Correction: Thanks to a commenter and my friends at USAA, I’ve verified that my original post was wrong. USAA is not eliminating rewards on credit cards, just debit cards. Whoohoo. I’ve updated the post to reflect accurate information.
One subtle effect of the entire recession/financial meltdown/current economic mess is that credit card companies are changing the terms and conditions of their cards. Many changes have been as the result of federal legislation. Other changes have been the result of decreasing card revenues. Cardholders who diligently chose the best (for them) card three years ago may find that their current credit card is no longer the right financial tool for their particular situation.
Changing laws, poor economic climate, and even the downgrading of the US debt rating are all impacting bank and credit union revenues. I have heard tons of stories of cards instituting new annual fees, reducing or eliminating rewards, and tightening leniency on late fees, over-limit fees, etc.
How should a consumer react when their credit card issuer informs them that they are changing the terms of their account? First, don’t panic. Consider whether it is still a good card for you. Ask yourself these questions:
- How many cards do I have?
- How many cards do I need? (I recommend 2-3, max, but that’s just my opinion.)
- Do I carry a balance?
- Is there an annual fee?
- Does this card offer any extra protections or services?
- Does this card have any particular features that are helpful for me?
- Are there any rewards with this card?
- How is the service from the card issuer?