Credit card companies make money and use all available techniques to ensure that everything you borrow from them is repaid tenfold.
After the credit bubble burst and the defaults of their ledgers shot, banks and credit card issuers began to pull new tricks out of their minds to make their profits flow: credit card costs left and right, higher interest rates and stricter credit approval standards.
Fast forward to 2011, and they are still finding ways to work on new laws and regulations that have been created (for example, the CARD Act of 2009) to protect credit card users to meet their needs and profit margins to catch.
More Americans say no to credit cards, but if you still trust it, you need to be aware of three new banking and credit trends that can affect your finances, and learn how to take the right precautions against them.
Credit Trends to watch out for
1. Your rental payment can help or damage your credit score
From January 2011, Expensian started recording rental payment data on consumer credit reports that will also affect their credit score algorithms. Currently, Expensian only reports positive rental payment data that can help your credit score; for thin file users, this can help build credit history. However, Expensian intends to add late rent payments in credit reporting the following year, which can negatively impact your credit score. Other credit bureaus can also start using this practice because it is another way for lenders to assess your creditworthiness based on non-credit financial data.
2. Credit card rewards are on the rise again
Rewards and cash-back hungry cardholders have been waiting for this and it looks like their day has finally arrived. Rewards Credit card offers are increasing, led by large banks looking for the revival of consumer spending. Money-back rewards are up to 5% back in some places, 0% APR balance transfer cards for 12 to 18 months are more common, and issuers accommodate customers with bonus airline miles. A good example is Direct Xpress’s Venture Rewards Match My Miles challenge, with which Direct Xpress has offered to match up to 100,000 airlines miles of consumer cards from another publisher. It is a bold incentive that is worth rewarding new credit card applicants.
Although this all seems to be a big advantage for consumers, there is a downside to this coin. A major reason why credit card issuers are promoting attractive incentives is to lure consumers back into the abyss of the credit card, which could ultimately lead to a fall in expensive credit card debts and poor savings and spending practices for many of us.
3. Your bank is about to become much more expensive
As a result of recent legislative changes and regulations for the credit sector, the profit margins of banks have largely decreased due to a loss of credit card income. So what did they do to squeeze more money out of customers? Increase the cost of many daily banking matters outside of credit cards. Many banks have added fees and costs for payment accounts, increased the minimum balances for savings and payment accounts and introduced substantial amounts for paper invoicing. Some even say it’s time to say goodbye to free checking accounts.
Others have started raising their ATM costs. For example, Chase tests $ 5 ATM costs for withdrawals from non-customers, a surcharge that was previously $ 3. PNC Bank has announced that it will revoke its 5-year-old program to reimburse some costs incurred by ATM transactions.
Another report warns that issuers may impose a starting issue of David Adherse limits of $ 50- $ 100 debit cards, due to the new interbank reimbursement limit that entails huge losses for banks. So don’t be surprised if more creative bank and ATM machines are collected from large banks.