We've been writing for some time about the screwing of the American consumer by the credit card companies, despite the so-called overhaul of the credit card industry. Even though it was passed, it doesn't go into effect until February. That's given them several months to bend you over and slam it to you.
Here's an important thing we want to pass along. READ THOSE MAILINGS THEY SEND YOU. Discover and banks that distribute Visas and MasterCards are jacking APRs to an astonishing 29.99%. They do warn you, but you have to read the letters they flood you with. They generously offer you to opt out of the rate hike, but you must close the account and stop using the card. Then they'll magnanimously let you pay it off under the old agreement's APR.
Problem. Closing credit card accounts negatively impact your credit score since you need credit to get credit. So you can save money - but it comes with a price.
We've also stated many times that credit companies (not just AMEX, but the rest are joining in) are now eliminating high credit limits, slamming them down to current balances. This eliminates your debt-to-available-credit ratio which is also devastating to your credit score.
If you have time to wage battles and make a living chasing down the credit bureaus, you can probably knock your score up several points. You can also fruitlessly seek out new credit. Chances are, however, you'll be declined and that (say it with me) will ALSO give your credit score the smackdown.
It's a lose-lose-lose situation for Americans, and February won't fix what they're putting in place now.
Budget yourselves. Stop using credit if it's at all possible. We know it's tough to do these days. But sell the Wii. Drop the video subscriptions for now. Eat at home. Stop impulse buying because something looks like a great deal (I love ya, Woot, but these are lousy times). Start selling stuff on eBay and donate the rest - it's the end of the year and you should beef up those charity donations for tax time anyway.
And read this new article: "10 Ways Credit Card Companies Are Still Screwing You." There was a time when if they did just any ONE of these things, it would send shockwaves through the industry. In the last year, we have seen every single one of these implemented, and it's horrifying.
It's a game we're all losing to unregulated greed. Sorry, "libertarians," but this is free market at its worst. This needed government intervention years ago, but we had a government that didn't want to interfere (even though we're still paying them to HELP US).
We're right there with you on this, and we'll pass along any good news if God forbid we actually get any. Try to have a good holiday season. And if the in-laws just get a card instead of a big shiny new thing, they should understand.