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?
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