Christmas is coming -- the goose is getting fat
Won’t you please put a penny in the old man’s hat?
If you haven’t got a penny…just charge it like you do
No room on your charge card? God bless you.
Just a little wannabe humor for something really not so funny at all. The holidays are quickly approaching and the majority of Americans do all their shopping using their credit cards. So what is happening in the credit card sector right now is concerning, to put it mildly. The predictions are that this will be the next big thing to hit Main Street. Even consumers who pay their bills on time and currently have high credit scores are being affected! No one can afford not to take notice.
The New York Times is likening it to the mortgage crisis, saying, “Now comes the credit card crisis.” There is more and more talk among financial experts that even creditworthy consumers are and will be affected by tactics the credit card lenders say they are being forced to do in this sinking economy. This entails:
- Cutting credit limits for existing cardholders (even for “good” responsible cardholders)
- Raising existing interest rates on carry-over balances (again, even for those considered highly creditworthy)
- Lessening the amount of credit card offers being sent out
- Reducing the amount of time for those zero-balance promotional offers
Here are some other facts you should be aware of. Without warning, credit card companies are changing payment due dates – which can sometimes go unnoticed if you use a Bill Pay system each month, like we do. All it takes is missing the due date by a day and POOF – your interest rate can skyrocket, any promotional rate you might have had is gone, and your credit score is dinged.
When credit card companies reducing your credit limit (another thing that might go unnoticed – because after all, they have been arbitrarily raising your limit over the years since you’ve been such a good customer and it is not like you use it all anyway) it can actually LOWER your overall credit score. That’s right – through nothing you have done, your credit score can be negatively affected just because the lender decided to lower your limit.
Are you like this Zen Mama Wannabe wanting to know what you can do to protect yourself? Most importantly, pay close attention to your credit card statements when they arrive each month. Diligently check the due date, the interest rate, and look for any “hidden” charges that might be getting tacked on. Another way lenders protected themselves in the past was to raise fees charged when your payment is even that one day late, or when you charge over your limit not realizing your limit has been dropped down considerably. Ensure that your payments are not late (THEY CANNOT BE LATE!) and that you do not charge over your existing credit line (and be aware that number may not be the number you thought it was several months ago).
Is it time to go back to using paper – not plastic – when making purchases? I have a friend who is trying to use only cash for all purchases for the entire month. Only 8 days into it and she says she is already having a hard time. Personally, I can’t even imagine doing that – but then, that sure says a lot about the situation we are in today.
But typical monthly spending aside, when the holidays come around it always seems to change the rules. For most people it is a time of spending and giving and buying – and I’m not just talking about gift buying; stocking up the pantry and entertaining those holiday guests adds up too.
We all have different budgets and different spending abilities. But whether you live on Baltic Avenue or Park Place, your ability to CHARGE IT like you have done in the past could very possibly be affected by the recent economic downturn. Right now, it is more important than ever to really be conscious and aware of the purchases you make (and keep a careful eye on your statements too). Who knows – maybe it just might simplify the holidays a bit, if only out of necessity. And that can’t be such a bad thing, can it?