Watch Out for Credit Limit Cuts 11-22-2008 Money Now! USA

The credit crisis has many credit card issuers slashing their cardholders’ credit limits. Back in June 2008, both Washington Mutual and Wells Fargo cut credit limits by up to 10%. Recently, American Express customers have seen credit limits slashed by thousands of dollars. These credit limit cuts couldn’t have come at a worse time, with holiday spending ramping up.


Lower credit limits are dangerous for your credit score. You see, 30% of your credit score considers your credit utilization – your credit card balances compared to your credit limit. The closer your balance gets to your credit limit, the lower your credit score will be. You could be doing well at keeping your balances low until the credit card issuer comes along and drops your limit, making it look like you’ve maxed out your credit card when you really haven’t.
If you don’t know your credit limit has been decreased, you could mistakenly go over. Credit card issuers don’t stop you from exceeding your credit limit. They just charge you a fee when you do it. They’ll also increase your interest rate. Even worse, your other credit card issuers might do the same.


Before you swipe your credit card, make a quick call to customer service to check your credit limit and available credit. Your credit limit could be decreased at any time without your knowledge, even if you have a good credit score and a positive payment history. Credit card issuers aren’t being picky with credit limit cuts – everyone’s fair game.
Checking your balance before making a purchase helps make sure you don’t go over your credit limit and receive a hefty over-the-limit fee.
If your credit card issuer notifies you that your credit limit is being decreased, it’s best to pay down your credit card balance to keep your credit score from being hurt.

3 Ways to Keep a Low Interest Rate - Money Now! USA 11-17-2008

Your interest rate is important because it directly influences the cost of your credit card. When you carry a balance beyond the grace period, your card issuer applies a finance charge, which is essentially your interest rate multiplied by your balance. The higher your interest rate, the higher your finance charges will be.
Even if you start out with a low interest rate, it could increase. Sometimes interest rate increases are out of your control, like when the issuer raises your rate because of market conditions. Other times, it’s your actions that cause your interest rate to go up. Here are things you can do to keep a low interest rate.


Pay your credit card bill on time every month. All it takes is one late payment to have your credit card issuer enact the default rate on your credit card. Keep paying your credit card bill on time, even if it’s just the minimum payment. If your due date falls on a weekend or holiday, plan to have your payment arrive before the due date.

Keep your credit card balances low. Maxing out your credit card is another surefire way to get higher interest rate. Credit card issuers see high credit card balances as a risk. So, to compensate for your increased risk, they require you to pay higher interest on your balance. It’s a good idea to keep your balance below 30% of your credit limit at all times.

Don’t bounce your credit card payment. When you write the check for your credit card payment, make sure there’s enough money in your checking account to cover it. Not only that, should make sure other outstanding checks or debits aren’t going to deplete your account. Enrolling in your bank’s overdraft protection program can prevent bounced checks.
Make sure you’re managing your other credit cards, too. Many credit card issuers have a universal default clause that allows them to increase your interest rate even when you’re late on another credit card payment.