Gather Little by Little

I think that on the whole, most Gather Little by Little readers are not major credit card users, so most of you will not notice any credit card changes. Last Monday, several new laws regulating credit cards went into effect. I listed the changes in a post here at GLBL a couple of months ago. This month, we start to see the effects of the new laws. Here is what I have noticed so far this year:

• Fewer balance transfer offers: In 2007 and 2008, 0% introductory APR balance transfers helped me to make extra income through balance transfer arbitrage. When savings account interest rates took a plunge early last year, arbitrage was no longer a way to make money, however I still used balance transfers in order to stay afloat financially while it took 16 months for our house to sell. I am sure glad that I no longer need such offers because balance transfer offers with favorable terms have almost completely dried up. In 2007, I could get five or ten or fifteen thousand dollars in free money for 12 months without fees and interest free from almost any credit company out there. At one point, I had close to $100K in various bank accounts earning interest at 5% or even 6%. All I had to do was stay current on my payments and pay off the balance before the introductory period ended. With the new legislation, those days are long gone.
• Closed credit cards: My wife and I only use one credit card, however we have close to fifty open credit card accounts between us, the result of past transgressions . . . don’t ask . . . While we do not use the old cards, I have kept the accounts open because closing a line of credit hurts one’s credit score. Over the past two months, several of our idle accounts have been closed by the banks without warning. Mrs. Stew and I closed a couple more accounts when the banks stated that the accounts would now come with annual fees. I expect our credit score will drop a few points next month.
• Increase in fees: I never pay fees, but I have noticed several fee changes – over-limit, late payment fees have increased. I have also heard of new fees being charged, however, I have not seen any new fees on my card.
• Increase in interest rates: This is the big one. The interest rate on our main credit card went from around 9% to between 13 and 14% – a big jump. But not as bad as if I have a late payment, then my APR will increase to 29.99%! Yikes!
• Decrease in rewards: Our main credit card had great cash rewards, I think that we earned over $1,000 in the two years that we used the card. We were careful to make purchases that earned us almost 4% cash back. When the bank changed that rewards program was significantly back in December, we switched to an airline card that earns flight miles on an airline that flies to airports near both of our families.
• Changes to statements: This is interesting. Some of the changes were mandated by law, some are dependent on your credit card company. I looked at my statement and found that it lists my total fees and interest charge in 2010 ($0 for both). There is also a really prominent section that explains how long it will take me to pay off the balance if I only pay the minimum amount – 12 years in this case! It also lists how long it will take if I make no additional charges, but pay double the payment: 3 years. Of course, I always pay my balance in full every month.

Have you noticed any other changes to your credit card statement this month? (If you don’t want to admit credit card use, you can claim that you saw “your sister’s” statement or something like that.)

Article by Stew

Photo by sJasonRogersx