Cover your bases when shopping for a new credit card

Two aspects of the Credit Card Accountability, Responsibility and Disclosure Act of 2009 — also known as the Credit CARD Act — went into effect Thursday. One of the changes now forces credit card companies to give card holders a 45-day advance notice — amounting to an additional month — before potentially hiking their interest rate.

That gives consumers time to shop around for better rates and cards that might better suit their situation. That is particularly important to Atlanta area residents, said Billshrink.com co-founder and president, Schwark Satyavolu, this week’s Voice of the Expert.

In anticipation of the hit to their profit margins, credit card companies went on the defense, increasing rates and lowering credit limits for even the most loyal and responsible consumers. Billshrink is a free online service that makes recommendations to help people save money. It compiles regional data when analyzing its clients’ requests and financial situations, and found that Atlanta residents are overpaying $3,430 a year on their credit card bills.

The San Francisco-based company came up with that figure by comparing its recommendations for other cards to the cards currently carried by customers seeking the company’s assistance. From January to July 2009, Billshrink reviewed 150 credit cards nationally. What it found is alarming:

Issuers that have changed their rates the least include American Express and Bank of America; Issuers that have increased rates the most are Capitol One, US Bank, Discover and Citi.

According to Billshrink, Capitol One has increased purchase and balance transfer rates 50 percent; US Bank 33 percent; Discover 30 percent and Citi 27 percent.

That has sent card holders scurrying for better rates.

“The trend is in greater curiosity,” Satyavolu said. “We are seeing an uptick in credit card applications. People who have bad credit are finding it harder; people with good credit are looking for better offers. There’s an increased awareness and more people are looking.”

It’s imperative to be smart in the process. Satyavolu makes these suggestions:

Read your mail: “Card companies have made these products so complicated,” he said. “You need to look more closely at the rates. Some may treat you better than others based on your profile. Small changes in penalties or rates can translate into a lot of savings. And don’t just look at it once, but on a regular basis.”

Explore your options in one sitting: “You should do all your credit card [options] shopping at one time. From the perspective of your credit score, you are treated more favorably if you do it all at once rather than doing it over time.”

Don’t go for gimmicks: “Realize you should not go after the card offer you receive in the mail or the offer for the free T-shirt from the guy at the airport. These offers are designed to make card companies a lot of money. There are other cards out there that will get you the best deal. Make sure you’re going out and finding the right card for you, instead of taking what they give you. There’s usually a reason they are sending it to to you. They are trying to make money.”

Re-evaluate: Just because your card has served you well over the past year or so, doesn’t mean it’s still the best offer. “The entire marketplace has changed,” he said. Make sure you are keeping a close eye on your statements and reading your mail.

Are you looking for a new credit card company? Are you finding the process simple, difficult or confusing? Will the Credit CARD Act help you?

Follow me on Twitter @atlbargains

Have a story idea? Email rcash@ajc.com

6 comments Add your comment

reality

August 23rd, 2009
6:07 pm

Want to really save money? Do not use credit cards at all.

The Sarge

August 23rd, 2009
7:03 pm

When I was in school, they didn’t waste instructional time on “how to use credit”…the 12-year pipeline was barely long enough to master the 3-Rs. As I became an adult, I, like millions before, during and after, fell into the “credit card ambush” which seems to be the mania of the day. Unlike many, I “applied gray matter” to the situation and learned to manage my affairs. Are people really that idiotic, stupid, and what ever descriptive there may exist to identify one with absolutely no brain cell activity whatsoever? The current state of widespread credit card woe can best be attributed to ignoring or misunderstanding “the hot stove rule”…if, upon touching the stove, you find it to be hot, it is in your best interest to remove said finger which lies upon the hot stove, lest you become burned. IF YOU GET BURNED, YOU HAVE NO ONE TO BLAME BUT YOURSELF! Not the nasty ole banks, not the lame duck govt which allows the nasty ole banks to be nasty, BUT YOU!

Sue

August 23rd, 2009
7:59 pm

Sarge, it must be something to be so all-knowing, abolutely correct, and cold blodded in your thinking. While there are certanly many who have handled their finances irresponsibly, there are also many who have been caught by high medical bills, lay-offs, and other understandable reasons for running up high credit card balances they would much rather not have. You need to be a little slower to speak in absolutes.

Sue

August 23rd, 2009
8:00 pm

That should be “cold blooded.”

FaceSitter

August 23rd, 2009
8:05 pm

Stop going to the Cheetah every weekend and you won’t need credit cards.

Mitzymy

August 23rd, 2009
9:06 pm

My Master Card, owned by HSBC, sent me a notice in January that they were removing my account from a fixed rate to a variable rate. When I called them they said that they were moving all of their accounts, not just mine. It seems that someone in congress tipped them off to what was comming. I just wish they would allow the intrest we pay on the credit card, to again me deducted on our tax returns. It used to be that way, but the republicans changed it. I pay $130. per month on $5k, and $80. of it goes toward intrest.