Card companies seem unnerved by new debt management trend

One potentially interesting new trend in the world of debt management appears to be that some consumers are doing so well at paying down their balances that some creditors are trying to provide incentives for them to use their cards more.

A recent report on the Baltimore Sun’s “Consuming Interests” blog notes that one card company recently contacted the author asking if there was a way they could get them to use their card more often, claiming they wanted to be the “primary one you turn to when making purchases.”

The article may be a sign that instead of simply closing down inactive accounts, slashing credit limits and imposing new terms that make continuing an account unfavorable for a consumer, creditors are feeling a financial pinch from people simply using their cards far less often.

Another example of credit cards feeling the heat can be seen in Bank of America’s decision to keep its fees and interest rates steady until federal reforms go into effect early in 2010. Since some companies are going to see their profit margins erode by no longer being able to impose punitive rate hikes and high late fees after next spring, they have been trying to cash in now.

However, such methods have drawn criticism from members of Congress as well as from the public, prompting the Bank of America announcement. Congress has even been trying to move legislation that would enact the reforms even faster in light of these and other concerns.

A look at this month’s consumer credit report from the Federal Reserve illustrates how serious many Americans have become about debt management, having paid down their card balances and other revolving debt at a 13.1 percent annual rate in August.

Source: http://www.credit.com/news/credit-debt/2009-10-14/card-companies-seem-unnerved-by-new-debt-management-trend.html