Looking for the best deal in credit cards these days can be tricky. There are many companies that offer an initial offering that may sound great, however if you fail to meet their terms you can find yourself paying fees that were unexpected. Most card companies will offer a zero transfer rate to entice a card holder to bring their debt to them, however make sure you read the small print to uncover the hidden interest rates that will soon come back to haunt you. Just remember the old adage, anything that sounds too good to be true most likely and probably is. When moving to a new card, you lose the longevity you have obtained with the previous carrier which can and will cause problems if the card companies decide to cut limits.
Many of the card companies have recently began cutting credit limits on as many as one in five card holders. Many of these cuts are not because the customer has missed a payment or exceeded their credit limit; the creditor just decides the debtor has enough credit so they enforce a cut. Even if they announce cheap credit card rates in the beginning, they may suck you in with these rates, cut your limit and cause your score to drop. The economy has created an environment that has banks and lenders running to cover their own portfolio. Cutting credit limits is a way that the card companies can limit their risk; however they hurt their clients in the process. When they cut the credit limit of a client they effectively cut the credit rating or score of their clients, which can cause a problem that gives many of them no way out. Once one of them has cut your limit, your score drops and all your other card companies follow suit.
Changing card companies to try and get a better rate may push to speed up this situation. If you transfer your balances to a new credit card your credit rating with that company is that of a new client. The slightest change in your credit score will make you prime for a credit limit cut. For instance if your balance is $5000.00 and your credit limit was $10,000.00 a cut in your limit below this mark will cause your debt to credit limit ratio to change. When this happens your score is also cut, then the chain reaction begins. For some reason creditors believe saving themselves is the best medicine. However cutting credit limits without notice causes others to cut credit limits and eventually the debtor has no place to turn for their credit needs.
If this is a business owner, who relies on credit to meet their monthly cash flow needs this can turn disastrous.
Where do you go from here? Compare rates to find cheap credit card rates. Use companies such as Bankrate.com to review features and policies of card companies. Avoid those that can change your limits at a moments’ notice without cause. Make sure you read the fine print and in the end make sure the move to a new card is in your best interest.
Use credit wisely and avoid the too good to be true promises of companies looking out for themselves rather than their clients.
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