Best Credit Card Practices Under the New Laws
Posted on January 24th, 2011
In the past, the best credit card practices have mostly revolved around cautious spending. The recipe seems simple enough: use your credit card carefully, make your monthly payments, and keep your balance relatively low. That way you have your card if you need it and you don’t have to worry about going into debt.
In this day and age, though, credit card companies are — like everyone else — increasingly worried about the economy, and the new CARD Act doesn’t help matters. By limiting the cards’ abilities to make random rate increases, the Act has a number of creditors worried about their profit margins.
That could mean big problems for you — unless you know the best credit card practices.
1. Don’t use your card in unusual places.
It seems strange, but using your credit card somewhere you’ve never used it before can lead to its cancelation. For example, if you’ve never used your credit card in a restaurant before and you suddenly pay for a couple of meals on credit, the company might take this as a sign that you’re experiencing financial difficulties — and that in and of itself can be enough to make them cancel your card.
If something like that happens, you’re virtually powerless to do anything about it. By all means, contact the company and see if you can negotiate — you may be able to. But if you can’t, you don’t really have any legal recourse: they’re entitled to cut your contract whenever they want to. That means the best credit card bet is to limit your spending to familiar places and items.
2. Be wary of spending too little.
Again, it sounds kind of crazy, but it’s true: credit cards are cracking down on individuals who don’t spend very much money on their credit cards. After all, if you’re not spending money, they’re not collecting interest. With that in mind, a number of formerly free credit cards have introduced annual fees for clients whose annual spending falls below a certain amount.
In other words, you pay an annual fee and if you charge the proscribed amount that year, you get it back. It’s just another way to ensure that you use your credit card enough to make the company money.
With the new rules in place, it’s time to reexamine how we approach credit and debt. These two new tactics alone should be enough to convince you that the best credit card practices are changing.
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Tags: Card Practices, Credit Card, Credit Card Practices, Practices
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