Now Is The Best Time To Get A Credit Card Before Credit Controls Tighten

Now is a good time to get a credit card because most banks are offering the low to zero interest rate credit cards, and they offer rewards such as discount travel, hotel rates and cash back incentives.

If you’re one of the millions of Americans suffering through this economic crisis, a new credit card might be just the incentive to get you out and about again, to dinner, vacation and even a new outfit – as long as you don’t go overboard!

Both corporate and consumer loan officers interviewed in a survey said that lending standards were being tightened due to the higher costs involved for loan funding, and all of the fraud and foreclosures, non-payment and charge offs.  The economic crisis has hurt banks and lending institutions as well as consumers.

This tightening on the reins on loans and credit cards comes from the lack of sufficient payment ratios that have plagued banks and credit card companies, and the standards for getting money from a bank or lender are going to be higher now that the banks have been shafted, so to speak.

Underwriting Guidelines:

The underwriting guidelines are going up rapidly as banks lose more and more to foreclosures and unpaid debt.  Your gross monthly income will have to be substantiated to the tune of twenty six to twenty eight percent to qualify, and even in some cases, depending on your credit, thirty percent.  

Since credit loans are the main source of income for banks, they are going to make certain that they get their money back from credit cards and loans, and some going so far as to use credit-risk management tools, which will combine credit scores, early warnings and fraud alerts.  

All of this to allow banks to better evaluate whether their customers are credit-worthy, and are credible clients.  

Their lack of policy changes in above-target inflation, creates a higher risk of loss, and has made them tighten up their policies, and these changes are slated to go into effect in 2011.  

The main changes will be the standards for obtaining a credit card being above and beyond what we’ve seen in the past.  Higher interest rates, most likely in an effort to try to recoup some of the losses already sustained.

Limited Interest Rate Increases:

The benefits, mostly because of the 2009 credit card laws put into place, are that the interest rate hikes we’d seen in the past will not be skyrocketing, as there is a cap on these credit card companies.  The increased interest can only occur once a year and only with 45 day notice.  Plenty of time for a balance transfer to another low interest or zero interest credit card.

Universal Default:

There will no longer be default charges and interest rate hikes due to payment records, such as, if you miss a payment, or are late.  Also, any changes that the company makes to your account will have to be stated in writing, 45 days prior to the change.

Opting Out:

If you don’t like the way your credit card company is changing the rates, or the fees they charge, you can opt out – which means you can close the account, keeping the old terms, and you have five years to pay off the balance.

More Time:

Credit card customers now have more time to make their monthly payments before being dinged with ‘late fees’.  The new law allows account holders to have a ‘reasonable amount of time’ to make payments on monthly bills.  Payments are generally now due 21 days after the bill arrives in your mailbox, or email, but previously, if you didn’t get that payment in, a hefty late charge was applied.  Now, deadlines are less stringent, such as a specific time, or holiday would roll over to the following business day.  

Over Limit Fees:

Credit card companies can no longer charge fees over and above the charges you incur.  In other words, if you charge $10.00, and you go over your credit limit, the fee for the infraction cannot be more than $10.00.

Double Cycle Billing:

The credit card companies can no longer charge you finance charges on balances that occurred in a previous month –which are purchases that you have already been charged for.  The finance charges must occur in the current charges.  This hurt consumers who carried balances immensely.

With all of these changes, you can benefit from credit cards at this time.  So if you were considering it, do it now.  They definitely benefit your credit ratings, as long as you pay every month.  

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