Student Credit Card and Credit Education Blog

Back in December of 2007 I posted a blog titled “Post Holiday Credit Card Trouble Ahead” warning that the economy will slide a little more quickly in early 2008 and your credit card situation could get tricky. I had suggested you get on top of your balances, APRs, etc. Well, did you?

According to a February 5th 2008 article in the Wall Street Journal, Credit Card companies are buckling down and making it harder to get credit, decreasing limits, raising fees and in general giving you a lot less breathing room if you’re a person will bad credit, limited credit or are a little under water. Here’s a summary:

Despite recent dramatic Federal Reserve interest rate drops, credit card companies are tightening their standards. Big issuers such as Citigroup and Bank of America are offering lower credit limits and requiring higher FICO credit scores. Others like Capital One are limiting credit line increases and even decreasing credit lines for people who are now considered risky (who may have not been considered so in 2007).

Companies such as American Express and JP Morgan have increased their late fees and the fees for balance transfers and across the board credit card companies are expected to make some adjustment to fees. Why would they raise fees to protect themselves you ask? In 2007 Americans paid $18.1 billion in late fees alone. Whoa. See the more they expect people to default and not pay them anything, the more they will try to recover that loss from those that will. That’s the cost of getting into bed with the devil, and that’s exaclty where you are if you are carrying high balances and are close to your limits.

So what can you do? Well the fist thing you can do is to know your credit score and work on getting it up and keeping it up. Most of this is going to effect those with medium to low credit scores. Here is a link to a service we use to monitor our credit scores: Equifax Credit Score and Credit Watch. This service will give you your credit score and some ideas about how to repair it. You can also check out our articles in the Credit Education Directory.

Next you can make sure you limit your credit applications. One of the things that could flag you as a person who a credit card company needs to be concerned with (and lower your credit limit or raise your apr) is several new credit applications. This can happen very easily. Let’s say you respond to a balance transfer offer then the next day go to Target and get offered a Target Rewards card, well that’s 2 inquiries in a month and that could be enough to flag you. In general I say no to all store credit offers and only apply for other loans or credit cards when I decide I want them, not in response to them wanting me.

Finally you should get a budget and a solid plan for getting out of bed with the devil, i.e. knocking down the credit card debt. I’ve put together this handy little program for you that I guarantee will work if you follow it. I gave it to my own sisted and am happy to say its working for her! Its called the Student Credit Card Debt Reduction Plan.

Good luck and I hope you don’t experience any of these things. If you want to comment or ask additional questions feel free to do it here or even better, in the Student Credit Forum.