|For as long as most of us can remember, we have been tied down by the control that credit card issuers have over us. Even if you make all of your payments on time, stay in perfect standing with your creditors, and keep your credit score high, you can still be subject to decreases in limits or hikes in interest rates at any time.|
New credit card regulations are trying to change all that and help keep good customers protected, but as expected, credit issuers are already bouncing back and working new angles in order to continue to profit. So be weary about the new offers you are about to receive in the mail, and watch for new services that are aimed to make you think you have full control over your credit card.
Citi and American Express DIY Credit Card
Citigroup began paving the way to meet the new regulations by implementing a program involving balance-transfer promotions that can be customized. This program has been in place since October and gives consumers the chance to set their own promotional periods and interest rates.
Late in 2009, American Express began a program called Zync which is marketed to adults in their 20s and gives them the opportunity to customize their own reward programs and certain benefits. With the full launch of the card later in 2010 there will be an array of reward packages to select from, while at the moment there are only four.
Discover’s DIY Credit Card
Discover Financial Services has started the turn over for credit issuers by offering a new tool that allows customers to apply for a credit card that they can customize and create to suit their lifestyle and needs. The CardBuilder tool lets you choose your own promotional APR terms, set an interest rate that you choose, design the look of your card, and choose between different rewards programs.
The credit card issuers have released statements noting that the industry is heading to an increased customization trend, and point out that more individualized control is a big benefit for consumers. The real question is whether all this new ‘control’ is really a bonus, or if we are just being marketed the same old services with a new twist.
Citibank and Discover have noted that the increase in options allows customers to make their own decisions and mesh their needs with their credit card.
But as always, we urge you to be focused and prepared to read all of the fine print.
You didn’t really think it would be as easy as setting your own low rate and picking out the best rewards, did you?
Making personal choices is going to mean you have to give up certain things in order to receive other benefits, as with anything in life. For example, if you want to choose the option to have 0% annual percentage rate on your transfers, then you have to opt for higher fees on your transfers and a shorter time period for the promotion. With Discover, if you want the lowest interest rate then you cannot even choose any of the promotional offers at all.
It is important to remember that the credit issuers are still in control, and that you would be wrong to assume that you can go online and create a credit card all on your own terms. In the end, the customization offered is essentially just a smart way of marketing to counteract the new credit card regulations. It doesn’t mean you are getting a better deal, it just means that you feel like you have more options.
What`s even worse is the fact that the increase in options could in fact have a more negative impact in the long run. It is often a psychological trait for people to be willing to pay more to get just what they want. This means that credit card issuers will try to keep offering even more services and to convince you that they fit your tastes and your budget.
An increase in options is inevitably confusing and decreases your odds for choosing the options that are actually more beneficial for your finances.
If you decide that a do it yourself credit card suits your style, then by all means take advantage of your options. Just make sure that you always weigh the pros and cons of every decision and make the choice that not only benefits you in the short term, such as rewards and bonuses, but also saves you money in the long run.
Solid personal finance doesn’t come easily or without a concentrated effort on your part, so try your best to look ahead and analyze how certain credit card options can affect your future.