Credit Card companies are raising their rates, service fees and anything else they can, especially those that need to pay their way out of the sub-prime loan mess they created. Guess who is paying for that mess...you. That is unless you stand up for yourself.
In 2004 the average cost of customer acquisition for a regular credit card was $100-$120. A Platinum level customer $150-$200! And this was before the credit crunch. These figures are going up...way up.
It is the law of diminishing utility. Less available good customers are available, as they already have cards, multiple actually. However the credit companies have to still hit their numbers for Wall Street so what did the do, they expanded the available customer pool by lowering barriers to entry. Lower income, lower FICO, etc.. But now that has backfired so what can they do...steal each others customers and charge their current ones as much as they can.
Have you seen your offers lately? Are they getting bigger or smaller? It is a great way to see how creditors see you and your file. Read them! Look at the offers and rates. Are the terms generally improving? If so you are one of those that they want. Now that you know it, it is time to get a little Lindsay Lohan on their butt :)
Let me stop here and explain something...to have leverage, you have to have to be one of those coveted customers. Good (but really doesn't have to be too high) income, good credit (720 FICO) and a decent amount of credit longevity, say 5-10 years of paying regularly and only 35% or less utilization of the credit. If you aren't start working to get your FICO up to that semi-magical 720.
So ,you just got the BofA letter that says the charges are all going way up, what do you do? First really review the changes and see how they will impact you. No use getting upset if they just increased your late fee, and you are never late! However, this doesn't mean that you should call.
- First know what you want, or what you will take instead. - They can't take the charges away, OK, what can they do with the APR% to compensate! Can you get a longer Grace period? What else (bonus points) can they do?
- Call Customer Service - Explain that you do not want to be affected by these changes, and if they insist you are considering closing the account. Usually they will send you right to retention. If not, be very pleasant and ask customer service what they can do, if they say that they really cannot do anything it is policy, etc..Ask to speak to the manager. Once again as pleasant as possible!
- Management - Explain again in detail what was discussed, they will usually have the information, so don't try to stretch the truth at all. They will 99% of the time cough something up. Usually a few APR points to retain you. Bargain for as much as possible! If they just shut you down, explain that you are very disappointed and that you will have to really consider closing the account (But do not close it!)
- Work your Competing Offers - If they didn't do what you needed the next time you get an offer from a competing bank that is close, call them and ask them to beat your deal! For example, "Tom I really like the offer, but I get 3% better from BofA and xyz bonus, what can you do to get my business!"
The point is YOU have the leverage not them, there are a lot of banks that want your business...including your own! Get what is yours and don't just accept your fate! My point isn't to pick on BofA, this is and will happen with all major banks, just remember, if they lose you it costs them $200 to replace you!
Over the course of 20 years being proactive to get the best deal, with a little negotiation, can save your budget and you significant money.