The Credit Revolt Movement - Things to Think About Before You Join

Ann Minch, who had been a loyal bank customer for over a decade, and with more than six years using their credit card without any late payments or over limit charges, got a notice from her bank that that credit card interest rate would jump from 12.99% to over 20%. Although she carried a balance on her card, she had never missed a payment or charged beyond her credit limit. It looked as though the bank raised the rates as a way to increase their revenue. She is not alone. Across the US, banks are increasing their interest rates and fees, lowering credit limits, and in some cases canceling accounts of card holders who have not done anything wrong.

In many cases, the behavior of individuals doesn't matter. The banks are dealing with normal changes that come with recessions, things like more customers defaulting on loans, they also have to deal with changes coming in early 2010 that will make it harder for banks to change the rules on consumers. Between now and next year, one of the areas where they have an opportunity for profit are from those credit card holders who carry a balance on their cards and who pay at least the minimum every month.

The Beginnings of a Debtor's Revolt
Ann Minch did two things. She decided to revolt against what she thought was an unfair practice be refusing to make any more payments until the bank changed her rate back to the old rate. She also made a YouTube video in September 2009 that had almost half a million by mid-Novmember.

What Happens If You Revolt and Stop Making Payments
Ann's actions attracted a lot of media attention, and that attention probably led the bank to change her rates to the old rates. It's too early to tell if her actions lead to a broader debtor's revolt or to changes in banking policy. One thing is certain--if you follow Ann's lead you may not get the result she got and things may get worse for you. Your bank could cancel your card, and your credit score could go down, making it harder to get a loan or to open up another credit card account.

Whether you stop making payments or keep making payments, the banks will not go away, nor will your need for credit. If you are having trouble with your bank over your credit card, you should think of things to do that won't affect your credit score or leave you stranded with out a credit card.

Things You Can Do if Your Credit Card Goes Bad
If your bank or credit card company has done things like increase your rates, add fees, reduce your credit limit, or has started to hassle you in other ways, there are a bunch of things you can do:

• Talk to your financial institution - You can always ask the fees be taken off, rates reduced, or credit limits changed. If your bank, credit union, or credit card company is reasonable, there is no reason to revolt.
  
  
• Close the Account - If you don't want to deal with your current credit card, close your account and go somewhere else. Before you do, make sure where you are going has rules you can live with.
  
  
• Transfer Your Balance to Another Card - If you already have another card that allows you to transfer a balance, then you can do that before you close down your old card. Make sure you check to see if there are any fees or other issues you have deal with on the old card or the new one.
  
  
• Get Another Card - If you don't have an alternate credit card, you should start looking for one as soon as your current credit card company starts adding restrictions and fees or raising your rates. You should definitely do this while you are in good standing with your other card. If you join the debtor's revolt and stop making payments on your old card, your credit score could drop and you may have problems finding another card on good terms.
  
  
• Pay Your Card In Full Each Month - If you don't carry a balance, it really doesn't matter what kind of interest rate your credit card charges. So long as your credit card doesn't do anything else to you like charge fees just to have a card, or reducing your credit limit, you should be OK.
  
  
• Stop Using Credit Cards - If you have cards you don't use or need, then close down those accounts. Also, if you use several cards and have trouble keeping track of each account, simplify your life and reduce the number of cards you use. If you can do your normal activities without using a credit card, you may want to kick the credit card habit and go without. Be careful with this step, since many activities such as buying online, ordering by phone, renting cars, or buying plane tickets may be a lot more difficult if you don't have a credit card.
  

Resources
What Is Your Credit Score and How You Can Make It Better
Understanding Credit Card Balance Transfers