Credit Limits Hurting Your Score?
Filed Under (Credit Cards Blog) by creditblogger on 13-03-2009
If you have owned a credit card for a while, you are probably familiar with the concept of debt/credit ratio. Credit card companies use that as one of the factors to determine your credit worthiness. Think about it. If you are one of those people who like to max out their credit cards, you pose a bigger risk to credit card companies. But what happens when your credit card company reduces your credit limit by half? Let’s say you have a credit like of $1000. You put $450 on it. You are not even close to maxing it out, right? But what if your credit card company reduces your limit to $500? More than a reduction in your credit limit, wouldn’t you say?
Credit card companies are in control. When you sign their agreement and sign up for their credit cards, you essentially give them the ability to increae your rates as they wish. The new credit card rule which will go into effect in 2010 is a great win for consumers. But what do you do till then? What if you are being victimized by greedy credit card companies?
You should always avoid spending the money you don’t have. People have been saying that for years, but nobody really follows it. Credit cards are not ATM machines. You are not getting free money. Your credit card account is like a loan account but it’s even more risky these days. Your rates can jump up fast if you are not too careful. Credit card issuers are feeling the squeeze and in order to stay profitable they are cutting limits and employees and increasing their rates. If you keep spending like you have in the past few years, you only invite card issuers to increase your rates and steal your hard-earned money. The credit card industry is full of companies with deceptive practices. Don’t be a victim.
