Prepare for higher Credit Card APRs
It might be a good idea to pay a little extra attention to your credit card statements over the next few months, and also to actually read the legalese contained in any notifications of a change to your credit agreement.
The reason is that there's a fair chance that many of us could face the prospect of our cards' APRs (interest rates) being hiked, either by a couple of percentage points or by an altogether more dramatic amount.
Why are many experts predicting this?
The Credit Crunch & Its Fall Out
You'll no doubt have heard by now of the problems besetting the global credit industry, with banks finding it harder to borrow funds from each other at affordable rates, while at the same time facing surging levels of bad debt and write-offs as customers struggle with their commitments.
Naturally, banks aren't too keen on losing money, and so will look for ways to recoup their losses - and the interest rates they charge for credit are right in the firing line.
During the credit boom of the last decade or so, it was hard for card issuers to raise their rates too high or too quickly, as it was a fairly simple matter for a customer to apply for a different card, transfer their debt over, and become an ex-customer.
Now, however, it's getting ever more difficult to be accepted for a new card, as bad debts force the banks to tighten their acceptance criteria. It's widely thought that more than two thirds of all credit applications will be being rejected by the end of the year.
Thus, credit card companies know that they have more leeway to extract cash from their customers, and you can be sure they'll do whatever they can get away with to increase their profits.
Take Action
So what can you do as a cardholder? There's not much you can do if your current bank decides to increase your rate, although it's always worth informing them of your intention to switch your account to a competitor, in the hope that they might relent.
A more likely successful tactic would be to take out a new card with a long 0% balance transfer period, or one with a low rate fixed for the life of the balance, and transfer your debt onto it now, while issuers are still willing to approve a reasonable number of applications. This way you'll at least be locking your current borrowing into an affordable deal, even if rates across the industry do soar over the next year or two.
