Credit card terms change

Nearly 34% of consumers said their credit card company had made changes to their card accounts, according to a survey commissioned by consumer education website Credit.com.

Of those, 15% saw an increase in their interest rate, and 11% noticed an increased minimum payment requirement. Rewards programs were reduced for 8%, while 9% reported their due dates had changed, 8% had their credit limits lowered, and 7% said their accounts were now closed. The answers total more than 34% because some respondents saw more than one change.

The survey had a margin of error of 3 percentage points, Credit.com said. Respondents were not asked to consider a specific time frame when forming their answers.

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Even in the best of times, carrying a balance on your credit card is a risky — and costly — proposition. These days, it can be downright foolish, at least if there’s a chance you might miss a payment or two.

Millions of cardholders have recently received letters from the likes of Citibank, Bank of America Corp., Wells Fargo & Co. and American Express Co. notifying them that their interest rates are going up, in some cases to 30% if a single payment is missed.

JPMorgan Chase & Co., the nation’s largest issuer of plastic, has begun charging hundreds of thousands of cardholders a $10 monthly fee for having carried large balances for more than a couple years.

Why? In part it’s because default rates are rising and banks are dealing with additional risk. But lawmakers and consumer advocates say the higher rates also reflect banks’ massive losses from betting wrong on the housing boom, and they’re basically sticking credit card customers with the tab.

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The national wave of auto dealership closures has come crashing down on thousands of people who are on the hook for used-car loans that dealers were supposed to absolve.

When a car buyer still owes money on a vehicle he is trading in, the dealer promises to pay off the outstanding loan, then resells the vehicle. But as more dealers go out of business, some are sticking consumers with the bill. Lenders can then go after the previous owner who thought the debt was paid, or repossess the car from the new owner who assumed it came with clear title.

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While the economy tumbles and the government rushes to help stop the housing crisis, another danger is lurking–in your wallet.

Credit cards are shaping up to be the next chapter in the financial meltdown, promising to stymie consumer spending, drag on the economy and force a whole new wave of financial difficulty on Americans.

On Monday, Capital One disclosed rising delinquencies and loan losses for the month of November because of unemployment and the weakening economy. Loans at least 30 days past due made up an annualized 4.7% of the portfolio, up from 4.48% in October and loans charged-off rose to an annualized 6.98% from 6.54% in October.

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Check out Mint.com for an exceptional money management solution. I’ve personally been using it for several months, and it’s great to see all my accounts in one spot, and view spending habits/trends.

It’s a very good solution to put your finances into prospective.

Consider moving to one low interest credit card, usually with a 0% balance transfer option. Move all existing balances to the new card, and to cut out the temptation to keep spending, close the other accounts.

Here’s a link showing a list of low interest credit cards http://www.creditcards.com/low-interest.php

If you have gotten in over your head in credit card debt, you are in good company. The Federal Reserve says Americans have accumulated nearly $1 trillion, a record amount, in what it calls “revolving credit.”

But while the financial experts are urging people to pay down debt — particularly expensive credit card debt — that is easier said than done.

It may help motivate you to look at your debt in a new light, said Hersh Shefrin, a professor of behavioral finance at Santa Clara University. Although many overstretched consumers think of paying off debt as a form of self-denial, Professor Shefrin said they have got it wrong. Debt, he said, is actually a form of borrowing against future consumption. In other words, paying off a credit card with a high interest rate now means you will have more money to spend on yourself later.

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WASHINGTON — As the fall semester beckons and financial aid from parents and the government runs dry, more college students are turning to credit cards to pay not only for their textbooks, meals and transportation but also for tuition.

A recent survey by U.S. Public Interest Research Groups found that two-thirds of college students have at least one card, 70 percent pay their own monthly bills and 24 percent have used their cards to help pay tuition.

That helps explain why the average survey respondent will graduate with more than $2,600 in credit card debt, and those with student loans will owe nearly $3,000.

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