Credit Card Debt News and Advice

Good news for U.S. consumers struggling with credit card debt: The Federal Reserve has enacted a new set of rules governing how banks assess interest rates and fees that could save credit card customers a bundle. Now for the bad news: The changes won’t go into effect until June 2010.

It’s no wonder so many people in credit card debt describe themselves as trapped. It often seems that the only ways out of debt are to simply stop paying or declare bankruptcy–both decisions which will create decades of legal and credit problems.

As the economy continues to lag, credit card banks are suffering as more and more cardholders pay late—or simply don’t pay at all. How do credit card companies compensate for money its customers don’t pay back? By raising fees and interest rates. One of the most profitable income sources for credit card companies is the “default APR”, or the higher interest rate the bank charges you when you make a late payment.

It’s a fact: your credit cards need you more than you need your credit cards. They spend a lot of money on advertising to make you think that it’s the other way around, but without customers paying fees and finance charges, credit card companies would go broke.

If you are motivated and savvy, you can use this to your advantage and negotiate with your credit card issuer on everything, including your interest rate, annual fee, credit line, even your rewards.

Credit cards want your business. Whether you carry a balance (and you are a profitable customer), or you pay-in-full each month (but could someday change and become a profitable customer), your credit card doesn’t want to lose you. Here’s how to negotiate with your credit card on some of the most common terms: