COVERITLIVE.COM

11:38

Eileen - Welcome, folks. Our live chat with Curtis Arnold will beging in about 20 minutes. He'll be able to discuss card industry trends as well as why card issuers are playing so tough these days and what your options are. Talk to you soon.

11:46

Eileen -

Curtis Arnold, founder of CardRatings.com, has been educating consumers about credit cards since 1998. He is the author of the 2008 book “How You Can Profit from Credit Cards: Using Credit to Improve Your Financial Life and Bottom Line” and the “Complete Idiot’s Guide to Person-to-Person Lending” published this past spring. Arnold’s CardRatings is an online nonprofit based in Arkansas that allows consumers to shop for cards. Arnold has experienced the severe consequences of credit card debt, struggling to repay as much as $40,000 in plastic debt after his graduate studies in business at the University of Texas at Dallas.

11:47

12:01

Eileen -

It’s time to get started. Thanks for joining us. We’ve had lots of gripes recently on the blog about tactics credit card issuers have been taking. One question off the bat, credit card issuers are playing tough these days, even people who pay on time are finding that they are being charged annual fees or having their cards canceled. Is it still possible to get a card with good terms today?

12:02

Curtis Arnold- CardRatings.com - Good afternoon everyone! Yes...it is still possible to get a card with decent terms these days. But, you have to "think outside the box".

12:03

Eileen - What's outside the box?

12:04

Curtis Arnold- CardRatings.com -

Good question. We often just consider applying for cards from the big boys...such as Citibank, Chase, etc. Consumers should consider smaller issuers...often that are definitely not household names.

12:05

Eileen - This question is from Brian:

Would you ask your guest for a recommendation on the following situation:

My wife and I are are looking for a credit card that has a cash back rewards option. We both have excellent credit (Fico 802 and 796). We will charge roughly $3000.00 a month on the card and expect to pay it off 10 of the 12 months of the year. Purchases will mostly be supermarket, gas, occasional night out and daycare expenses.

Any suggestions for a card that would fit our profile?

12:09

Curtis Arnold- CardRatings.com - Great question Brain. Sounds like you have potential at that spending level to rack up some nice cash rebates. My only concern is that you may carry a balance a couple months out of the year. Carrying a balance on any reward card is a bad idea and can easily wipe out any rebates that you might earn. In fact, you could easily end up in the whole.

So, in general, I would suggest that you use a low rate card for those two months and a cash back card the rest of the year.

My favs are the Charles Schwab and Fidelity...both of which give a 2% rebate.

12:09

[Comment From Liz]
Retailers say that using credit cards drives up prices because of all the transaction fees that CC companies charge merchants to accept them. What do you think about interchange fees? How do you think they impact prices and purchases?

12:13

Curtis Arnold- CardRatings.com - Liz-

Thanks for your question. This is a controversial topic. In fact, I blogged about this very topic recently on CardRatings.com. On one hand, you are correct that interchange fees do drive up the costs of goods and services. On the other hand, credit cards- when used responsibly- have a lot of benefits to us as consumers.

The way I look at it is I'm getting part of that interchange fee back when I use a reward card and the non credit card users out there (i.e. folks that still use cash) are subsidising my rebate. So, I don't mind the interchange fees in general. But, do think that interchange fees should be limited and there should be a competitve markeplace.

12:13

Eileen -

This question from a shy reader, Anonymous: So if the credit card company decides to cancel my card with no warning (or provocation!), will my credit score go down?

12:15

Curtis Arnold- CardRatings.com - Issuers are closing out millions of accounts for various reasons and, unfortunately this normally adversely affects your credit score. There are exceptions to this rule, but the exceptions are fairly few and far between.

One example would be an account that you have had for a very limited amount of time and that has a very small credit line. If you have a long credit history with many different credit accounts, then closing out an account like this will likely have a minimal affect.

The main question related to this is not if your score will be adversely affected, but how much your score will be affected.

12:15

Eileen -

This is a comment on our blog about Citi, which canceled people's Shell cards. What advice do you have for Liz: " Citi also increased my rate from 3.99% to 14.99%. With my current balance there's no way I can pay that monthly payment AND live... What are we to do?"

12:18

Curtis Arnold- CardRatings.com -

This is a very tough situation that we are hearing all too often from our readers at CardRatings.com. 14.99% is certainly a very high jump and we
are even hearing more from consumers seeing their rates go as high as 29.99%!

Have you tried negotiating with Citi directly? I wrote a book last summer called "How You Can Profit from Credit Cards" that gives tip on how to
negotiate with your card company. Negotiating isn't quite the art that you might think it is (anyone can do it) and it still does work even in
this tough enviornment. Often you will need to speak to a manager for the best results and theaten to take your business elsewhere.

If this doesn't work, then you should go to Plan B...and that is to follow through with your threat! It is still a competitive market out there and
there are a lot of issuers that want your business. Many of these issuers are smaller issuers that you may have never heard of...incuding community banks and credit unions. Check our website for ratings and reviews of these smaller issuers and ask around your local area.

Good luck!

12:18

Eileen -

Another question from Liz: How will it affect my credit score if an issuer cancels my card on me (for not being profitable or just because a branding deal with a retailer died)?

12:20

Curtis Arnold- CardRatings.com - Thanks for your question Liz. Issuers are closing out millions of accounts for various reasons and, unfortunately this normally adversely affects your credit score. The question of how much is hard to pinpoint as credit scores are compicated and often counterintutive!

The general guideline here is that if your credit history is limited
in terms of its length and you only have a few credit accounts (called a thin file in the industry)...then your score will take a potentially bigger nose dive than if you have a 10-20 years of solid credit history with numerous accuonts reporting.

This is why it is so important that we try to develop as long of a credit history as possible. It is also a good idea to have several different type of credit accounts...such as a mortgage, auto loan, credit card, etc. A healthy mix of credit and a long credit history will help you to negate any adverse affects such as one of your accounts being closed out by a creditor.

Hope this helps.

12:20

Eileen -

Your book about profiting from credit cards was published last year. A lot has changed. Can you still profit from credit cards? If so, how?

12:24

Curtis Arnold- CardRatings.com -

Great question Eileen. I get this question quite a bit as of late. You would think with all the negative news out there about consumer credit that profiting from credit cards is laughable.

I maintain, though, that it is still very much possible and acheivable. I personally am still profiting from my cards. Not quite as much as I used to...but my rebates and perks have only fallen a tad bit compared to this time last year.

The key is responsible and savvy usage. I'm on pace to get over 1,000 bucks back this year from my rebate cards!

12:24

[Comment From SporkSpork]
It sounds like a lot of credit card companies are trying to add fees or shed some customers now before that new reform law takes effect. But, aren't they still making money? Is it still profitable for issuers to offer credit cards?

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