Subtle Critical Credit Card Changes

Since Congress passed the new regulations related to credit card billing and rate practices, recent studies have shown that the average credit card interest rate has jumped from just over 13 percent to just under 15 percent since the second quarter of or 2009.  This means that this is the highest average rate since 2001.   CCS Retail Systems, Inc. has some ways to help Retailers with this, contact us for more information on our RPS Processor Option or adding our Accounts Receivable option.

Here are the details of the situation and some strategies for improvements.

For Consumers:

Some of the changes that credit card companies are doing involve:

• Charging higher balance transfer fees.

• Charging higher cash advance fees.

• Charging new foreign transaction fees.

• Charging higher annual fees, and/or introducing annual fees to accounts that never had them before.  This would be regardless of how you use your account or other credit.

• Lowering of credit card limits without warning. 

Because of the tight economy, many people have started relying more on credit cards, despite the higher fees.

For Merchants:

This may mean an increase in service fees, and increase in security compliance audits, an increase in the number of consumer  contested charges.  - All of which eventually translate to increased overhead.

What are some suggestions for getting around these issues?

For Consumers: 

• Verify the details of new cards that you plan to apply for to replace and existing account before actually transferring balances or closing an old account. Closing an account can adversely affect you credit score.

• Consider paying down the balances on your higher interest/higher balance cards first. 

• Pay the card balance in full each month. 

• If you can't pay off the balance, consider making micro-payments, where you always pay more than the minimum amount due before the due date, but make more than one payment during same billing cycle.  This reduces the Average Daily Balance, which is what most credit card account interest is now calculated on, and in turn helps reduce the balance more quickly. 

For Merchants:

• Focus staff goals on customer satisfaction, this can help reduce customer frustration and reduce disputed transaction situations.  This is especially critical in service oriented businesses.  As an Example:

A Hot Tub repairman was 4 hours late, didn't complete the work, and did a sloppy job with the repair, and billed the customer for parts that he didn't use.  The customer was so irate, that he called the credit card company and contested the charges.

• Consider re-evaluating your current credit card processor.  RPS (Radiant Payment Services) has special, competitive, preferred rate packages for CounterPoint users.

• If you are not using the Account Receivable option, consider adding it. Over the years, many companies have gone away from using this option because of the availability of easy credit, and extremely low interest rates.  With the A/R option, you can charge what interest you want, an optionally charge late fees.  As an example:

If you are selling high ticket items like furniture or appliances, and a customers credit card interest rate is higher than 15%, and you are going to offer them a 9% interest rate, a no annual fee account,  with extended payment time, this would be a no-brainer for most consumers.

Please contact CCS Retail Systems, Inc. for more information on RPS or adding the Accounts Receivable option.