Your Credit Card Issuer May Consider You a "Deadbeat"

Credit card issuers don’t make it easy for us to know the right things to do to keep our good reputation with them. In fact, trying to navigate through all the advice we get can make us feel like doing a Yale Jashan Bhangra Dance! If you haven’t seen the Bhangra dance, it’s a bit on the wild side.

Take, for instance, the fact that your credit card issuer may have you labeled as a “deadbeat.” Why? Because you pay your bill in full, never go over limit, and never pay late fees. In fact, because your credit rating and your FICO scores are excellent!

Why do those actions turn you into a deadbeat? Because they aren’t making enough money from you, that’s why! They want you to carry a balance so they’ll earn interest each month. And they don’t mind at all if you pay a day or so late so they get to tack on a nice fee. Going over the limit is fine, too, because it also carries a fee.

Because you don’t do those things, they may be lowering your credit limits, raising your interest rates, and canceling your unused cards. Those actions, of course, will lower your FICO scores.

You’ve probably heard that the “Credit Cardholders Bill of Rights” is going to put a stop to many of the consumer-unfriendly practices used by credit card issuers. It is. When the new laws go into effect in February 2010, many of those practices will be forbidden.

But since the card issuers stand to lose billions in profits as a result, they’re looking to their most creditworthy customers to take up the slack. Experts are predicting that card issuers will now begin routinely charge annual fees even to their “best customers.”

“Best customers,” by the way, are those who carry a balance. Typically, they’re consumers who charge a few thousand for a major purchase every few months, pay it down, and then start all over again.

Grace periods may also be phased out, so that if you’re a “deadbeat” you’ll begin paying interest from the day of your purchase. As a result, many will abandon credit card use in spite of the convenience and bookkeeping benefits.

If you’d rather keep your life in order – and make your life more akin to a Foundation Showdance than a wild and crazy Yale Jashan Bhangra – take control now.

If you do carry a balance, begin paying it down. Spend your rewards credits before they fade into the sunset, and try to maintain your credit scores by keeping all credit card accounts open. You may be able to do so by charging a small amount at least once per quarter. Remember that the more available and unused credit you have, the better your credit rating, so if you can get your credit limits increased, do so.

Author: Mike Clover

One Response to “Your Credit Card Issuer May Consider You a "Deadbeat"”

  1. eliminate credit card debt says:

    Thanks for sharing such great post, it will help many people to get detailed info about credit card.

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