It is an overwhelmingly obvious fact that credit card companies are now quickly changing their rules for credit card use in order to alleviate the problems that they are facing due to the economic recession and, more importantly, be ready for the activation of the credit card bill.
The credit card bill, officially known as the Credit Card Accountability, Responsibility and Disclosure Act was drafted early this year and signed into law by President Barack Obama just this May. The bill aims to control the way most credit card companies run their business, from limiting the freedom of the companies to arbitrarily raise interest rates to forcing them to make their bank statement and contract languages much easier for consumers to understand and comprehend. With the bill in place, the government hopes to level the field for consumers.
Ironically, what was meant to lessen the credit burden of consumers became one of the driving forces for the current widespread credit cuts and interest rate increases that credit card companies are doing. Right now, many credit card holders, regardless of the health of their credit scores, are finding it more and more expensive to keep their credit cards. As credit card companies continue to adapt their business model for the new credit card bill, credit card holders are getting hit very hard.
While credit card companies are busy adapting, the majority of credit card holders are unfortunately still clinging to their old ideas about credit. The biggest concern among them are usually their credit scores. More and more credit card holders are trying to live down some very bad terms from their credit card companies out of fear that opting out would hurt their credit score.
One example is the excessive rate hikes that credit card companies are imposing on their customers. Although most credit card holders would want to avoid having to live with an excessive rate hike, they are too scared of getting their available credit cut off which will hurt their credit score. Credit card holders are also worried that the continuing cutting down of credit will also negatively effect their credit scores, so much so that many of them are willing to sacrifice their finances in the interest of keeping their credit lines open.
Credit card holders need to refocus their finances on what is important: the avoidance of high costs rather should be top priority, not the credit score losses. Unless they are planning to make a loan soon, credit card holders should consider getting rid of high interest rates even though it means losing some credit score points.