For many, many years, American consumers have been having a love affair with their credit cards. Everything has been purchased on credit and when bills arrived, a minimum payment would make them go away. It was a great way to live way above your means and many enjoyed this new found freedom. Suddenly, the current credit crisis hit the entire country. Credit card companies are lowering credit limits at the same time they are increasing interest rates and establishing new requirements for their customers. Many people are no longer eligible for the lines of credit they had in the past and are suddenly in the position of trying to pay off these very high debts. No one expected this crunch to really happen, yet here it is.

One way the consumer is fighting back is by turning back to good, old-fashioned cash as a means of payment for purchases. More and more people are trimming their expenses and only purchasing the items they can afford to buy with cash or debit cards. This could be the beginning of a whole new trend that will, in the long run, make our economy healthier and our citizens more prudent spenders. Only time will tell if this tendency will continue, but for now, many have reverted to paying for purchases with cash instead of the often misused credit card.

Retailers are having a difficult time surviving in the current economy. Sales are very slow and fraud is increasing rapidly. A reaction that many are having to the current atmosphere is to limit returns of merchandise. There is, however, a way to get your money refunded even after the retailer has turned you away.

If your purchase was made by credit card, especially, silver, gold, and platinum cards, many credit card issuers offer their customers return guarantees. If you can prove through your statement that you purchased the item and show that the store refused to accept your return, the card issuer may offer you a refund in exchange for the item. Many of these refunds are good up to $250 per item and will last for 90 days after purchase.

Many card issuers offer extended warranties for items purchased with their card. Check the fine print in your agreement and see if your card offers this advantage. You would not want to purchase an extended warranty from the store if you are already receiving one free from your credit card issuer.

Another advantage to using your credit card for purchases is that many card issuers offer coverage for stolen or damaged goods. Whether there was a theft or accident, you may well be able to be reimbursed for damaged or stolen merchandise within 90 days of purchase. Some cards, for example, offer as much as $1,000 per item in the event of damage or theft.

An additional advantage to credit card purchases is that many offer price protection to their customers. Furnish proof of a sale price along with your original receipt and your card company may well refund the difference up to $250 within 60 days of purchase.

Credit card companies will always represent you in a dispute when furnished with the necessary documents to prove your case. My experience with this particular benefit has been excellent over the years with several different credit card companies.

It has become necessary to carefully review your credit bills and the notices contained therein. Even after doing this, you are still in danger of risking your financial standing. It is up to the individual to constantly be vigilant about following up and confirming credit limits and interest rates.

A current trend with card issuers is that they are arbitrarily reducing the credit limit on cards and, frequently, not even advising the cardholder that this has happened. It would be nice if we had safeguards in place to keep this from happening but, apparently, we do not. Yes, they are entitled to reduce your credit limit at will and not even legally responsible to advise you. Some send notices that are included in those fine print inserts we receive with our bills. Others just change the amount on your statement and assume that you will notice it. Many of us, of course, do not. It’s amazing how when they want to get you to be their customer, they send you all types of beautiful promotional key rings and promotional mugs, but once you become their customer they don’t even feel important notices are important.

There are many consequences that can result from a reduction in your credit limit. You can be denied when attempting to make a large purchase. Even more upsetting, is to be approved for going over your limit for which you will be charged a fee, possibly as much as $36. Once you’ve gone over your limit, your interest rate will frequently be adjusted upward. This can happen with all of your outstanding debt, not just this particular card. By lowering the ratio of debt to available credit, your credit rating is in danger. A review will possibly lower your score which results in higher interest charges on both current and future loans. It is even possible that you could be turned down for employment as many companies routinely check your credit ratings before offering you a position. Debt can frequently lead to marriage problems which brings just more trouble into your life.

There are several things you can do to stay on top of this situation.

Verify your credit limit with the issuer, especially prior to making a large purchase.

Get your free credit report annually and also request your credit score, which will cost a fee. Monitor these closely as you want to be certain that all information is accurate.

Be certain to keep your outstanding balance at 50% or less of your available credit limit. Anything higher makes you look like a greater financial risk and will result in a lower credit score or higher interest rates.

Make it a habit to pay your bills early. Even if there is a mail delay or a processing delay, you will still be on time thereby avoiding any late fees.

By keeping a sharp eye on your financial situation, you will maintain a good credit rating which will be a savings to you in the long run.

Everyone knows that college students, especially freshman, and credit cards are a dangerous mix.  It is common knowledge that many students entering college for the first time have difficulties managing their budgets.  Issuers of credit cards are well aware of this fact and are doing everything they can to exploit the situation. 

Credit card companies literally chase students around campus offering handouts to those who will complete an application.  A student will find several credit card solicitations in the dorm mailbox and is probably receiving them at home, also.  Statistics show that 55% of college students get their first credit cards in their freshman year.  The following are several suggestions as to how you can select the right card and use it responsibly

• Comparison shop for the best terms and the lowest interest rates available.  Avoid cards that have an annual fee.  There are several websites available that will help you in evaluating the different credit cards you are considering.

• It is extremely important that you form the habit of paying off your balance every month.  If you are unable to meet the payment, you are buying things you can’t afford.  Remember that credit must be used responsibly for items that are in your budget.

• If a salesperson offers you a zero percent credit card, it is probably not a legitimate offer.  Beware!  Most likely you will complete the application and then find that the small print states an 18% interest rate.  Be certain of what you are getting before signing up for anything.

• Do not make a decision regarding a credit card immediately.  Take the application; investigate the offer, comparison shop, and only then should you complete the application. 

• If you do not like some of the terms of the card when it arrives, do not use it.  Using the card, even once, implies that you have accepted the terms as stated in the disclosure statement.  Cancel the card if you are unhappy.

• Missing a payment is a very serious thing and will result in several new charges to your account.  Interest and late charges will be added.  If you couldn’t make last month’s payment, realize how difficult meeting this month’s obligation will be, with the additional charges and fees included.

• Responsible use of a card includes making all payments on time, paying more than the monthly balance, avoiding cash advances, never exceeding your credit limit, and holding your total balance to less than 50% of your credit limit.

A credit card provides the opportunity for the student to begin to establish his/her very own credit score.  Using a card responsibly can be the beginning of an excellent credit rating which, hopefully, will follow you through the years. 

Difficult economic times cause even more people to turn towards credit cards for necessities.  Keeping up with inflation is not possible, so many people need to resort to credit to feed their families, pay heating and electric bills, etc. The last thing the average financially strapped person needs is to be hit with all sorts of additional charges for using this credit, yet, that is what can happen.

Credit card companies actually target people who are experiencing financial problems.  After all, they know this is where the money is to be made.  One late payment, even on another bill, can cause a very large increase on the balance on your credit card.  Yes, even though you borrowed the money at one rate, this can suddenly change and often does.  What does a person do if the rate on their credit cards leaps from 16% to 26% and they have a large outstanding balance?.  All they can do is struggle to pay the minimum due amount and spend years contributing to the profitability of the issuing bank or credit card company.  A spokeswoman for the American Bankers Association addressed this issue by saying “There are over 6000 card issuers.  If you don’t like the fee structure of your credit card, there are 5,999 other ones to choose from.”  Consumer advocates have responded that companies often add new fees and policies after customers have already signed up for the old fee structure.  Customers are advised of changes with notices that are extremely difficult to understand and in the tiniest print allowed by law.

Congress is currently studying several new proposed laws to address the abuses which currently exist.  The banking industry lobbyists are expected to fight any changes, but Congress is being greatly influenced this year by the plight of the average citizen trying to survive in this economy, so passage of one of these bills looks like a strong possibility.