The credit card providers such as Mastercard and Visa are changing some of their charges in a way that could dramatically increase your credit costs.
The most significant of these changes has to do with the way these providers determine your interest rate. Until now, your interest rate was based solely on your record with each individual lender. In other words, if you never had a late payment on your Visa card, your interest rate would remain unchanged.
Now, many of these providers are also looking at your credit history with other lenders, ncluding even your mortgage company. If they find a history of late payments with any of these other lenders, they may increase your interest rate by as much as 35%. If you have a balance of, say, $8,000 and you make the minimum payment each month, this could increase the amount of time it will take you to pay off your balance to 31 years!
Many of these lenders are also increasing their yearly fees and increasing required minimum payments from 2% per month to 3%. Again, depending on your balance, this could have a serious effect on your cost of credit.
What's the answer?
Shop around for your credit cards. For example, there are lenders such as Bank of America, that is not increasing it's minimum monthly payments. And credit Unions usually offer better deals than conventional banks so if you qualify for membership in one, check it out.
If you are interested in cutting your interest rate, there are several credit cards that might qualify. As of this writing, the Citi Platinum Select Card had an introductory interest rate of 0% on purchases and balance transfers which then goes to 10.49% at the end of 12 months. This card has no annual fee. The Chase Platinum Credit Card also offers an introductory rate of 0% on purchases and balance transfers and no annual fee. And the HSBC Platinum Mastercard has an introductory rate pf 0%, along with no annual fee.
If you're not careful, your credit card costs could be going up substantially. But if you keep in touch with your card providers and shop around, there's no question but than you can beat these increases
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Douglas Hanna is a retired marketing executive and the author of numerous articles on HD radio, old time radio and family finances.