Guest Post: Credit Card Accounts In Good Standing No Longer Guarantees Favorable Terms

This is a guest post from Tisha Tolar.

Recessions do not just “happen”.  In fact much of what we have been dealing with in terms of the economy has been in the works for years.  While financial experts claim the tides have turned, many consumers will need months or even years to recover from losses felt during the recession.  With many people facing unemployment, downsizing, loss of savings and other financial hardships, it is not surprising that the number of credit card accounts that are delinquent are on the rise.  The rate of delinquencies is up over 11% from last year and that number may continue to grow as people struggle to pay their day-to-day living expenses.  Lenders are responding by providing less credit and increasing the standards for those they are willing to lend money to in an attempt to reduce their risk.  If you have accounts in good standing, do not be fooled into a false sense of security.  The changes within the credit industry will affect all consumers.

Consequences of Credit Card Reform

It is likely the rate of delinquencies will continue to rise for several months before peaking which makes lenders less inclined to offer deals or breaks to anyone.  For this reason everyone should be aware of and prepared for changes that are anticipated within the industry.  Here are a few of the negative consequences of the credit card reform which was created to help consumers struggling with debt. 

• With more and more card holders finding themselves unable to make their monthly payments, credit card issuers will try to recoup their money from any available source.  In this case, that source would be card holders who are current with their payments.  Is this practice unfair? Certainly-nevertheless expect to see higher interest rates and less leniency in the terms and conditions of your credit card account in the future.  In fact, many consumers are already experiencing these changes and will likely continue to do so in the months to come.
• If you are thinking about moving your higher interest credit card balance to a new card, you are in for a surprise.  Low introductory rate balance transfers are harder to come by and for those of you who qualify due to your exceptional credit, balance transfers are less lucrative due to high balance transfer fees.
• Many responsible card holders have taken advantage of rewards programs in the past.  By using their card for most expenses throughout the month and paying it off in full when the statement arrived, consumers have been able to avoid interest while reaping the benefits of these programs.  Credit card issuers are considering doing away with interest free grace periods which could result in interest charges from the date of purchase. 

As you can see, changes within the credit card industry will have an impact on all consumers.  Whether you have an account in good standing or you find yourself struggling to make your minimum payments, there has never been a better time to sit down and re-examine your finances.  Getting out of debt and staying out of debt should be the top priority for consumers, which of course is in the best interest of everyone involved.

Tisha Tolar is a writer for DebtFreeDestiny.com, where she provides information about credit card consolidation, debt relief and how to get out of debt.