Why Junk Mail from Credit Card Companies May Not Be Junk May 15
Credit card companies are lowering limits without warning, because of the continuing credit crisis. Because they are afraid of losing money on people who fail to make their payments, declare bankruptcy, or go into foreclosure, almost all the lenders in the country have tightened up their rules and regulations and have reigned in their lending.
That means that they are cutting back on the amount of credit they extend to customers, they are raising the interest rates charged on loans and credit cards, and they are hiking the fees and penalties they charge to those who go over their credit limit or fail to make payments on time.
When they make these changes they are not required to first get your permission, so in one sense they are allowed to change the rules of the game in the middle of the game. But the law does mandate that they notify customers of any changes that are made to the account that could affect the terms and costs associate with it. So to comply with the law, lenders mail out notices and announcements that describe their changes in policy. Most people have trouble understanding these written notices because they are filled with legal terminology and clauses that are very complicated.
But instead of junking these notices, it is important that you try to read them and understand whether or not your credit is being limited. When card companies lower your credit limit it makes it easy to accidentally go over your limit. Then they will charge you for going over limit, and that will cost you fees – plus it will get reported on your credit history. Soon your credit score could be lowered, as the vicious cycle snowballs out of control.
To avoid that kind of scenario, keep tabs on your credit card company and bank notices that arrive in the mail, and phone them if you have any questions or cannot understand the notices. Also order copies of your credit report on a regular basis and study them for errors or recent changes. The sooner you discover problems and deal with them, the faster you can solve them without harming your credit. But those who ignore these changes or put off checking on them can be in for a rude surprise and the disappointment and frustration of higher fees and a lower credit rating.