How Credit Card Companies’ Policy Changes Affect You
I have 10 credit cards, don’t worry my balance on all are ZERO except for one.But that is not what I want to talk about here. Recently I have received a number of letters from credit card companies informing me about everything from raising my interest rate to closing my account due to inactivity.
If you are getting these letters also, here is how these actions by credit card companies are going to affect you.
Raising interest rates
If you have a zero balance this is not a big deal. However if you are carrying a balance your minimum monthly payment will go up. It maybe time to either pay off you debt if possible or do a balance transfer to a card with a 0% APY on balance tranfers or just one of your cards with a lower interest rate.
Lowering existing credit limits on open accounts
This means that you now have less credit available. If you are carrying a balance on any card, this increases your debt to available credit ratio. A higher debt to credit ratio may have the effect of lowering your FICO score. Again here paying off you balance should push your debt to credit ratio up, all things being equal.
Closing inactive accounts.
This can also have a negative impact on your credit score. If the account has been open for some time it shortens your recorded length of good credit history. It also has the impact of reducing the amount of available credit. Again negatively impacting your debt to available credit ratio. If you have more than one credit card with a particular company it is a good idea to ask them to transfer the available credit of the closed account to another account.This has worked for me. This should maintain your current debt to available credit ratio.
During this period of credit card policy changes if you haven’t already it is a good idea to go ahead and check your credit score for any changes. MyFico is offering a service where you can monitor your credit score free for 30 days ¢
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