Playing With Credit

Debbie Wilson
LoanBiz Columnist

Recent congressional pressure has forced credit card issuers to become a little more consumer-friendly. Citicorp has quit using "universal default" and Chase has stopped using the "two-cycle billing". But that doesn't mean they can't still make plenty of money from your account if you aren't paying attention. A little information and effort can help.

Credit Card Late Fees

According to the Government Accountability Office, 35 percent of cardholders paid at least one late fee in 2005. The average late fee charge was $34, compared to $13 a decade earlier. But what does this mean for you? Even if you can't cover the bill in full, send the minimum payment by the due date.

Request Lower Interest

Believe it or not, creditors will negotiate. If you've been a reliable client with a solid credit profile, there's no reason to settle for a credit card with a rate of 15 percent or more. Call customer service and politely but firmly state:  "Given my strong credit history and the fact that I pay my bills on time, I feel the interest rate on my credit card should be reduced to 8 percent. If you can't do that, I intend to take my business to a lower-interest card." Then, if your current credit card company refuses, either pay off your balance or transfer it to a new credit card. Then close the old account and don't use that card again.

Eliminate High-Rate Balances

If you're dealing with multiple credit card balances, always pay the minimum due on each, and add more than the minimum on the card with the highest interest rate. Concentrate on getting rid of the debt on that card, then move on to the card with the next highest rate, and so on, until you're in the clear! Then stay debt free and financially wise for years to come.

Sources:
Government Accountability Office

About the Author
Debbie Wilson owns and operates a lakeside resort. Her previous experience includes profitability consulting for a national healthcare company. Debbie holds a B.A. in Business Management with a minor in Physical Education.