards companies have made subtle but critical changes: higher balance transfer fees, higher cash advance fees, new foreign transaction fees, more annual fees. And experts say most fixed rates are being converted to variable interest rates, so keep an eye on your statements.
And if you're considering applying for a new credit card, get all the facts before you cancel what you have- especially if you have a high credit limit.
Synovate's latest market study shows the average new card limit in May of last year was $4,422. In May of this year, it was $3,923, which is nearly $500 less.
So again, read your statements carefully as soon as they come and make sure you know all the fees and penalties.
If you can't pay the full balance every month- make what are called "micro-payments." Always pay more than the minimum due, but instead of making one big payment before the due date, break it into smaller payments several times during the billing cycle and add a little extra whenever you can. Making micro-payments lowers the running balance so you save on interest charges, and helps you pay down your balance more quickly.
For more information:
Consumer's Guide to Credit Cards
Since Congress passed new laws to regulate billing and rate increase practice, a new study by research group Synovate shows the "average" credit card interest rate has jumped from just over than 13 percent in the second quarter of last year, to just under 15 percent this year. According to Synovate, that's the highest average rate since 2001.
To make up for the millions they're losing because of the new restrictions, credit cards companies have made subtle but critical changes: higher balance transfer fees, higher cash advance fees, new foreign transaction fees, more annual fees. And experts say most fixed rates are being converted to variable interest rates, so keep an eye on your statements.
And if you're considering applying for a new credit card, get all the facts before you cancel what you have- especially if you have a high credit limit.
Synovate's latest market study shows the average new card limit in May of last year was $4,422. In May of this year, it was $3,923, which is nearly $500 less.
So again, read your statements carefully as soon as they come and make sure you know all the fees and penalties.
If you can't pay the full balance every month- make what are called "micro-payments." Always pay more than the minimum due, but instead of making one big payment before the due date, break it into smaller payments several times during the billing cycle and add a little extra whenever you can. Making micro-payments lowers the running balance so you save on interest charges, and helps you pay down your balance more quickly.
For more information:
Consumer's Guide to Credit Cards