credit cards

Credit card damage control

In fact, several major issuers rolled out a campaign in February called Help With My Credit. On the Web site, participating companies provide direct phone numbers to their loss-mitigation departments. You could also call the number on the back of your card or speak with a credit counselor.

Warning: Don't ask for a hardship plan unless you truly need the help. Telling the bank you're having financial trouble can target your account for adverse action.

6. Opting out is not always the best option

When an issuer makes a negative change to an account, it may -- but doesn't have to -- let you decline the change, or opt out. Usually, this means the account will be closed and you can pay off the balance under the original terms.

Opting out may carry the appeal of revenge. Yet the last thing you want to do is close an account merely to punish the lender. Do it only if it makes financial sense. Canceling a card can damage your credit score in several important ways. Read the column "Why closing an account hurts your score" for details.

If you can afford the change to your account, get the balance paid off either by paying it down or transferring the balance to another card. Then leave the account open to buffer your score against other negative actions.

Compare all types of issuers if you shop around, including credit unions and community banks. You may find better deals and more lenient practices with smaller lenders.

Consider account closure if leaving the account open proves unjustifiable. For instance, in January Chase slapped some of its cardholders with a veritable $120 annual fee -- a $10 monthly service charge -- and an increased minimum payment. Regardless of whether they carried a balance, cardholders would have to pay the fee if they didn't opt out. Chase has since rescinded the fee -- after many cardholder complaints, class-action lawsuits and threats by the New York attorney general's office -- but the minimum payment is still increased. In any case, consumers should weigh the cost of keeping the account open against the expense of moving the debt and taking a credit score hit.

If you're about to apply for a car loan or mortgage, though, use caution. Ulzheimer warns that it may take some time for the score to recover, and "if you're trying to finance something in the interim, it may cost you much more than you saved."

You could try complaining to the issuer to undo the adjustment or give you an alternative, but don't expect a change of heart unless the outcry is more than your lonely voice, as was the case with Chase. Remember that what you say, coupled with your credit report and score, can trigger further actions against your account. See tip No. 1.

People whose financial situation has improved may have reason to call. Issuers are more likely to reverse a decision if you provide new information, notes Scott Talbott, senior vice president for government affairs at the Financial Services Roundtable, which represents 100 of the nation's largest financial services companies. If you recently scored a job or a raise, mention it.

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Balance Transfer Cards 15.67%  0.02 15.65%
Cash Back Cards 16.36%  0.03 16.33%
Low Interest Cards 10.87% --0.00 10.87%
 
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