smart credit moves before Feb. 22
With new regulations starting in less than two weeks, you may need to take stock of your credit card portfolio to determine which cards' terms are changing to your benefit and which will feature changes that could hit you in the wallet.
The most important thing to do, says Lauren Bowne, a staff attorney for Consumers Union, is be aware of your cards' terms. So much has changed in recent months that consumers need to pay attention to what is and isn't featured in their credit cards.
"Even if you're the person who pays off your balance and doesn't even have any credit card debt," Bowne says. "They might get a notice that says they're getting a $100 annual fee. Even people with stellar credit and stellar credit payment histories need to pay attention."
Here are five smart credit card moves to make before Feb. 22:
- Consider waiting to get new credit cards until after Feb. 22, because new accounts are protected from interest rate increases for the first year. As issuers compete for customers in the new reform law landscape, there may be good deals and offers for people with good credit.
- For existing accounts, consider a balance transfer from higher interest rate cards to accounts with lower interest rates. Some issuers are offering good customers interest-free or low-interest balance transfers of at least a year. Remember that there is a cost of 3% or 4% of the amount transferred, so weigh that decision carefully. Also, take note of what the new interest rate will be after the promotional period ends. If it's higher than the rate on the old card or only slightly lower, it may not be worth it to switch.
- Have a backup card or two. Issuers can still lower your credit limits and close your accounts without notice. Make sure you have more than one card as a backup in case this happens to you and you need a credit card for emergencies. [especially if you don't have a savings account]
- Charge a small amount on those other cards every other month and pay it off in full when the bill comes. This avoids any dormancy fees that may be assessed and may prevent the companies from closing the accounts for inactivity. Some issuers require a minimum amount of charging to avoid inactivity fees, so check your terms.
- For college students or any young adult under 21 who is responsible with credit, the best move could be to get a credit card now while you still can get one on your own. Young adults' access to credit will be restricted by the new law. Starting Feb. 22, you'll have to get a co-signer who is at least 21 years old or show proof you have the ability to pay.
Pay more than the minimum amount due. It will help you pay your credit card debt off faster. The new law mandates that your billing statement include a prominent notice of how long it will take you to pay off your debt.
I was recently told by someone at the Macy's credit card department that even if you pay a measly $5 more, it makes a difference. I haven't tried it since I am busy with the "snowball" effect to debt, wherein I intend to tackle the small balances first before trying to pay off the big balance cards. Your money will snowball into a big snow mess that you can hurl at the big cards later. At least, that's how I envision it.
article link:
http://articles.moneycentral.msn.com/Banking/YourCreditRating/5-smart-credit-moves-before-feb-22.aspx?page=all
www.creditcards.com
