Five Ways The Credit Card Companies Are Changing Business Practices
Posted at by ifydcat on category CreditWhile Americas economy struggles in economic crisis, not only consumers but companies are looking for ways to protect their finances. With families this may involve cutbacks on unnecessary expenditures.
For the companies, the goal has been to develop better ways to keep their customers from going elsewhere. Keeping satisfied customers is a matter of common sense since they determine your profits. Nevertheless, there is one company that is adopting a different attitude. Many credit card issuers have chosen strategies that have created much controversy.
New policies do not necessarily mean that card companies no longer care whether they keep customers. The focus just happens to be on recovering the majority of funds they offered to consumers over the course of the last five or ten years and then putting a cap on lending today. In order to deal with the increasing numbers of card users falling behind on monthly payments, credit card issuers are now employing harsher policies to protect them from loss. Since this will affect many credit card users, you should have some idea about what will be going on in the credit industry. For those cardholders with balances on their cards, this can be especially important information.
A number of credit lending institutions are in the process of changing procedures in at least five ways. First on the list is raising interest rates. Where before credit worthiness was the primary factor for setting a customers interest rates, now there are other factors. Customers, both old and new, may receive raised rates even if they have a good payment and credit history.
Second, consumers must have a higher credit score than was previously acceptable to borrow credit from lenders. In fact, those customers who would have been eligible for credit only a year ago may no longer be accepted. Now lenders are requiring better credit scores to lower the overall risk.
Third, you should expect reduced credit limits. With both new and existing accounts, credit card companies are applying lower credit limits to accounts. Even for those customers who have an established relationship and a perfect history with lenders, card issuers have every right to lower available credit.
The fourth area you may see changes has to deal with enforcing conditions and terms on a strict basis. One example of this inflexible shift involves refunds on failed online payments. It doesnt matter if it failed or not, you will not receive a refund. Customers who make late payments will not only receive a late payment fee but also may see their interest rate rise.
Fifth, there will be higher minimum payments. In some cases, there have already been increases in the required minimum payment within a few months. If you have not experienced these increases yet, it is likely you will in the future.
Given the clear understanding that the above policy changes may hold the power to financially destroy some consumers, it will pay to know what can be done to lower your risks. Obviously, the best solution is not to keep a balance on the credit card. If it is a matter of serious debt struggles, then paying down an account balance may be out of the question. If this is true, a debt relief program may be the only option left.