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Cambie de Tarjeta de Crédito y Ahorre

by Antonia Wang

Americans love credit cards. They are a convenient way to shop and allow you to make purchases you may not be able to make if you were using a debit card or cash-only. However, there is a catch. If you go over your credit limit or miss a payment, your interest rates could increase to over 20% with a national card issuer. Although the average credit card debt declined 11% to around $6,576 in 2011 (CreditKarma.com), consumer debt remains costly.

According to the Federal Reserve, the average credit card rate decreased since 2007 to the end of the first quarter 2012, to 12.34%, a drop of 0.96%. This would mean that using credit cards has become cheaper overall. But not everyone agrees. "Consider this in the context of other rate declines over the same period: 48-month car loan rates dropped by 2.7% over the same period. 30-year mortgage rates dropped by 2.75%. Relative to the broader interest rate trend, credit card rates have not come down nearly as much," says Bankrate's Richard Barrington (July 2012). Adjust for inflation and credit card rates are still high.

So, although the Credit Card Accountability Act signed in 2009 is supposed to protect consumers from rate hikes and confusing disclosures, chances are you are not getting the best deal on a credit card from a national issuer.  What can you do to make sure you are getting the best interest rates and favorable fees on your credit card?

First visit your credit union

If you are unhappy with your credit card's current rate, or the credit card issuer's service and fees, consider shopping around and switching to a better card. Be proactive in comparing credit cards, making sure you understand their fees.  In looking at terms and conditions; in most cases you'll find credit union credit cards are cheaper and the most consumer-friendly.

"We generally recommend consumers look at credit unions first," says Travis Plunkett, Director of the Federal legislative and regulatory efforts for the Consumer Federation of America. "Look at their terms and conditions; in most cases you'll find they're cheaper and the most consumer-friendly."

According to recent comparison chart from the National Credit Union Administration (NCUA), the average credit union credit card rate remains lower than the average rate of all national banks. That is 11.65% vs. 13.69%. The numbers speak for themselves.

What to ask

If you're not sure about your credit card fees and penalties, ask your card issuer. The terms may have changed since you opened the account, and you may not have seen the notification, which generally accompanies your account statement. You should know:

  • Your interest rate
  • Whether there are different rates--and if so, what--for balance transfers, cash advances, and purchases
  • The order in which payments apply to different types of transactions; some banks pay off low interest-rate balances first so the high-rate ones stay on your account longer
  • Whether the rate could increase to a higher penalty rate, and under what circumstances (such as a late payment--on this card or any other card)
  • Annual fee, late fee, and overlimit fee amounts, and when they're charged.
  • What other fees are charged, and when
  • The grace period, or number of days from the billing date you may pay in full without incurring finance charges

If you're not satisfied with the answers, maybe it's time to shop for a better card. And be sure to ask these questions up front.

Doing your homework before switching or getting a new credit card will save you money. You may find that the best rates and options are close by at your local credit union.

Published 10-04-2012.

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Si tiene alguna pregunta sobre su cuenta o una transacción, por favor póngase en contacto con su credit union por teléfono en vez de usar esta forma.

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