Credit Card Companies Scrambling to Raise Rates Before the Credit Card Reform Act Kicks in

With the Credit Card Reform Act kicking in this year, card companies have been reportedly looking for excuses to increase interest rates, shut down accounts, and lower credit limits. I received this question from a reader and wanted to throw it out to the 20SomethingFinance readers for opinions on what she should do:

I have a question for you that no doubt other people are running into with the economy today. I made it through college and graduate school without racking up any credit card debt, but then a few months after graduating and starting my job I had an unexpected $6000+ medical bill that I had to put on my credit card (with Bank of America).

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After a tumultuous 2009, it’s time to welcome in 2010 with a brand new attitude on credit card spending and a brand new pay-off plan!  This has to be the top resolution for the new year, because there are a lot of people who are in this same boat.  Now you just need to put that resolution into action!

First, assess the damages.  How much do you have in credit card debt?  Add up all the cards that you have and get a good assessment of where you are at.  Also take a look at your overall debt-to-income ratio.  This will help you give a good idea of where you’re money is going and where you can make adjustments.

Second, start thinking of a payment plan.  This may include contacting your creditors.  Some of them may work with you to close the account and set up a reasonable payment plan or at least lower your interest rates.  The point is, you need to call and ask what they can do.  The worst thing they can do is tell you no.  Your payment plan should be consistent and realistic.  Make sure it’s something that you can stick to.

When setting up your plan, also look at your interest rates and available balances.  It could be possible for you to consolidate some higher interest cards on to a lower interest card that you already have.  The key is to stop using those cards you’ve transferred the balance off of.  Transferring the balance doesn’t give you free reign to rack the charges right back up!

Third, get rid of those cards!  You can cut them up, hide them, ask someone else to hide them, or freeze them in a block of ice.  That last one may sound funny, but if you really want to use it, you’ll need to wait for it to unfreeze, and by then your urge to splurge may have passed.  It’s reasonable to keep one card as an emergency card, but the others have got to go.  My advice is to keep the oldest card.  The longer you have a credit card in good standing on your credit report, the better it can impact your credit report.  It helps establish your credit history.

Fourth, put yourself on a budget.  Don’t put yourself in self-imposed debtor’s prison, but establish a reasonable budget.  Allow yourself to splurge every once in a while, something small to celebrate each balance paid off!

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I’ve often heard it said “a goal without a time limit is not a goal.” To that end, last year I made a concrete list of goals for 2009 (you can see the results here). While I didn’t accomplish every single one of my goals last year and I don’t expect I will this year either, it’s always good to have something to work towards. What’s more, recent evidence suggests the simple act of writing a goal down, especially in public, makes it far more likely you’ll actual accomplish it. Why? Being kept accountable. If nobody knows your goal, you won’t catch any flack when you fail. If you publicly announce it, however, you’ll be far more motivated if only to avoid embarrassing yourself. Check out Robert Cialdini’s Influence: The Psychology of Persuasion for a fascinating look at how and why this works. He devotes an entire

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Credit cards have become a necessity for small business owners. Being able to have the power to make necessary purchases, track spending and pay for business related travel are all common ways small businesses use credit cards every day. With so many offers and options out there, it can be confusing as to which card is right for your business. Here is a look at some of the more popular cards for your comparison.

AT & T Universal Business Rewards Card

The AT & T Universal Business Rewards card is a common choice. Card benefits include no annual fee and a 0% introductory APR on purchases for your first six months.

Employers can obtain cards for each of their employees and are able to set a credit limit for each card they distribute. The card earns thank you points for purchases that can be accumulated and used for such rewards as air travel, statement credit and gift cards. Read more…

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Encouraging words from the UK’s Central Bank that could be further proof of the impact of quantitative easing economic policy.

Bank of England

Banks and other lenders were making more mortgages available to their customers in the final quarter of the year and are expected to further boost their offerings in the new year, the Bank of England said today.

In its latest quarterly Credit Conditions Survey, which asks lenders about credit conditions over the past three months, the Bank reported that respondents had said that the situation had become better because of the improved economic outlook and higher house prices.

Times Online

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