Why there will be changes in 2009 and beyond

There are two primary reasons that your credit card statements will change in the near future. The first is a black and white issue: Federal regulators have asked all credit card companies to change their statements no later than July 1, 2010 to make them easier for cardholders to read.

This change is actually part of much larger and wider ranging legislation of credit card regulation reforms, passed in December 2008.

These sweeping changes are the result of numerous consumer complaints that their credit card statements were confusing, difficult to read, and didn't highlight many important terms of their agreements. Banking regulators listened and you should soon see some different, more prominent credit card statement disclosures and information.

The second primary factor will be less pleasant for you. You may already know that most credit card account agreements allow lenders to change most of its terms, including interest rates, fees, charges, late payment conditions, and credit limits.

The global economic problems facing everyone in 2009 severely jeopardize the income, growth, and collectability of balances for credit card companies.

The combination of severe economic downturns and the ability to modify most agreement terms at will make it likely that you will see some of these changes to your credit card statement. You might see your credit limit reduced, or, in some cases, even set to zero.

This sometimes happens even if you've managed your account perfectly for some years, with a long history of on-time payments.

As employers suffer with reduced income, they lay off employees or implement an all encompassing downsizing program. As more people become unemployed, their cash flow suffers greatly. When people lose cash flow, they restrict their spending and closely tighten their personal budget. From a credit card company perspective, two things usually happen.

First, income goes down. People cut back on discretionary spending, reducing credit card use. Reduced credit card use equals reduced lender finance charges. Second, people reallocate their reduced income. Priorities are rent or mortgage payments, auto loans, education expenses, and medical needs. Credit card payments become among the first obligations that are ignored.

Therefore, credit card companies face reduced monthly income, accompanied by sharply escalating delinquencies. Increasing interest rates, fees, minimum monthly payments, while reducing credit limits, helps credit card companies survive.

Types of statement changes to examine

Look for the following notifications (typically inserts) in your coming monthly credit card statements. Your credit card company usually must notify you of these changes, but, until July 2010, they may, for obvious reasons, try to keep the notification as subtle and unobtrusive as possible.

Interest rate increases

The fastest way to increase income is to adjust your interest rate. If your agreement gives your lender the option, they may take this action soon.

Increased fees

Late, over limit, cash advance, and other fees can also quickly be increased to improve credit card company income.

Minimum monthly payment increases

Do you know why your credit card typically requires low monthly minimum payments? Lenders want you to have the largest average balance possible so their finance charge income remains strong.

Card companies fearing delinquency problems, however, may increase minimum monthly payments to recover balances as quickly as possible.

Lower credit limits

To lessen their risk of loss, credit card companies may lower your spending limit, restricting you from generating larger balances. Take special note of this statement change so you can avoid the embarrassment of receiving a rejection when you use your credit card.

Rescinding your spending limit

This may sound a bit bizarre, but one of the four primary credit card companies recently reduced many cardholder limits to zero . Some of these people missed the credit card statement notification and were shocked to have their card rejected and a new credit limit of zero.

Examine your statements closely

The new mandatory changes to credit card statements take effect in July 2010. Before then, examine your credit card statement closely to see if you've been subjected to one or more of these unpleasant adjustments. Don't take these changes personally.

Like you, credit card companies must protect themselves during periods of recession. But, try to avoid being surprised so you can manage your credit cards properly and take action to get the best deals available.

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