Today’s topic is credit cards and the banking industry. The old Banking Rule of 3-6-3. This worked for centuries. Banks would pay their depositors 3%, lend out at 6% and hit the golf course at 3pm. But then the banks got greedy and got to the point of being open 7 days a week and open later, until 6 pm or later. Lending rules aslo went out the window. Lending 100% to purchase a home or even as high as 125% to buy or refinance. The banks are always devising new ways to getting you hooked on credit. When I was growing up, I was first solicited fro a credit card when I was 24 and in law School. Now, they start with college freshmen. The solicit at sporting events and concerts. These people are drinking and the banks think this is a good time to have you apply for credit. For what? A hat or a ball? It adversley affects your credit score each and every time you apply for credit. Why should you care? Because your credit score is one of the most important numbers in your life; right up there with your blood pressure number and your cholesterol. Another scam you should watch out for is when they increase your interest rate based on something that happened with an unrelated account. They will use any excuse to raise your interest rate. They will also lower your credit limit which then lowers your FICO score. This has an ever increasing negative impact on your credit score, which then means it costs you more to borrow for anything else, like a house or a car. The CREDIT CARD PROTECTION ACT OF 2009 which is posted on posted on the website was enacted to give the consumer some protetion against these practices. Buth the banks are already working on ways around it. They have already announced plans to change all cards to variable interest rate cards to get around the prohibition on changing rates. Since this show is called “Your Financial Health”, what should you do? Thin of credit card debt like cancer ro a tumor and cut it out. As soon as you can, pay off your credit cards with the highest interest rate. Do not cancel them, because that adversely affects your FICO score. You want to show is that you have available credit and that you do are not using it. It’s the old saying that “The bank will only lend you money if you can show that you don’t need it.” With everything that involves credit cards and the banks, there is a caveat. Banks are now charging inactivity fees to punish you for paying off you debt and not paying interest on the balance. What should you do? Charge a very small amount which you know that you can pay off in its entirety when the bill comes due. Basically you must show that you have available credit and that you don’t need it. Another practice that makes my blood boil is when they increase your credit score from 6 or 7% to 26 or even 39% after a few late payments. If you are having financial trouble with making the small payment, what makes the bank think that the answer to the problem is to raise your interest rate. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………