CREDIT CARDS » Credit Card Rates

Choosing between a credit card can be a difficult process. The process must be researched, you need to choose the best card that will meet your needs and complete an application process. It seems that you can secure a credit card from almost anywhere, because both national companies and local banks provide this service to their customers.

Credit cards from national banks and local banks both offer promotional offers to get started, penalties for late charges, and reward programs. If, however, you are interested in linking your credit card to your checking account as a means to overdraft protection, getting your credit card directly through your bank may make it easier to hook up.

Additionally, during the downward spiral of the economic crisis and subsequent credit crunch, local banks in general have been faring better than national banks. Many local banks did not aggressively lend out mortgage loans to people who could be a risk for them (but many national banks did - which ultimately lead to the subprime problem) thus, keeping local banks more liquid when the economy went down so they have not been as deeply affected and have steadily been able to offer credit to their applicants.

Regardless, if you choose to secure a credit card through a national bank versus a local bank, there are some things to consider before completing the application. Make sure that you understand the terms of the arrangement, including: the introductory offer and its expiration date, the interest rate, and all penalties and fees associated with the cost of maintaining your line of credit. Make sure to pay your credit card bills on time and whether you go with a national bank or a local bank card, both can help build your credit score - which will be very important when you apply for any type of loan in the future (i.e. mortgage loan and auto loan).

In the old days, if you were hit with a credit card rate increase you could call and threaten to take your business elsewhere; that was then, this is now. Today, consumers calling in to negotiate a lower credit card rate could be putting themselves at financial risk. That's because credit card issuers are extremely worried about extending credit in this turbulent environment, and even grade 'A' customers have seen their rates increased for no reason at all. A call to a credit card issuer could put you at risk for a "credit review," as credit card companies view a rate negotiation as a potential sign of trouble - and they're not taking anymore chances.

Beware the Credit Card Review

If credit card companies decide to put your account on review and don't like what they see, you could be facing a rate increase, a lower credit limit and possibly even a closed account. You're essentially putting yourself on their radar by calling in. If the current credit card legislation working its way through the Senate is approved however, you won't have to worry about these unfair practices occurring in the future.

Biggest Credit Mistakes

The biggest mistakes consumers make when calling in and questioning their credit card rate increase is arguing with the representative. Instead of demanding things, you should instead request a rate drop or simply ask why your rates have gone up. Being polite can go a long way. Angry consumers who cancel their credit cards or opt out of rate increases are only hurting their own credit score. That's because your credit score is also determined by the overall amount of credit you have available; if one line of credit is suddenly closed, it will negatively impact your score.

Good Credit History

But not everyone should be afraid of calling in. If you've paid your bill on time each month, have a good history of credit usage and have a great credit score, there's no reason a call could hurt you. Don't know your credit score and what's on your report? Check with Go Free Credit for free. Many times, credit card companies will be willing to drop your rate again if you are a responsible customer. For those of you who have less than perfect credit and saw had your rates increased, your best bet would be to accept it and pay off your debt as quickly as possible. If the interest rates are breaking you each month and you absolutely must try for a lower rate, remember to be professional and tactical in your approach. Explain your situation openly and honestly and you may be able to get that lower rate.

Tired of your credit card company? Check out these great credit card offers from some of our partners.

Have you had a bad experience after calling in to a credit card company, or have you ever successfully negotiated a lower rate on your credit card? Please share your experiences with the Go Banking Rates community.

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