Owning credit cards during an economic downturn might look very different than it has the past decade. Similar to the rest of the lending industry, banks are responding to the credit crisis and tough financial times by adopting stricter practices regarding credit cards. They are decreasing credit limits, increasing interest rates and closing accounts that have been inactive too long. In fact, some customers whose accounts are current have even had their maximum credit amount lowered. And it is estimated that about 60 percent of banks have cut limits for subprime consumers. Many banks are reevaluating the credit histories and scores of customers who currently have credit cards. They can modify the terms, limits and interest rates for a current customer they feel might be a credit risk. Interest rates may be increased, which means minimum payments will increase. Credit cards that have had a zero balance for a year or more are at risk of being closed altogether. Lower credit limits on credit cards can affect your credit score. A large portion of your score depends on the percentage of debt you carry when compared to your maximum allowed limits. Your percentage of debt will increase, if your limit is lowered. Your credit score could consequently be hurt. The cancellation of an inactive card can also affect your credit score, since long standing credit cards reflect positively on your credit report.

Over half of the people that have credit cards in the United States carry debt on those cards. This translates to a large number of consumers who will be directly impacted by any changes banks make regarding credit cards. Call your bank if you have received a notice of modifications to your credit card account. If you are in good standing and have a record of low balances relative to your limit, you have a very good chance of convincing the company to give you back your original rates and limits. You do not stand a good chance if your account is not in good standing or you carry a large balance regularly.

It is always best to pay off your balances in full each month. It is important to be aware of the conditions and rates for credit cards on which you may presently carry a balance. Understand all changes on those credit cards that the bank may notify you about. Your first goal in the New Year should be to tackle those carried balances. The best way to reduce debt is to make more than the minimum required payments. When possible, make cuts to your budget so you can put those funds toward your outstanding balance. Many financial advisors tell consumers to tackle the card with the least balance first, if you currently have balances on several credit cards. You may wish to transfer debt from higher interest credit cards to one with a lower rate. Do not wrack up more debt, even if you have a lower interest card. Keep making payments on that debt until it is paid off. The reward will be financial independence.