As we have explored in an earlier post, one of the basic rules of improving your credit score is to NOT close a credit card account when you pay it off.  This process applies to the “Credit Saturation” threshold that we’ve previously investigated.  This is a procedure that I try to impress upon all of the borrowers that refinance and use proceeds to pay off credit cards.

Well… the banks have caught on and are now beginning to see profits dwindle as consumers no longer want to be saddled with credit card balances, and have now compensated by creating new fees.

As unpleasant as opening the mail might be for some individuals, you must do so with a renewed awareness now.  Within those mailings, whether they be statements or addendums to your contract with the company, you must be vigilant of the following:

• Items you may have already seen…
  • Increased interest rates
  • Increased minimum payments
  • Increased fees for exceeding your limit
  • Increased penalty fees for late pays (be very careful in reading your contract… some companies can increase your rate if you make a payment late at ANOTHER company!!)
• NEW charges that you may be seeing soon…
  • Annual fees on cards that might have previously not had an annual fee
  • Inactivity fees on cards you hold, but don’t use
  • Processing fees (basically a junk fee disguised as a fee for sending out a paper statment)

To sum this all up… OPEN your mail… STUDY your statements for changes and anything out of the ordinary or different from what you signed up for… OPT OUT of any changes that are being proposed, if given the option (you may have to search for the ability to opt out)… CALL your provider and verbally negotiate out of the changes… if all else fails, go to one of the credit card resources such as www.lowcards.com to find a replacement card.

IMPORTANT:  If you are forced to replace a card that just will not give you what you want, DO NOT close the existing card prior to opening the new account!  This will almost certainly result in a credit score hit.  Additionally… DO NOT replace more than one card in a 60-90 day period of time.  Also, DO NOT do anything that will result in an additional inquiry to your credit… applying, en masse, to a number of credit card companies WILL result in inquiries!  Do your homework first and apply to one company at a time!

As always… please feel free to contact me should you have any questions or comments.