Protecting your credit, keeping rates low

By Courtney Lane - bio | email
Posted by Ellen Krafve - bio | email

TYLER, TX (KLTV) - If you have a credit card, you probably want to pay close attention to your bills. You've probably heard that credit card companies are jacking-up interest rates and adding hidden fees, until a new law cracks down on that next year.

Some East Texans say they are seeing interest rates soar as high as 25 and 30 percent.

"And, it's Christmas holidays," said Kathy Richey. "Nobody can afford that!"

Others say it's almost impossible to make a payment on time because their company is constantly changing the due date. Some relief is in sight, though, when the Credit Card Act President Obama signed goes into effect next year. It will ban unfair rate hikes and extra fees.

Dr. Harold Doty with U.T. Tyler says credit card companies are worried that will decrease their bottom line so they're taking advantage now.

"It's not so much as digging themselves out of a hole, the real problem is that as we get rid of those fees or make consumers more aware of them their margins," said Dr. Doty. "Their revenues will go down and that's what they're trying to avoid."

But he says you're not locked-in to paying those high rates and there are other options.

"Shop for a different credit card," said Doty. "If their current interest rate is going up, my advice to them would be to particularly look at their local banking institution or credit union, some place like that, and see if they can't get a better interest rate."

Dr. Doty also suggests reducing your credit as much as possible. Some say they've gone so far as cutting up their credit cards altogether.

"Now, I only pay cash or with my debit card," said Ximena Rosales.

"We're doing cash," said Blue Richey. "Cash is good."

But, if you do still have credit, like most American families, Dr. Doty stresses to pay more than the minimum payment so you can knock off debt faster and watch those due dates.

"With current credit cards, companies issue them at a low rate and then as soon as you're late on a payment they jack the rate way up," said Dr. Doty. "They won't be able to do that anymore so once customers do get a good credit card they need to be very careful to protect it by making on time payments."

Though President Obama signed the credit card act into law this year. It does not go into effect until February.

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