The Credit-Card Jungle
If you’re among the two-thirds of credit-card holders who carry an outstanding balance, you might have noticed that your interest rate was hiked recently, or your billing cycle shortened. Failure to navigate card providers’ payment terms successfully can earn you one of several consumer-unfriendly fees.
Some of the industry’s more creative practices, like including the balance from a prior billing cycle in current finance calculations. Alas, these protections won’t take effect for up to 18 months.
The minefield of credit-card booby traps is being cleared, but not soon enough for consumers struggling with debt.
In spotting unfair or deceitful lending practices, several shopping/news Websites like CardTrak.com, Credit.com and CreditCards.com can help. They report on new credit-card pitfalls, provide calculators and other tools for comparing card offers, and translate the arcana in credit-card terms and conditions.
CardTrak.com and CreditCards.com give a big picture view. CreditCards.com identifies the top five card issuers. CardTrak.com notes late fees and over limit charges have tripled since the 2001 recession. The average ding for each is $35 now, and those penalties are assessed much more readily than before.
Even more damaging to your wallet may be the growing “spread” between the prime rate and interest rates charged by the dominant card issuers. Trip over some of the terms in your credit card agreement and you may be graduated up to an annual percentage rate of 28% or more.
Fewer cardholders have been making progress reducing debt lately. Sixty-day delinquencies have jumped nearly 24% since August, according to industry monitor Fitch Ratings (www.fitchratings.com), which expects complete charge-offs to rise 33% this year. Issuers’ portfolios continue to be profitable, however, precisely became they’ve been able to raise rates on cards users, notes Fitch. Credit.com offers an extensive list of cards across categories, and a free questionnaire that will give you a quick estimate of your FICO score.
CreditCardClients.com’s Savings Agent is another useful search tool. Enter your current card balance and a few other credit details (without any identity information), and Savings Agent will compare your needs to about 200 of the newest cards offers, indicating the 10 cards that will save you the most money relative to your current card.
IndexCreditCards.com also follows the credit card industry closely, and lets you rummage around a frequently updated database of more than 1,200 credit offers. Besides having encyclopedic listings of cards by category, both LowCards.com and CardRatings.com review individual cards.
BadCreditOffers.com, on the other hand, is dedicated to finding credit cards and other kinds of loans for people with bad credit histories. The terms might not be optimal, but even in today’s market BadCreditOffers.com lists more than 12 potential credit lines, both secured and unsecured, for those with low FICOs. But be careful: Applying for a new card usually will knock a few points off your FICO score.
It’s best, of course, to pay credit balances in full every month. But if you must play (and pay), at least know the rules of the game.