Good day all,

So now that we are up and running, time again for the Friday emails with insightful articles and commentary that I am sure you have come to love. =) This week, I actually wanted to do something a little different and share a tip that you might find useful, or know someone who may. It involves credit cards.

In light of all of the financial difficulties banks have been having, the sluggish economy, and rising unemployement, many credit card issuers have seen rising defaults, to a now apx 11%. (percentage of card holders that are not paying their debts). To get ahead of this problem, many credit card issuers, Chase, Citibank, Capital One, HSBC, etc., have been raising credit card rates, and also lowering the credit limit on cards not in use, and in some cases closing the accounts completely. Not only have I met people who have never been late on payments have their credit card interests raised up to 29.99%, but many have had their accounts closed for not using the cards. Aside the added money being wasted by the consumers on exuberant interest changes, which let’s face it, are almost as high as bookies, but unwanted account closures and lowering of credit lines has a NEGATIVE impact on your credit scores. Then the downward spiral begins.

So what can you do about it?

First, if you haven’t read the fine print on your statements, do it. Find out the interest rates on your credit cards, even if there is no balance on them. If they were raised, call up the bank and ask them politely to lower the rate. Many will do so with no issues. If you have had a balance on the card, and the rates were just raised, you do have an option. You can tell them that you do not agree to the new rate, and you will have the option of paying off your balance at the old rate, however the card will be closed off. You have to weigh the balance between the extra money going out the window in interest, to the impact on your credit score by closing the account.

Secondly, if there are credit cards that you have, that have either lower interest rate, good perks, no fees, etc, and just keep them, you can typically pre-empt any closures by the banks by making a transaction on the cards, either monthly or every two. I know people who just pay their phone bill with the card, or go buy a pack of gum.

Lastly, if you know anyone that is having a hard time with their bills, as I know it is none of you, my responsible adults ;) , call up the credit card companies, and ask them for your options. They are willing to work with people, as they would rather be paid something on their money, then taking the chance the debtor will default on their debt.

Keep in mind, if you do not do anything, or take any steps, the credit card companies will walk all over you.