In the most general sense, banks are still approving credit card applications.  However, the FICO score requirements being imposed by many banks is leaving a large number of consumers in the lurch.  On our website, we’ve seen application approval rates for balance transfer credit cards drop dramatically over the past three months.  In some instances, approval rates appear to be as much as 75% lower than they were back in May.

While consumers applying for credit cards are met with unpleasant denials, consumers with active credit card accounts are being met with complete disdain.  Despite the fact that the Prime Rate – which is used to determine credit card rates – is many percentage points lower than it was a year ago, many banks are continuing to dramatically raise rates on existing customers.

Rate squeezes are leading consumers to seek out new cards with lower interest rates.  Unfortunately, few credit card companies are interested in taking on the new business, especially via balance transfers.  And this trend is worsening, despite the return to profitability by many banks.

Unfortunately, tighter credit card approval standards are likely here to stay.  With new credit card laws due to take effect in February of 2010, banks are literally scrambling to find ways to profit from the credit card business.  This was never a problem before, as this type of lending was a huge profit creator for banks.  However, the new credit card laws will change the way credit card companies due business in significant ways, and it appears as if the banks have yet to figure out how they will profit under the new restrictions.

In addition to burden of new regulations, record high defaults and continually rising unemployment pose signicant risks to existing loans, which is why many credit card companies are jacking up rates and slashing credit lines.  It is also why consumers who have very good and even excellent credit are getting denied for new credit cards.

Hopefully, a slowdown in unemployment and credit card defaults will entice credit card companies to lend again.  But in the meantime, consumers stuck with high interest credit card balances that are unable to get approved for balance transfer credit cards should focus on paying down their debt as quickly as possible to avoid massive interest expense and to improve their credit scores so their credit utilization ratios make them appear less of a risk to other credit card companies.

Want bad news?  Open mail from your credit card company or search online for a balance transfer credit card.  Along with increased balance transfer fees, many credit card companies have been sharply decreasing the duration of 0% balance transfer offers during the past two months.  Here is a roundup of current offers from some of the largest banks as of July 24th, 2009: Continue Reading »

UPDATE:  Please see Citibank Interest Rate Increase Solutions for detailed information on the most recent rate increase.

A few weeks ago, I wrote an article about Citibank raising credit card interest rateson a small number of store issued credit cards.  At the time, Citi had been generating very few negative comments from readers and it appeared as if Citi was shaping up to be one of the best behaved credit card companies.  I was proved very wrong, as CitiBank has substantially raised interest rates on an apparently large base of customers to as much as 29.99%. Continue Reading »

As I’ve been reporting for the past seven months, credit card companies are growing increasingly unwilling to offer 0% balance transfers to even the most creditworthy consumers.  Despite the fact that many people need balance transfers more than they ever have in the past, the combination of the credit crunch and new credit card legislation have spelled nothing but bad news for balance transfers.

Yesterday, during their second quarter earnings call, JP Morgan Chase discussed various ways in which the new credit card laws will impact they way they do business.  And one area mentioned was a move away from not only 0%, but all low rate balance transfer deals. Continue Reading »

Although much as changed in the balance transfer market over the past twelve months, a number of credit card companies continued to offer 0% balance transfers for 1 year.  However, the new credit card laws, designed to help consumers, can count 0% balance transfers for 1 year as their newest victim, as more and more credit card companies stop offering 0% rates lasting more than 6 months. Continue Reading »

I received an email today that sickened me.  A visitor interested in purchasing a timeshare was being told to use a 9 month 2.9% introductory rate credit card to pay for the $17,000 bill and then utilize 0% balance transfers for five years to pay off the bill and escape interest.  I was very please to have an opportunity to help this visitor avoid what could easily have turned into a financial nightmare.

During the past five years, it was entirely possible to use 0% balance transfers year after year to defer interest (and hopefully pay down debt).  However, this is not the case today.  Not only is it getting tougher to get approved for a 0% balance transfer credit card, it is also getting increasingly difficult to get a 0% APR for more than 6 months.  To make matters worse, just about every company has raised the maximum balance transfer fee and many have increase the fee to 4 or 5% of the transaction. Continue Reading »

While I’ve only heard a couple complaints from consumers who called to opt out of their credit card contract before a rate increase, enough people have written in to concern me.  At first, I thought perhaps the customers had made mistakes.  But given the current behavior of credit card companies, I’m inclined to believe visitors that take the time to share their stories at Smart Balance Transfers.

A visitor posted a story about an opt out that his credit card company failed to recognize, which is re-posted below.  However, given both the behavior of credit card companies and the huge potential for miscommunication with foreign based representatives, I strongly advise all consumers who choose to opt out of their credit card instead of accepting a rate increase to do the following: Continue Reading »

Over the past two weeks, I have heard some truly disheartening stories from Chase credit card customers whose monthly payments were increased from 2% for 5% (see Chase Raises Minimum Payments for horror stories).  Today, however, two posters have left notice that it is possible to arrange a reasonable repayment plan.

According to these posters, people who have been hit with payment increases should request to speak with the aptly titled HARDSHIP DEPARTMENT.  Both posters wrote that they were able to negotiate a lower monthly payment without having to pay a significantly higher interest rate.  Here is a very helpful posting from Susanne, who successfully got her monthly payment reduced: Continue Reading »

2009 has surely been a less than stellar year for many of us.  Unfortunately, the difficulties many of us are going through have been made significantly worse by our not so friendly credit card companies.  During the first half of 2009, Smart Balance Transfers received ten times more credit card complaints than we have in the past two years.  To make matters worse, most of the credit card complaints we’ve received came from people who had really done nothing wrong.  In the past, a majority of complaints came from consumers who had made mistakes, such as missing payments or failing to understand elementary fine print.  Such is not the case in 2009.

In 2009, the worst credit card complaints have come from people who literally did nothing to deserve ludicrous interest rate increases, absurd payment increases, and drastic credit limit decreases.  So strap yourself down and take a moment to absorb some of the most horrendous credit card practices in the history of modern finance. Continue Reading »

In the summer of 2008, it was possible for consumers with good credit – not great, just good – to get a 0% APR on no fee balance transfers for around 6 months or get a 0% APR balance transfer for 1 year with a 3% fee capped at $75.  Today, such is not the case.  Credit limit decreases as well as other factors have dented otherwise very good credit scores, sometimes substantially.  And balance transfer fees, as well as interest rates, are increasing dramatically. Continue Reading »

Editor’s Note:  At the time of publication, Citi had only raised rates on a few store branded credit cards.  For information on the current Citibank credit card interest rate increases, see this article.

Much has been made today about Citibank raising interest rates on consumers.  However, it appears the increases are only tied to co-branded store credit cards issued with Macy’s and Sears.  According to reports, the interest rate increases average 3%.  The media, however, has turned this into a headline story when, compared to the actions of other banks, this is a rather small increase.

Late last week, Chase raised minimum payments for some consumers by 150%, from 2% of the balance to 5% of the balance.  This has put many consumers on the brink of default, as once manageable payments have ballooned into mortgage sized responsibilities.

Similarly, Chase, Capital One, and a wide array of other banks have been sharply increasing interest rates on broad swaths of consumers with solid credit histories.

Perhaps the fact that Citibank is a semi-nationalized bank is causing this big uproar.  But ultimately, Citibank’s decision to raise rates on already high interest store credit cards people should not have been carrying balances on in the first place is one of the least newsworthy credit card headlines of the past six months.