OnlineCreditCardBlog

Have you received a letter from your credit card company? Sometimes we toss these out, thinking they’re just advertisements for card services or prescreened offers of credit. But you should open everything your credit card company sends you these days. It might have important information about your account.

Times are hard, and even banks are wary of lending to one another. With little available credit and record levels of default, many credit card issuers are trying to do whatever they can to recoup their losses.

Many times, the letters they send you will contain information about your credit limit. Namely, it might decrease significantly and with little warning. You don’t even have to be a delinquent borrower to experience this effect; if you’re considered a credit risk for any reason, your limit could plummet – and take your credit score down a few notches as well.

Letters from your credit card issuer might also contain amendments and changes to your cardholder’s agreement. Credit card companies reserve the right to make changes when they deem necessary. For the convenience of carrying a credit card, we have to agree to those terms. Still, it can be frustrating when your fees and interest get hiked for no good reason.

Old-fashioned negotiation is one way you can fight back against unfair changes. Talk to a supervisor and ask them to work with you. (Note: this only works if you’ve been a good customer.) You can also keep a variety of cards, and transfer your balance to more favorable ones when terms get tough.

Will you be shopping online this holiday season? How do you plan to pay for your purchases? Many shoppers don’t think it matters, but credit cards and debit cards have very different levels of buyer protection.

When you pay for online purchases with credit cards, you maintain your rights to dispute charges and refuse making payments while a charge is being investigated. Additionally, by reporting suspicious charges to your card issuer, you can only be held accountable for the first $50 in unauthorized charges made to your card.

Debit cards give you a bit of protection, but with limits. For example, you could be held accountable for the full amount of unauthorized charges made to your debit card unless you report the charges to your bank within 48 hours. Also, the money will be removed from your bank account, leaving you strapped for cash in the middle of the holiday season.

Major online retailers and auction sites like Amazon and Ebay are frequent targets for hackers. If you’d rather not enter your card information directly on a web site, consider using a payment processor like Google Checkout, or a third-party service like Bill Me Later. (Just be sure to pay off your deferred balance on time, or Bill Me Later will tack on some hefty interest charges.)

It’s been a busy and somewhat dismal season for American Express. After reporting a 24% drop in quarterly profits, AmEx announced that it would lay off 7,000 employees. That’s not exactly surprising, considering the company is trying to cut costs wherever it can to survive the drawn-out economic downturn. AmEx also stated that it would reduce costs by spending less on consultants, business development, travel, entertainment, and rewards programs. The company seems determined to make ends meet despite experts’ speculation that it’s not strong enough to stay the course.

Perhaps the most surprising move by American Express was the decision to become a bank. Chief Executive Kenneth Chenault said of the maneuver: “Given the continued volatility in the financial markets, we want to be best positioned to take advantage of the various programs the federal government has introduced or may introduce to support U.S. financial institutions.”

The Federal Reserve gave its blessing for AmEx to shift from credit card issuer to bank holding company. The move will give AmEx more stable funding in the form of deposits, as well as greater access to government relief, though representatives did not say whether or not American Express would be taking part in the $700 billion bailout package. Goldman Sachs and Morgan Stanley also made the switch following the Lehman Brothers bankruptcy.