With the credit crunch that is hitting the markets at this current time, be careful if you are still using credit cards. Most issuers are trying to figure out ways to remain profitable by increasing rates and adding miscellaneous charges. One charge in particular is the new annual fee charge. Annual fees on credit cards are not new, however consumers are being hit with annual fees at record rates. In fact, 28% of all new solicitations have an annual fee. In addition, the average annual fee is now $82.00. What I find interesting about this is that credit card companies are imposing these annual charges is that they penalizing you if you don’t spend over approximately $2,400 (See Citi Group’s new policy). Let’s do an example, You have a credit card with a $5,000 balance. You currently owe $500.00 and pay a minimum payment of $25.00. The credit card companies will charge you a fee of $80-$90 a year if you don’t spend $2400 a year. How asinine is that?
Citi spokesman Samuel Wang said in an e-mail statement:
“We have adjusted pricing and card terms for some customers as part of our regular account reviews. This is an ongoing process to ensure we offer terms, interest rates, credit lines and products based on individual needs and risk profiles. These changes also reflect the dramatically higher cost of doing business in our industry as we work to preserve the broad availability of credit.”
My advice is not to use credit, change your blueprint because after this credit crisis that we are in, I predict things will only get worse. Credit card use is up 6% for the year compared to last year. Most companies want you to continue drowning in debt. I was in Target recently, which happens to be my favorite store, but what I saw made me sick to my stomach. On the front of the cart is a message that says, “charge it, The Easy Way To Pay” (See Image Above). The Gap will only give you a discount of 25% if you are a cardmember. The goal is to keep you down. I encourage anybody reading this to seek change and to restore the original blueprint of using cash. Don’t take my word for it, check out the CARD Act for more information and read your terms and conditions.
If you are in need of help with credit cards, please call me for a free financial counseling session at 888-882-3058 or you can email me at ag@agthecoach.com.
Source for this post: Leslie McFadden, Bankrate.com
