Surviving the Economic Crisis With Your Credit Intact
As a followup to my earlier article about credit card issuers reducing credit limits, I wanted to highlight some emerging problems in the credit realm, along with some tips for protecting yourself.
Credit Card Issuers Reducing Limits
As I noted previously, card issuers have started reducing their customers’ limits as credit has become tighter. Here’s how to protect yourself:
- Keep a close eye on your mail for any notifications of a change in your limit.
- Login and check your account regularly. While issuers are supposed to provide you with prior notice of any changes, you can never be too careful.
- Save room under your limits for true emergencies. Better yet, build up an emergency fund so you don’t have to rely on credit in a pinch.
Credit Card Issuers Increasing Rates
As credit has dried up, issuers have also started charging more for it. Here’s what you can do to avoid overpaying:
- Keep a close eye on your mail for any notifications of rate changes.
- Pay down your balances, preferentially targeting the balance with the highest interest rate first.
- Move your balances to a lower rate card — ideally one with a 0% balance transfer offer.
Credit Card Issuers Tightening Standards
Given all of the recent problems with people failing to make good on their debt obligations, credit card issuers have also tightened their approval standards. Here’s what you can do to make sure you’re in a good position to get credit when you need it:
- First and foremost, stay current on all of your payments.
- Keep a close eye on your credit report.
- Dispute any inaccuracies to get them removed from your record.
- Do whatever else you can to improve your credit score.
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I just looged on to WAMU’s credit card website and got 0% until January 2010 and a $30,000 limit.
That’s insane.
https://online.wamu.com/personal/credit_card/platinum_mastercard/default.asp
Comment by Eric — Oct 21st 2008 @ 8:11 amMy simple suggestion is get rid of your credit cards COMPLETELY. Most of my problems were due to my credit cards and my infatuation with using them to buy shoes.
Comment by Joanne — Oct 21st 2008 @ 10:41 amWith the excellent credit my wife and I have, we’ve been playing the 0% float game for years without a dime of interest paid. Get some self-control. }:o>
Comment by Eric — Oct 21st 2008 @ 12:38 pmHey Folks,
It’s relieving to see such healthy discussion about the pitfalls of cards, especially these days. I was wondering if there’s any risk to your credit rating if you do balance transfers too frequently. I work for a company that’s trying to design a product to help people get out of debt. Any uncommon advice on what I can tell the people we talk to about getting out of the red?
Thanks.
Scott Crawford
Comment by Scott Crawford — Oct 24th 2008 @ 6:29 pmGoalSpring
“Any uncommon advice on what I can tell the people we talk to about getting out of the red?”
1) know your finances (track your spending and income like a hawk)
2) set a budget
3) act on the budget. (that’s the hard part–changing what and how much you buy).
the fact is if you have been in debt, you need a significant change in behavior to turn it around. The fears and uncertainty around the current economy might just be the impetus many people need to make changes they wouldn’t otherwise have the willpower to make. Fear anmd uncertainty can be quite a motivator.
Comment by steve — Dec 5th 2008 @ 1:38 amInteresting all the judgment placed on people in debt… Before you can understand how to get out of debt one needs to understand how people get INTO debt in the first place. The vast majority of the time it isn’t because of frivilous spending. It is because of unexpected medical emergencies, lost job(s), change in family (another child, caring for elderly parent) or catestrophic event, like Katrina or the Red River Valley Flooding. Sadly, sometimes it a combination of these things that force families to rely on credit to keep their heads above water and food on the table.
Comment by Renee — Aug 25th 2009 @ 3:07 pmMy best advice is to find a way to supplement your income, get a part time job, sell on ebay, capitalize on a hobby, let your children baby sit for the extras they want. Its a slow road and not a smooth path, but it will take you further from where you started.