MyCardBlog

Everyone knows that current American economy is under a very bad situation. There are a lot of economists, politicians, financial advisors and bloggers talking about how the Wall Street finance crisis will hit our main street. The truth is the failure of Wall Street has already hit our main street. You would never believe that Lehman Brothers, AIG, WaMu and Merill Lynch will fall down some years ago. The question is how the finance crisis will affect our average Americans?

Based on current credit card and banking news, I think there are 5 aspects that the finance crisis will be directly related to your personal finance.

1. More Banking Promotions: this has been proved to be true! Before WaMu was acquired by JP Morgan Chase & Co, it was running 5% CD promotion. The 5% 1-year CD rate is pretty high considering the current banking status. Bank of America is offering $100 sign up bonus for opening a MyAccess Checking Account. Wells Fargo Bank is offering $50 bonus for its new customers. Chase is currently offering $125 to open a free checking account with direct deposit. (More banking deals.) The reason is very simple: banks are trying to attract more customers to bring more deposits!

2. Credit Card Limit is Reduced: I heard some of MyCardBlog.com readers complained that their credit card limit was reduced. The most ridiculous thing is that Citi sent a mail to my friend about his Citi Dividend Credit Card. The credit limit was $8,100 before he received the mail and the mail was stating:”Congratulation, because of your excellent history with us, we’re increasing your credit line to $3,800. It’s our way of saying thank you.” American Express recently cut the credit for 10% of its cardholders. All of these are indicating that your spending power might be reduced because of the bad economy.

3. Easier to Get a Loan with Good Credit but Harder to Get a Loan with Bad Credit: Even banks are suffering the finance crisis. They are still in business. They want to make money from you. If you can still maintain a good credit, this means that you are a responsible consumer and banks are willing to do business with you. I have heard many friends got instant approvals recently. However, if you are with a bad credit. You should face more rigorous credit check. Your credit performance will dramatically determine your loan rate as well.

4. Harder to Get A Student Loan: The bad news comes with the message that Bank of America and Wachovia is stopping issuing student loans. Because not only banks and mortgage companies are in crisis but also student loan industry is under crisis. Many private lending companies will also decrease the amount for issuing student loans.

5. More Deals and Ad Campaigns: It’s no doubt that your family budget has tightened due to the finance crisis. The price of every product seems going up day by day. Retailers are anticipating the tough holiday sales season ahead. You would see 42″ and up plasma and LCD TVs starting at $499 during the Black Friday! You might even see a laptop for only $99! Of course, retailers are going to spread their names more often than before. eBay working together with Microsoft is offering 30% cash back for buying qualified items on eBay. (Go to live.com and search for wii, wii cheap, xbox 360, PS3 etc. and you can see the offer link.)

My post “How to Save Money on Gas?” turned out to be a very popular post here at MyCardBlog. “Best Gas Cards Roundup” and “5 Top Rated Gas Rebate Cards” are also very popular in the past one month. I believe this phenomenon is due to the sky-high gasoline prices. However, there are more frustrating times for SUV, pickup truck, and motor home owner: With the climbing gas prices, they have to pay more money at the pump. At the same time, the credit card quirk at the pump makes it difficult for drivers to fill up their tanks completely.

Many gas stations have a $75 limit on Visa or MasterCard transactions at the pump! Of course, Discover card has a $50 limit at many gas stations.  American Express has different policies for corporate card holders and consumer card holders at the pump. This policy seems stupid to me. If we assume a SUV has a 25-gallon tank, the driver might need $100 limit at the pump to fill up the tank completely. The driver has to do another transaction to get his tank full.

The reason why the merchants set a $75 limit at the pump is to reduce the risk of fraud use of credit cards. And Visa/MasterCard typically only reimburse merchants only up to $75 per transaction at the pump if there is a charge back or a fraudulent card is used.

What can you do about this?

You have two options:

1. Start a second transaction. The limit system is designed to cut fraudulent charges, but it’s a ham-fisted tool. The limit is per transaction. You can just start pumping again in a new transaction. Starting a new transaction is an annoyance for customers, but it can become a burden for retailers that pay a per-transaction fee.

2.  Go into the store and pay to a cashier, where the limit is likely higher because it will be a face-to-face transaction.

If you are a SUV, pickup truck and motor home driver, it’s quite likely that you have to swipe your card twice at the pump to finish filling.

Due to the mortgage losses, banks are reducing the credit card borrowing limits, even for those who have good credit records. I have some friends recently received letters from their credit card issuers stating that their credit limits have been reduced. Rich Helmich, my colleague, told me that he had a Citi Dividend Platinum Select Card got closed by Citi Bank last week. Factors that could let credit card issuers make this decision: minor mess-up (late payment once? exceed the credit limit once?), carrying too much balance on your credit cards (usually credit issuers “soft” pull your credit report periodically) or other risky debts, not profitable to the credit card issuers……

Lowering your credit limit can push up your debt-to-credit ratio, which will hurt your credit score. How can you defend your credit limit if this happen to you?

Make An Appeal: maybe a computer may cut your credit limit, but a costumer service representative can fix the bug for you manually. You can always call them up and request to have your previous credit limit reinstalled. Please be polite during the appeal process.

Threaten to Cancel: If the customer representative doesn’t fulfill your request, you can ask him/her to close your account. And tell him/her that you never use a credit card with low credit limit! Banks can’t afford to lose a good customer. Last year, I requested to increase my credit limit on my Chase Freedom Card and got rejected! Then I called Chase up and asked the credit specialist to close my account. Then she increased my credit limit immediately plus a $10 rewards credit on my Chase Freedom Card!

Apply for A New Credit Card: It might help you to increase your overall credit limit. Citi is in a big trouble right now. I think most of you can avoid Citi. American Express and Discover are still in a good shape. Some credit cards from American Express and Discover are still easy to get.

In a word, if you are profitable to your credit issuer, your chance to get hurt in this credit crunch is very low.

Need tips for how to deal with customer service representatives?

Suggested posts:10 Confessions of A Chase Customer Service Representative 1

10 Confessions of A Chase Customer Service Representative 2

I have a Blue from American Express for about 6 months. I requested to increase the credit limit when I received the card 6 months ago. They increased the credit limit from $2100 to $8100 immediately. (American Express claimed I can used the new credit limit in 15 minutes.)

Since six months have passed, I think it’s time to request credit limit increase again. Yesterday night I requested to CLI online again and the result is very exiting! I increased the credit limit from $8100 to $14000 immediately! What a shock! This makes me believe that American Express is very generous on the credit limit compared to other credit issuers.

The credit limit increase process is very simple. You can finish it in your online account in 1 minute. All you have to put in the credit limit increase form is your annual income and the new credit limit you expect. Generally, the credit limit under $24,900 is thought to be safe. I don’t know where the number comes from or maybe it’s a rumor. If you don’t have an American Express card yet, I suggest the Blue from American Express and Blue Cash from American Express. The direct link to request credit limit increase at American Express is here.

This post also tells you how to do credit limit increase from different credit card issuers.

There are many reasons to increase your credit limits. Basically we can boost our credit scores by lower the usage of your line of credit. We can get more free money from banks and earn more interests. Sometimes the credit card issuers will increase your limits without a request. However, you may want to increase you limits for some reason. And you can’t wait to get an automatic increase. Here, I summarized the process on how to increase your credit limit with different banks.

Citi Cards
1) Log in your citi account.
2) Go to the menu bar, go to Manage My Account>Credit line Increase Request.
3) After clicking that button, you will get two results: Instant Approved with a specific amount. This will not get a hard pull on your credit report, since Citi review your credit report monthly. And the decision is based on the last soft pull. I got $800 increase from $2,000 to $2,800 after 6 months. Another result is you have to put some information and go to manual review process. Usually a hard pull will reflect on your credit report. So please be careful to full in the form.

Chase
Usually they will pull a credit report every time you ask for increasing your credit limit except for the automatic increase. You can submit the request online (similar to Citi) or call chase customer service. When the CSR asks your annual income, they will pull your credit report. So be careful about that. Ask them whether or not to pull your credit report before give them the authorization.

American Express
There is no hard pulls for increasing credit limit from American Express. There will be a soft pull on your credit report although they ask for your annual income. This is the most friendly credit card issuer for credit limit increase. Log in you AMEX account, go to account services, and then click “credit management”. You will see “Increase Your Line of Credit”. They will ask for your annual income and you have to fill in the amount you want. Fill in the form and then there will be a decision for you. You can get instant approval. Sometimes the amount will be smaller than you requested. Sometimes, you can get the amount you requested. Usually a high household income will help you to get higher limit. If you see a notice for 7-10 days, it doesn’t mean they deny your request. At this time, you can call in and talk to a credit analyst directly. Usually the increased amount will appear in less than 15 min. Again, no hard pulls. Generally, the credit line under $24,900 is safe.

Bank of America
You can ask for a credit limit increase online. (Just on the left side of your account information.) You have to fill in some information like occupation, income and housing payment. They will not pull your credit report. If they want to access your credit report, they will notify you. SO there is a soft pull on your credit report. The process is similar to that of American Express. Someone indicated that there’s a trick on how to increase credit limit if you have two credit cards from BOA. Can you figure out it?

Discover
Call customer service 1-800-347-2683 and they will ask you some questions. From my understanding, they will also increase your credit limit automatically. When you call them up for increase your credit limit, please ask them not pull your credit report. To my knowledge, there will be a soft pull but you have to require them to do so.

HSBC
They will pull your credit report if you can’t get automatic increase. Somebody said the HSBC was operated by a bunch of “Space Monkeys.” Even though you can get $10,000 from other credit card issuers, you might get $500/$750 from HSBC. No matter how high your credit score and how long your credit history is they just give you what they think should be.

Capital One
I believe they will pull (soft) your credit report from 3 credit bureaus and they will increase your limit automatically. However, please don’t expect too much from it. When you apply for their card, they will also pull your credit report from 3 bureaus. That’s why I don’t suggest my readers use their cards. Their credit limit usually sucks. For your credit score’s sake, please don’t touch Capital One!

WaMu
They claim they will periodically review your account. If you maintain a good standing with your account with them, they will increase for you automatically. Some report a huge increase while others report tiny increase. I hope I can get a huge jump on my account.

You may have already known that cancel a credit card may influence your credit score. However, there are sometimes you just have to do it. For example, the annual fee ($125) is going to be charged on American Express Business Rewards Card, and you don’t want to pay that money. Sometimes you find that that card is no longer profitable for you and you want to get another wonderful credit card. You may say this will affect my credit score and I don’t want to try. Ok. The most important things for your credit score is the credit utilization and credit history. If you are not cancelling your first credit card, it won’t hurt you. If you have huge credit limit, it will also be Ok for you credit score. Of course, you have to make a choice by yourself. Here are some tips on how to make your cancelling process profitable.

1). Combine with other existing credit cards.
You can choose to combine the credit card with another credit card from the sane issuer. You can call them up and ask for “moving” the credit limit from this card to another credit card. This approach is very useful for most credit card companies. However, sometimes some ristrcitions may be applied. Sometimes the CSR might give you wrong answers. So if one CSR tells you that he/she can’t do that, just hang up and go for another call. I think it works for most issuers.

2). Switch to another credit card.
If you want to avoid the annual fee of a certain credit card, you can choose to switch this card to another no annual fee card or a card with lower annual fee. It’s especially useful for Citi PP-Elite and Citi PP card. You can get more sign-up bonus from the Elite level card, and waive the annual fee for switching to non-Elite card. You can earn simliar miles for both cards. This approach is also useful for Citi AA series cards.

3). Get bonus for staying.
I have the experience. When I called Chase to close Chase Freedom card, they gave me $10 to stay with that card and transfer credit limit from another card. Usually, when you called to cancel your credit card, you will be transferred to a person who is specially trained to handle this problem. They may give you some incentives to stay with that card. But remeber, don’t get angery. Stay calm and talk to the person kindly. The goal of that person is trying to get you stay with them. You can make profits for them! I hope you can get bonus for staying with them.

When you are ready to cancel a credit card, make sure you have a plan to deal with the credit card company. If you have any experience with this , please feel free to make a comment.

Every time when you use your credit card, you are making money for credit card companies. It’s obvious that credit card companies are willing to establish good relationship with their card holders. They want you to use their cards! So how can you take advantage of it? Here are several tips on how to deal with credit card companies:

Call: you can easily find the phone number at any where. You can call to ask for low interest rate, waive or reduce any fees. If you miss a payment and come up with a late payment fee, call then up and request them to reduce or waive the fee. If your APR is too high, just call them up and request to lower the rate. If they simply decline your request, you can go further and request to close the account! Tell them that you have other better choices then to use this card. Remember: the credit card market is extremely competitive. If they lose a cardholder, they lose the chance to get profit.

Consolidate credit lines: this is especially useful for those who have multiple cards from a card issuer. In this way you can lower the utilization of your credit card and boost your credit score. You can also lower the chance to get over limit fees. Increase your credit limit without credit pulls: most credit card issuers request to pull your credit report every time you ask to increase your credit lines. Talk to them directly and see what will happen. Switch your card or rewards program: usually you can change your card to another card which might be better meeting your needs. You should notice that you can switch cards within similar class. For example, a student card can’t be converted to a business card. Sometimes you find out you are not a frequent flyer but you have a mileage rewards card. What should you do? Call them up and switch to a cash back card/program.

Warranty extension: lots of credit cards now are offering extend or double manufacture’s warranty plan. Figure out which card offers such benefit and take advantage of it when you make large purchase.

Auto rental insurance: I believe most cards are offering such benefit. Keep an eye on it.
Foreign transaction fee: discover card and capital one provide on transaction fee for foreign transactions. HSBC household card and orchard card offer 2% cash back and 1% foreign transaction fee. Try to avoid the transaction. Other benefits: some credit card offer better discount trough special online shopping in their website such as VIP lounge access, free upgrade to coach or business seat, free companion ticket etc.Remember: 1. credit card companies are trying their best to make as much money as possible. 2. They have well defined rules, policies and procedures. 3. They are willing to sacrifice 2 for 1.

I have a chase freedom card for about 6 months. The initial credit limit is $200. (don’t laugh at me) Then I asked for increasing credit limit twice. Both were got rejected! Emm…I don’t know what happened. Then today I called in to close this account. The credit analyst talked with me for about 30 min. She told me that I could move credit limit with any chase cards. I have chase freedom card, chase amazon.com card and sony card. She said I could move any amount among the 3 cards. Then I moved $1000 from sony card. (I even didn’t activate that card!) The fact is I got 2 hard pulls in my credit report.(sad) I hope I can do it better next time. The credit analyst told me that sometimes the total credit limit I can get is not only base on chase but also consider other credit card issuers. Through the talk I can see the household income is very important. And this is a fact, right? If you have a high household income, you probably will spend more…..then you know what will happen…

update on Sep 20: I forgot to mention that the credit analyst gave me $10 rewards for my lost.