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Happy New Year everyone. 2009 is finally upon us, and many challenges are ahead. But it can only get better, right?

Now, this may be well known to you, but I haven’t had to deal with the driver’s license office in 4 years. So, I tried to outsmart folks today by getting up early and trying to renew my driver’s license. The funny thing was, I decided to leave my checks at home and bring my credit cards, assuming that in 2008 (almost 2009) most places would accept credit cards. No dice! I was told that only check or money order would be accepted.

This shouldn’t really be surprising. Credit card companies make a lot of money out of businesses that accept credit card. And the DMV office never really planned to jump on the whole credit card bandwagon anyway. Does that mean it’s right not to accept credit cards? I am not sure. It’s way more convenient to use a card, but it’s most costly to businesses too. Then again, these guys don’t accept cash either! Talk about making it easy to get a license.

A lot of folks have been hurt by the credit crunch, and credit card companies have had trouble pulling in profit from their card holders. That has made credit companies to make some tough decisions. For one, credit card companies are increasing fees on folks who have less than stellar credit background. Even some folks with excellent credit have been hit by higher rates. Secondly, many credit companies are tightening the criteria for getting approved for cards. This all means that you are going to find it difficult to get a credit limit in the upcoming months. The bad news is credit struggles will continue in 2009. The good news is that you may still get approved for some of the better offers if you apply for a card right now.

You can always compare cards to find the one that is best for you by going to your favorite credit card comparison site. I personally recommend the following comparison sites:

• CreditCards.com
• Credit-Land.com
• Intellicreditcards.com

You may still qualify for some of the better offers before the year-end. But you can be sure that a few cards will no longer be offered in the new year, and those that will survive will have tougher approval criteria.

Your take: Have you been hit by the financial crunch?

Credit card consumers have finally something to cheer about in these tough economic times. Federal Reserve has finally put the hammer down on credit card issuers that use deceptive business practices to extract more fees from their card holders. Credit card issuers have gotten away with many shady practices in the past few years, but the new ruling will bring more transparency to the credit card business and empower the consumers. Here are the major points of this decision:

• Credit card companies can not increase your interest rate on existing balances unless they have gotten your payment late by 30 days.
• Credit card companies can not charge you a late fee if they don’t give you at least 21 days to pay your dues.
• Credit card companies can not move your payments around in a way to make you pay more interest over long-term.

The only downside to the new rule is that it will go into effect on July 1st, 2010. As someone who has worked for credit card corporations before, I do understand the frustration on their part. But it’s simply not acceptable to play with consumers’ lives by charging them hidden and misc fees. I can just name a few card companies that will be not too happy about this (and you can expect them to look for ways to challenge this rule or find a loophole).

Your take: will the new ruling stop credit companies from continuing to apply their deceptive business practices?

If there was any indication a few months ago whether our economy was struggling or strong, there is no question now. We are half way through our way to a depression, and credit companies are affected by the state of economy as well. The volume of bad debt has put the squeeze on major credit card companies, and many are firing a few of their employees to cut cost.

But credit card employees are not the only ones who are getting the end of the stick from credit cards. Honest, good folks who have been paying their bills on time are also suffering. A few credit card companies have taken the initiative to reduce the credit limits of folks who are getting the most out of their cards. Let’s say you have a card that comes with $4,000 limit. If you are averaging only $1,500 a month on that card, you are going to have to expect to lose your credit limit soon. The argument here is that “you are not using your credit limit to it’s fullest,” and I guess that’s a valid argument. But that still counts as a penalty in my eyes.

Your take: is it fair for credit companies to reduce their best customers’ limits?

I never thought it would happen to me. I have paid my credit card bills on time and have never had any negative item on my credit. But that still didn’t keep a few credit card companies from cancelling a few of my credit cards (worth $25,000 in limits). The truth is that is happening to many consumers and business owners around the nation. Credit companies are not making as much these days as they used to, and as a result they have decided to pull the trigger on their unprofitable customers.

There are two ways to be unprofitable to your card issuer. You can either pay all your bills on time, or you can put your cards away until you have money to spend. Either way, you are making card issuers upset. Card issuers don’t like folks who avoid fees. That’s their business model. I know why my cards were cancelled. I wasn’t using my cards as much as I used to. Before, I used to get a warning before having my cards cancelled. This time, however, the credit company took it upon itself to cancel 2 of my cards without letting me know. They were kind enough to send me a letter to give me a heads up not to use my card again, but I wish they had let me known they were planning to cut me off.

Credit companies are hurting these days but they are still making money. That still doesn’t keep them from being more greedy. So, don’t be surprised if you find your limits slashed in half or your account cancelled after years of paying your bills on time. That’s what credit card companies do…

Your take: Is it fair for credit card issuers to cancel your credit card without giving you a warning beforehand?

In case you haven’t been noticing, the economy is in the dumps, and there is no sign that things are going to get better. There is no questions that consumers are being squeezed by the financial conditions these days, but small businesses have been hurt the most by the credit crunch. Small businesses rely on loans and leverage to run their business, and if you can’t borrow money to run your operations, you have to close doors sooner than later.

But things are going to even get worse for small businesses. Many credit card issuers have reduced credit limits and increased fees on their customers. Now, we are hearing that a few major credit companies are going to modify their applications to ask for more verifiable information that could affect your eligibility for their cards. In essence, if you are a small business owner, you are going to find it difficult to get approved for a business credit card.

Business credit cards have been so valuable to business owners in the past, but with credit companies making it difficult for business owners to get approved for them, you can expect some more businesses to close doors this year or next.

What’s your take: should credit card companies penalize their well-behaved customers to protect themselves in these tough economic conditions?

If you have been in credit forums, you have probably heard the complaints that many card holders are making about their limits being cut in half or third. Credit companies are feeling the crunch, and they are getting more diligent with their numbers. If you have had a bad record in your credit history, there is a very good chance that you will feel the crunch first. But credit companies don’t necessarily need that to cut your limit.

Credit companies are now using your debt to payment ratio to figure out whether you are deserving of your limits. LA Times running a story about this very issue. The fact is, credit card companies don’t need a very good reason to cut your limits. If you have read your card agreement, you probably know that credit card issuers use a lot of wiggle room to cut your limits or do all kinds of crazy stuff, which is why you should:

1. read your terms and conditions carefully!
2. limit your credit use if you can. Times are tough and you never know what’s around the corner.

These days all you hear about is who is cutting how many jobs. Yesterday, we heard Citigroup laying off 52,000 folks. That’s just way too many, and the timing couldn’t be worse for some of these folks. The holiday season is almost upon us, and a lot of companies don’t hire these days. Besides, let’s not forget the economy is not exactly doing great, so these folks will have to ride out some tough times.

Now, if you have been among folks who have lost their jobs. No worries. There will be opportunities available. The key is to be diligent about it. But even if you don’t find a job, you can stop the bleeding by cutting the unnecessary costs and avoid silly fees (e.g. credit card fees) as much as possible. The times are tough but they won’t last forever. At least that’s what it looks like at this point.

If you are in debt up to your neck, and you are not able to pay even small payments on your credit debt, we’ve got some more bad news for you. There have been murmurs around the possibility of granting forgiveness to some of the bad loans that are outstanding on credit card companies balance sheets. However, the OOC has just rejected a proposal to write off some of these bad loans.

On the surface, you may find this to be a cruel and careless decision. But the truth is, banks are notorious for using loopholes in law to misrepresent their financial information. In the banking industry, bad debts are recognized as soon as possible, but the proposal would’ve given banks the possibility of postponing that.

The good news is that President Obama and his staff understand the situation, and there may be some help on the way. Now, I am not sure if you can get out of your debt completely, but creditors may be willing to work with folks in trouble to help them make reasonable payments.