Photo credit by 401(K) 2013
Due to the unstable state of the economy, banks are rolling back credit lines for many, many customers. These implications from the credit crunch, such as rolling back the credit limits and tightening borrowing restrictions for many consumers can be avoided by following these simple tips to avoid the skyrocketing interest rates and decreasing credit limits during the ‘credit crunch’.
Some credit card companies have been rolling back limits as much as fifty percent. Use these methods to ensure that your account isn’t one that suffers from this severe side effect of the credit crunch. A credit card limit is often raised based on positive history, due tot eh state of the economy and negative history with the credit card company, customers are livid at the reduced rate.
Reduce Your Debt. Reducing the debt on the balance of the credit card will demonstrate responsible borrowing practices to lenders. To maintain a good credit rating and credit limit, the balance on accounts should be kept to fewer than thirty percent of the credit limit.
Maintain Your Credit Rating. Maintaining your credit rating will ensure that you, as a consumer are kept within the interest rate brackets which allow you the low interest rate that you have become accustomed to. Through monitoring of customers credit reports, these numbers are often adjusted based on the fluctuating credit rating of card holders.
Avoid Missing Payments. In most credit card contracts it states that credit card companies are liable to increase interest rates if even one payment has been missed. Take measures to avoid missed payments such as using internet banking to pay minimum monthly payments and paying the credit card bill as soon as it arrives in the mail. Missed payments are attributed to financial hardship, which credit card companies are trying to avoid at the moment. Don’t miss payments if you want to keep your current credit limit.
Pay more than the Minimum Payment. Paying more than the minimum payment demonstrates responsible borrowing practices to the potential lender. This also helps to pay debt quickly, reducing debt to less than thirty percent of the credit limit.
Using these methods, the customer can ensure that measures are taken to avoid the credit limit that you have worked hard making payments on time and continually repaying credit card debt to achieve. Customers are now aware of the impending importance to repay debt, in the instance that their credit limit is rolled back.