DawgTalkers.net Forums DawgTalk Tailgate Forum Credit Card Rates

In particular, Bank of America. Unfortunately, I am one of the many that is having my rate doubled. They had lowered my spending limit, and I went over it by $400 last month. Just sent them a bunch of money to get well below my rate, but too little too late. The rep tells me to get back to my original 11.9%, I would not be able to use the card anymore (basically cut it up) and I could pay my balance off in time. If I want to keep the card (which I've had for 10+ years and am always on time, etc.), I would have to bow to their rate increase in the low 20s.

I post this to garner thoughts and ideas on the subject. I found this USA Today article from mid December:

http://www.usatoday.com/money/perfi/credit/2008-12-15-credit-card-consumer-squeeze_N.htm

Changing credit card terms squeeze consumers
Updated 12/16/2008 1:49 PM | Comments 705 | Recommend 61 E-mail | Save | Print | Reprints & Permissions | Subscribe to stories like this

Dennis Spaulding says last-minute plane tickets for his father's funeral increased the amount of credit he was using, leading to rate increases that have pushed his payments to about $2,000 and helped to put him on the verge of bankruptcy.

Dennis Spaulding says last-minute plane tickets for his father's funeral increased the amount of credit he was using, leading to rate increases that have pushed his payments to about $2,000 and helped to put him on the verge of bankruptcy.

Aggressive rate increases on credit cards are threatening to push struggling consumers into financial ruin, accelerating home foreclosures and the nation's descent into recession.

The growing problem is reflected in cases such as that of Dennis Spaulding, of Corona, Calif. He bought two last-minute plane tickets for his father's funeral in 2006, a purchase that increased the amount of credit he was using and made him appear riskier to banks. The result: Banks raised the interest rates on four of his credit cards — to 24% and higher — doubling his monthly payments to about $2,000.

That led to a financial spiral that has put him on the verge of losing his home and filing for bankruptcy. "I see no light at the end of the tunnel," says Spaulding, a cabinet designer.

Valerie Walker, of Middletown, Del., tells a similar story: Increasingly high credit card rates mean she's scrambling to pay other debt obligations. She worries about falling behind on bills for her mortgage and business, Subway sandwich franchises.

Across the nation, a growing number of consumers and financial experts are complaining that sudden credit card limit reductions and sharp interest rate increases are triggering a domino effect that makes it harder for consumers to juggle bills, stay in homes and avoid going broke. No official data are available on how many people are being pushed into financial distress by credit cards rather than mortgages. But credit counselors, bankruptcy lawyers and legislators say banks increasingly are pummeling consumers for making the smallest payment error — or making no error at all.

The shift comes as regulators and legislators have spent the last year pointing to toxic mortgages and overextended home buyers as the culprits behind the financial crisis. Credit cards, by encouraging a society of spenders rather than savers, have played a significant role in loading up consumers with unaffordable debt whose rates and terms can change at any time.

"If people get charged 30% interest, that is going to push them over the edge," says Sen. Carl Levin, D-Mich., who has co-sponsored a bill to crack down on credit card fees and rates.

The Federal Reserve is expected to release a rule shortly aimed at cracking down on hair-trigger jumps in card rates and fees, but consumer advocates worry it won't go far enough in reforming credit card practices.

USA TODAY, in previous articles in its "Credit Trap" series, has reported that during the housing boom, banks sharply raised card limits in part because of a surge in home equity, then guided borrowers to use mortgages to pay off card balances. The series also found that banks' practice of packaging and selling credit card debt to Wall Street has given them a powerful incentive to raise card rates and fees.

Now, USA TODAY's interviews with credit counselors, bankruptcy lawyers and other financial experts show that as debt-saddled consumers struggle to stay afloat, banks are aggressively raising rates and fees — often stripping consumers of what little disposable income they have left and threatening to become another drag on the economy. Consumer spending makes up more than two-thirds of U.S. economic activity.

"This is the only credit people have available," says Robert Manning, author of Credit Card Nation: The Consequences of America's Addiction to Credit. "You raise their monthly payments … this is going to drive people straight into bankruptcy."

Walker, 52, says she missed a single credit card payment in 2007, causing Juniper Bank, the U.S. credit card arm of Barclays, to impose a late fee and more than triple her interest rate to 20%. She signed up for a credit-counseling program to get a handle on her bills.

Before she could do so, other banks also penalized her, possibly for the late payment to Juniper, a common practice in the industry. Bank of America cut off an overdraft line of credit on her bank account. American Express more than halved her credit line to $14,000, cutting off a key source of liquidity for her business. Then GE Money raised her interest rate to 23% from 16% on a store credit card and lowered her card limit to $100 from $4,000.

"We are still paying our mortgage and our business bills," says Walker, who owes about $35,000 on her credit cards. "But by the skin of our teeth."

Good mortgages, bad cards

Walker's situation is increasingly common, experts say.

"There's a misconception that everybody who comes in the door has a bad mortgage," says Doris Latorre, national director of quality assurance for Acorn Housing, which counsels troubled homeowners. "There are people who have good" mortgages but get into trouble with other loans when their banks change card terms, she says.

Rate increases and dramatic reductions in credit limits can push borrowers deeper into financial distress, rather than encourage them to pay their bills, says Robert McKinley, chief executive of CardTrak.com, a card research site.

American Express, in a statement, declined to comment on individual consumers but said that in general, it reviews credit limits "in an effort to prudently manage risk." GE Money, also in a statement, said it "respond(s) to economic challenges and make(s) adjustments to the portfolios as needed." Juniper Bank said it may adjust credit lines "to ensure the proper credit line assignment is in place." Bank of America, in a statement, declined to comment.

Although consumers typically carry far less credit card debt than mortgage debt, card debt often is more punitive because banks have significant leeway to change terms.

"The computer kicks in and considers this person a credit risk and raises their rate to 30%," which makes it hard for them to pay off that debt in their lifetime, says Marc S. Stern, a bankruptcy lawyer in Seattle.

Even so, 90% of card users will not see their interest rates go up this year, says Scott Talbott, senior vice president of government affairs at the Financial Services Roundtable, which represents the 100 largest lenders. Consumers who do, he says, "can attribute it to their credit history, the economy and the lack of (demand for credit-card-backed securities) in the market."

Spaulding, 40, says he's a conservative spender who got trapped under $70,000 of credit card debt and high finance charges after 15 years of relying on his credit card for emergencies, such as car repairs. In a letter to the Federal Reserve, a bank regulator, Spaulding complained that "credit card companies are the reason why hardworking Americans like myself struggle for years."

Banks started raising his card rates two years ago, after his utilization ratio — the credit he used compared with his available credit — rose above 50%, Spaulding says. He borrowed $16,000 from his 401(k) to cover the higher monthly payments. Even so, he eventually fell behind, leading to rate increases on three other cards.

The higher card payments made it difficult to keep up with his mortgage. And plunging housing prices provided another reason to stop paying his mortgage. Now, he's trying to sell his house for less than he owes on it.

"More likely, I'd still be managing today if the credit card companies didn't raise their rates," says Spaulding, who plans to file for bankruptcy because he doesn't want to be saddled with high-rate card debt when he and his fiancée, Michelle, have their baby in April.

For families living paycheck to paycheck, a jump in credit card rates could mean the difference between paying their bills and putting food on the table, says Stephen Lerner of the Service Employees International Union, whose more than 2 million members include janitors, bus drivers and doormen.

Talbott, of the Financial Services Roundtable, points out that when banks raise credit card rates because of market conditions, they usually give consumers the option to pay off their balance at the old rate — as long as they stop using their card.

But if banks change rates because they consider the borrowers riskier — because they've paid late or have gone over their credit limit, even once — that option won't be available, says Curtis Arnold, founder of CardRatings.com, a credit card site.

Consumer advocates say that while they understand that banks need to make money, steep credit card rates and fees have become more severe than missteps made by consumers.

"We're not saying there shouldn't be late fees," says Gail Hillebrand, a senior attorney at Consumers Union, which publishes Consumer Reports. But fees, she notes, should be tied to how much a late payment actually costs a bank.

The Federal Reserve is expected to release rules this week to crack down on the most egregious credit card policies, such as raising the rate on existing balances. But some say that the rules won't obviate the need for a law reforming such practices.

Reform is particularly needed, says Jim Campen, executive director of Americans for Fairness in Lending, at a time when consumers are staggering under a record load of high-rate credit card debt. The typical household now has about 11 credit cards and owes $11,211 in card debt, according to CardTrak.com.

Those figures don't include the billions of dollars of credit card debt consumers have rolled into mortgages.

Ken Clayton of the American Bankers Association says, "It's easy to look back and say that credit was too available, but consumers have complete control over how they used their cards."

Banks now are reducing their risk, he adds, by taking actions such as lowering credit card limits, because "that's the prudent thing to do."

A domino effect

As lenders do so, a growing number of borrowers will see higher credit card rates.

Here's why: When lenders lower credit limits, the amount of credit available to consumers is reduced. That increases the percentage of credit that borrowers are using compared with what's available — often hurting their FICO credit score. Lenders use FICO scores, which range from 300 (worst) to 850 (best), to determine how much credit to offer consumers and at what rates.

At a time when consumers already are struggling to stay afloat, lower scores and higher card rates could aggravate their financial problems, says John Ulzheimer, president of consumer education at Credit.com, a consumer information site.

"Now, other issuers think you're high risk, and they may start doing nasty things to you, and it starts snowballing," says Ulzheimer.

Borrowers who don't realize their credit limit has been lowered may also spend above their limit, triggering an over-limit fee and a higher rate, says Bill Hardekopf, chief executive of LowCards.com, a card-comparison site.

So far, overall credit scores have held up "shockingly well," says Mark Zandi, chief economist at Moody's Economy.com, because lenders are still expanding credit to the least-risky consumers, boosting the average credit card limit.

Yet Zandi believes it's probably not a matter of if — but when — credit scores will fall. He expects scores to decline most rapidly in areas where card debt is rising and housing prices are falling.

The potential for consumers' credit scores to fall and their rates to rise — through no action of their own — exposes a serious flaw in the credit-scoring model, some consumer advocates say.

Tom Quinn, vice president of global scoring at Fair Isaac, which developed the FICO score, defends its ability to predict which consumers are more likely to pay their bills. He says, though, that partly because of media inquiries, the company is reviewing how credit-line reductions affect consumers' credit scores.

As a growing number of banks pull back on credit lines, even healthy consumers could be pushed into distress.

Take Mary Craig, 26, of Ashburn, Va. Shortly after American Express lowered her credit card limit by 60%, to $7,200, Craig's credit score dropped from a decent 720 to a mediocre 683, she says. She applied for two loans in recent months, unsuccessfully, and worries that even if she got one, she wouldn't get the best rate because of her credit score.

It's a stinging setback considering that Mary and her husband, Sean, 32, have spent years improving their credit score so they could get a bank loan to consolidate $17,000 in card debt. When she called the bank, a rep told her she'd have to boost her score to 750 to get her limits raised.

It's a no-win situation, she says, because, "How can I increase my score to 750 when (the bank's actions) have no doubt damaged it?"

American Express spokeswoman Kimberly Forde says consumers' overall debt levels are the primary factor for any credit limit reduction, but the bank also looks at borrowers' payment history and credit score, among other information.

Craig worries that American Express and other banks will raise her rates because of her reduced credit score. "That," she says, "would put us in hot water."

They didn't offer to make an automatic withdrawal from your checking account instead? That's what Discover card offered me when I went over my credit limit, and my interest rate is staying the same (which is nothing since I had just signed up to transfer money from a high interest card).

Maybe this will get people to live closer to their means and pay off what they charge every month. I've been doing it for almost a year and it's actually working very well. No finance charges, and I still get the rewards offered by the cards.

It sucks that people with high balances will get hurt with this, but they've been talking about it coming for quite some time, so it's not like folks didn't have the chance to get their balances in order.

and to swith to ONE credit card that has a FIXED rate.

Well, it really doesn't matter what the rates are if you pay it off every month. Also, it's a good thing, believe it or not, to have more than ONE card.

Agree'd, the greatest thing I ever did was pay off all my cards. now I use just the one, and pay it off every month. I keep a close eye on the balance, versus what I have in the bank to pay once the bill comes, and I earn cashback, yet pay no interest.

Another side affect is that I have noticed that without paying interest charges on multiple cards and stuff (ie: throwing money away), I always seem to have cash available when I want something.

It was a long hard process, and took some severe control and discipline to not buy things that weren't necessities, but the rewards have been well worth the few years, not to mention the discipline has carried over, and I really think out purchases now.

Isn't it great when you really learn to play the credit game?! I used to max out all my cards...now I use one regularly and rotate the others with a small purchase every few months to keep them active.

So far, I'm not having this problem with any of my cards

You and I will never agree on that. Perhaps it's better for YOU, but it's really not better for the rest of us.

If you have no credit cards, how do you go about applying for a loan? I'm sure you can, but wouldn't that negatively affect your credit score, thereby giving you a higher rate for the loan (whether it be auto, home, etc)?

Kudos to you guys that have zero debt....and I know the reasons I have a balance, which, believe it or not, were unavoidable. I am taking measures to pay it off. Only have 2 credit cards, and always pay at least double the minimum. Work and housing situation have contributed significantly to my situation. I'll leave it at that.

Actually considering re-financing my mortgage (in a 30 year fixed at just under 6%), but wonder if I could even get a good rate as my credit score is probably garbage. Will be investigating, but the purpose of this thread was to see if there are people in similar situations and to ascertain if there is anything a consumer can do. I know the government is discussing legislation to protect the consumer, but thought that was years away.

In a related article, Some of the less than fair practices are getting stopped. But it'll be a year before that happens.

______________________________________________________________________

Source

Feds ban 'unfair' credit card rules

Starting in July 2010, consumers will get a big blanket of protection. But banks claim that the cost -- about $10 billion a year -- will ultimately hurt consumers.

By MSN Money staff with wire reports

Federal regulators have adopted sweeping new rules for the credit card industry that will shield consumers from arbitrary increases in interest rates and inadequate time to pay the bills, among other changes.

Credit card companies will be allowed to raise interest rates only on new credit cards and future purchases or advances, rather than on current balances.

The changes, which take effect in July 2010, mark the most sweeping clampdown on the credit card industry in decades. They were approved this morning by the Office of Thrift Supervision, a Treasury Department division. The Federal Reserve and the National Credit Union Administration were expected to act on them later in the day.

John Reich, the thrift agency's director, said the rules "will enhance public confidence in financial institutions and establish a level playing field for institutions that want to do business fairly without suffering competitive disadvantages."

The rules also restrict such lender practices as allocating all payments to balances with lower interest rates when a borrower has balances with different rates.

They also could make it more difficult for millions of people with bad credit to get what is known as a subprime card carrying higher interest rates, some experts say.

The new rules prohibit:

* Placing unfair time constraints on payments. A payment could not be deemed late unless the borrower is given a reasonable period of time, such as 21 days, to pay.
* Placing too-high fees for exceeding the credit limit solely because of a hold placed on the account.
* Unfairly computing balances in a computing tactic known as double-cycle billing.
* Unfairly adding security deposits and fees for issuing credit or making it available.
* Making deceptive offers of credit.

In addition, consumers will have to be given 45 days' notice before any changes are made to the terms of an account, including slapping on a higher penalty rate for missed or late payments. Under current rules, companies in most cases give 15 days' notice before making certain changes to the terms of an account.


Consumer advocates praised the reform efforts, if not their timing.

"It's too bad the Fed is giving issuers so much time to comply with rules that should have been adopted years ago," said MSN Money columnist Liz Pulliam Weston, the author of three books about credit and debt.

She said credit card issuers shot themselves in the foot this year by making blanket, arbitrary changes to the accounts of some of their best customers. Issuers doubled and tripled interest rates and chopped lines of credit not just to high-risk borrowers, but to people who always paid on time and who had good credit.

"Their actions just brought home to millions of consumers how capricious and unfair the credit card industry had become," Weston said.

The changes could cost the banking industry more than $10 billion a year in interest payments, according to a study by law firm Morrison & Foerster.

Smart uses for credit cards
There are situations when a credit card can be your best friend. Here's how to know when -- and how -- to use it to your advantage.
Roughly 16,000 companies in the U.S. issue credit cards. The biggest lenders include Discover Financial Services, Bank of America, Citigroup, JPMorgan Chase, Capital One Financial, American Express and HSBC Holdings.

The head of the American Bankers Association called the changes "strong new regulations . . . (that are) unprecedented in their scope and signal the beginning of a new market structure for credit cards."

"While the new rules are designed to increase protections for consumers, the Fed itself has recognized that they may result in increased costs for most card users and reduced credit availability, particularly for consumers with lower credit scores or limited credit history," ABA President and Chief Executive Edward Yingling said in a statement. "With the uncertainty facing our financial system, it's absolutely vital for policymakers to understand the full impact of these regulations on consumers and the economy before judging their success or further restricting the marketplace."

Peter Pham, CEO of consumer Web site Bill Shrink, put it more plainly: "Credit card companies will have to change the way they have been doing business and unfortunately, probably raise fees to make up for the lost revenue."

The site allows people to look up individual credit cards to see if they meet the new guidelines.

Most of the rules were first proposed in May and drew more than 65,000 public comments -- the most ever received by the Fed.



Travis Plunkett, legislative director of the Consumer Federation of America, said many of them "were spontaneous from consumers who feel they've been treated unfairly by their credit card companies and are literally begging the Fed for help."

Many people acknowledged paying late, often mistakenly, and felt it was unreasonable for their card issuers to increase the interest rate on the balances, Plunkett said. Another common complaint came from people who paid on time but were hit with rate increases because companies needed to recoup losses from other cardholders, he added.

Under the new rules, credit card lenders will be required to apply any payment above the minimum to the part of the balance with the highest interest rate.

The so-called subprime cards for people with low credit scores typically have credit limits of no more than a $500 but require large upfront fees. The rules cap those fees at 50% of the credit limit and allow cardholders to pay off the initial balance over a year, not immediately.

The Consumer Federation estimates that credit card debt held by U.S. consumers is about $850 billion -- four times what it was in 1990.

Associated Press writer Carson Walker in Sioux Falls, S.D., contributed to this article.

Anyone who thinks not having a couple of credit cards is a great thing, isn't paying attention. GM of all people should know this....

Took me about 4 years to clear up all the mistakes on the credit reports and get my lady's credit card debt paid off, but we did it. Wasn't always easy, but we are now debt free (excluding the home payment). Both of our FICO scores are at or above 800 now and we watch our reports semi annually to make sure it stays that way. With FICO 08 coming out in Jan - June we should be going up.

GM, do you by chance listen do Dave Ramsey for financial information?

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Like you mentioned, the most important aspect is the debt-to-limit ratio. If you have 7 cards and they’re all maxed out, that hurts your score more than if you had 10 cards with 40% capacity on each one. By showing that you can manage your cards, you prove to a lender that you are responsible and creditworthy

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Ahhh, for those in the know. I have 2 credit cards - a Bank of America and a Citi Card. I have balances on both that are up near the limit. Would it improve my score if I transfer those balances to maybe 3 new cards, cutting my debt to credit ratio in half on the two main ones (each with 10 years of good activity), but maybe being at the limit on the 3 new cards? Would this boost my credit score?

We have a Capital One card and pay it off each month. I use the card for EVERY purchase and rack up the miles. It allows us to flyo to Browns games for free each year.

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2) Rewards for purchases. I have a card that offers 5% back at the pump, 2% at the grocery, and 1.25% on everything else...how can you NOT buy things with that card? It's an actual credit on your statement every month. Easy as pie. And, some cards have different rewards, so you would use them for different things.

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those are all fine and dandy if you pay off your balance every month....and the fact is, that the vast majority don't....

so if your interest rate is 12% (i'm guessing, it may be higher or lower) then if you carry a balance, you are paying 7% more for gas, 10% more for food, and 10.75% more for everything else...


credit cards are the devil!!!!!

what everyone likes, is the security of something to fall back on.....if they need something....if something breaks.....

so they get a credit card....(to build credit) buy some stuff, repair some stuff.....there monthly balance starts to climb.....this leaves less cash to pay for other things....so you charge those too....on, and on, and on.....

then you start getting home equity loans....or waiting for your taxes back....just to pay off your cards.....


ya know whats better? saving some cash....then when something breaks...you pay for it....then you don't need home equity loans.....then your taxes can get added to the pile of cash in the bank already....


credit sucks....


and take it from me.....i've done all the wrong things...well at least those i've mentioned....i've got minimal cash in the bank, and i've got one card maxed out that i almost had payed off....

did i tell ya credit sucks?

Actually, credit doesn't suck...some people that use it do, though. As I said, I've been there and done that. I know the nightmare we can get in to by abusing it...and I know the benefits of using it correctly as well.

Saying credit sucks is like saying guns kill.

Credit in and of itself is good. Credit abused is a killer. It will wipe you out.

Why can't our government see that? The parallels between individual credit and abusing it compared to national credit and abusing it are identical.

This country needs to quit spending. For individuals, if you can't pay cash, you don't need it. Same SHOULD be true of our gov't.

Just as out of control credit spending will suck a person into a deep dark credit hole they can't get out of, it will do the same to this country.

And, finally, thanks to congress, this country is in a deep dark black hole that it will never get out of. Well, maybe a few wars, and hundreds of thousands dying will help, but the glory days of this country are well past. $53 trillion in debt and counting.

i understand your point....credit does serve a purpose.....

it used to be necessary for things like houses...or starting a business....maybe to get a car....

people survived just fine without creditcards....

my point was that people that pay off there balances monthly are a huge minortiy of the people with credit cards...

and not everyone that has credit cards abuses them either....thats the rut you get into...

the major problem is instant gratification...everyone wants it now...

say you want to buy something....you can get it now, and possibly pay interest....or you can wait a few months and pay cash.....cash is always better...cause its yours.....the sale is final....

when you purchase on credit, you now owe....and if a problem arises, or you lose your job, they gotcha....

being in debt sucks.....i'm not too bad off, but when i read storys of what others have gotten themselves into its terrible....

and as far as the gun comment, if you don't have one then you can't get shot with it.....if you have a credit card, you might just get burned....

i think we can agree, that credit isn't bad....but having it just to have it leads to problems too...

I don't even know where to begin with your post because I disagree with 99% of it, but I'll just comment on the following statement...

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....but having it just to have it leads to problems too...

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It doesn't always lead to problems. Being credit wise is a very valuable trait these days and having some is better than having none.

If cash is working for you, that's great, I'm very happy for you. It also works for me, I just have the credit use in between purchase and payment. Very simple really...buy a tank of gas, pay my bill a couple days later after the transaction posts to my account. Then, when my statement comes, I have 5% off every gas purchase credited to that account...usually adds up to about a free tank of gas per month.

It's called being smart. And, this isn't 50 years ago when credit wasn't all that important. Have you looked around lately? Even people with credit scores of 750 (850 is the highest) are being denied home and car loans. Whether it's right or wrong, without a credit portfolio today, you are nothing.

well i would love to know how you can disagree with 99% of my last post, because its pretty much fact....

your purchasing on credit for the cash back bonus....i get that...and i won't even argue, cause if you pay your balance off every month, then you are ahead....

my point is the majority af the people in this country aren't doing that....for various reasons....loss of job, stupidity, wanting it now....you name it...they are paying more for things because they used credit...they aren't getting the cash back, because the interest kicks in....

you shouldn't borrow just to borrow....you borrow, when there is no other way...people have forgotten that....


and as far as those credit scores go.....you don't need credit cards to get credit....having a steady job, and a proper down payment goes a long way in showing fiscal responsibiltiy...

there is no way that a bank (before this stupid meltdown) wouldn't have given a loan to a person with 20% down for a house, or a decent down payment for a car..bad credit is what you don't want....

you shouldn't even need a loan for a car....but almost everyone buys on credit....why? cause they want a car that they can't afford...

you can easily buy a used car with cash....and then pretend you have a 400 per month car payment and buy a better car down the road....i haven't gotten there yet....been getting loans on used cars....but it can be done....

you pay cash for a 2000 dollar beater...and drive it for 3 years....you've got almost 15,000 for a better used car....then you drive that for 6 years and then you have 30,000 dollars....and a new car for cash...

how can you honestly say that credit is better than cash, (except for a house) for the majority of people?

quote]As the Sis In Law, I'll answer in Jules' absence.

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1) Protection that cash and debit cards don't offer. Stolen, lost, etc.

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ahh But some debt cards DO offer that protection. I agree cash does not.

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2) Rewards for purchases. I have a card that offers 5% back at the pump, 2% at the grocery, and 1.25% on everything else...how can you NOT buy things with that card? It's an actual credit on your statement every month. Easy as pie. And, some cards have different rewards, so you would use them for different things.

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You got me on that one Michelle. For those smart enough to use their cards right (paying off the entire balance every month) that would be a good reason to own one for some people.

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3) Credit score aid. I know you think, “Having too much available credit is bad because lenders will think you are more likely to go into debt”, but that's not necessarily true. Creditors (lenders) value an established history of responsible payments on a credit report over how much available credit you actually have.

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I gotta call you on that one. I see what the creditors value every day, and credit cards don't mean much to them at all UNLESS something from their history pops up as a reason to decline somebody from a loan on a big ticket item.

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By showing that you can manage your cards, you prove to a lender that you are responsible and creditworthy. All of this is a known fact in the credit world.

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All that is what is tossed about by so called experts. It's kind of like what they teach you in Nursing school. They tell you the basics, they tell you the way things should be done, but then you start working and BAM guess what you realize what they taught you does not work that way in the real world.

Do you realize what a lender values more than your payment history on a few credit cards? They value your overall history. Do own a home, do you rent, how long have you lived at the same address, how long have you been at the same job, do you have any collections ( a 50 dollar collection on a medical bill hurts your credit score more than a few late payments on a credit card) do you have any collections from utilities (cell phone, water bill, gas bill, electric, garbage, cable)

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4) Card denied. It happens for various reasons, none of which may be your fault. You are traveling and stop at a gas station in Peoria...they wonder why you are there and deny the transaction. It's good to have back ups in cases like this. Also good to always let your lenders know you'll be traveling so they don't see red flags.

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That one I am not qualified to answer as I always make sure I have enough cash when we travel (which is not very often)

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Would you like some more reasons?

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Sure go for it

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I have 10 cards and I'm under 10% utilization. At the end of 2009 I'll be under 5% (same as cash purchases on store cards being paid down). Credit isn't bad at all, and if you learn how to play the game, credit is a wonderful tool to add to

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Just remember if you have ten cards and each has a zero balance but a 5,000 limit your credit score can drop as you have the ability to go out and charge up 50,000. I have also seen banks look at the amount people have available on their credit cards, and deny them loans since they have to much available credit.

By the way, GM, I see where GMAC has lowered its standards for car loans...you only have to have a 621 score instead of the 700 of last week. Hopefully you guys see a rush of customers.

I find the biggest problem is the lack of understanding of the average person about Credit. Most of our school curriculum are put together by folks who either don't understand the need, or refuse to add a useful course.

I've spoken to a number of educators and a vast majority of them agree that basic math is a great foundation to build on, but they also agree that a true financial planning course would go a long way in helping our kids in the real world experience. A class that explains what a credit score is, how it works, how to balance a checkbook and what it means to pay your bills on time. How investing works (stock market, mutuals, annuities, etc...). Hell, even the basics of interest and compound interest would be a major help to kids/adults.

I've started teaching my neighborhood kids some of these things because they are not in the curriculum now. I've also spoken with the School board and specifically the principals of the high schools to try and get this in the works down here. If we start with the education of what this mess is, then we may not get into this mess again. (Of course there will always be those that choose not to attend or not to learn, but it would help a vast majority in my opinion.)