Survey results released this week say that 39% of consumers who had the terms of their credit cards changed either stopped using the card or cancelled the account entirely.
Here’s how consumers surveyed by comScore say they’ve reacted to higher credit card interest rates and new fees:
55% say they spend less with the card
27% say they no longer use the card
12% say they cancelled the account
9% say they applied for a card from another issuer
8% say they transferred their balance to another card
With all the upheaval in the credit card industry, many of your neighbors are making significant changes to what’s in their wallets, and the way they use plastic. Should you?
To answer that, first you must figure out what the heck is going on with the cards you have. That means actually reading the disclosures that come in the mail from your card issuer. It seems like an obvious step, but one that many consumers skip—perhaps because the letters look a lot like junk mail, perhaps because they’re lazy or feel overwhelmed and don’t want to be bothered. But there’s important info inside regarding interest rates and fees, along with details about how you can opt out of the new rules by certain cut-off dates, provided you’re willing to cancel the account. Ignore these notices at your own peril.
The WSJ lists some of the specifics to look out for among the gobbledygook in letters from credit card issuers and banks:
Changes in credit-card interest rates or annual fees. You can opt out, canceling your credit card for new purchases.
An end to the practice of automatically allowing you to exceed your credit limit. You can “opt in” to run over your limit but will pay fees if you do.
An end to automatic enrollment in overdraft programs for debit cards. You can enroll and pay the fees—but there are cheaper options.
Once you’re annoyed enough with your own credit card issuer to feel compelled to shop around for other options, shop smartly and make an educated decision before you wind up with an even worse card. LowCards.com is good at keeping tabs on the best cards for low interest, rewards, balance transfers, and so on. BillShrink’s Credit Card Bill of Rights, meanwhile, is tracking which cards are complying (and which aren’t) with the latest credit card reform laws.
Perhaps most importantly, no matter what you decide on the credit card front, don’t get too comfortable. Yes, card terms have changed a lot in recent months, but as consumers react to these changes, card issuers will surely launch counteroffensives, via even more changes. Virtually all major credit cards have engaged in “unfair and deceptive” practices, and the wise consumer assumes the worst and never gets too attached to any piece of plastic.
Stay on your toes. And oh yeah, read the darn notices that come in the mail.