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Ask John: Outlook for 2009

Hi John,
I think we all agree that 2008 was just horrible all the way around. What do you think will happen in 2009?

Blake Feinstein
Seattle, WA

This is a good question, Blake, and one that is on many people's minds.

Some of the following are things that will happen and others are what I believe will happen.

  1. We will see a new set of rules for the credit card issuers. This is very good news, even if it takes some time for the rules to go into effect. Here are some highlights:
    1. No more universal default — This concept refers to the practice of adversely changing a cardholder's terms simply because he or she did something wrong with a completely different credit card. This practice will come to an end.
    2. Longer grace period — This is my personal favorite. No more due dates that seem to be 10 days after you received your statement. The new rules will require issuers to send statements out 25 days ahead of the due date.
    3. No more over-limit fees — This applies to consumers who direct the issuer to not allow them to charge more than their spending limit. Today the issuer may let you overcharge, which results in an over-limit fee of around $35 each month exceed your credit limit.
  2. I believe we'll see a migration to credit unions from banks. Consumers will eventually get tired of getting caught up in the gears of very large banks. Credit unions are more stable and it's said that they treat their members better. They haven't been closing down credit card accounts, reducing credit limits, and raising fees. And they have very little exposure to the subprime mess. If you aren't a member of a credit union, I suggest joining one.
  3. Credit will continue to be difficult to come by, so you'll have to refocus your efforts to get your credit scores well into the 700s. Shoot for above 750 or above and you'll be just fine.
  4. I believe that you'll see action taken against debt settlement companies by the Federal Trade Commission because of their deceptive marketing practices. Much like the FTC did with "Operation Clean Sweep", where they shut down 36 credit repair companies, I believe you'll see similar action against the settlement companies.

All in all, it's going to be an interesting 2009. One thing is for certain: Those of you who are not carrying any credit card debt will be in a much better position to take advantage of what are still historically low interest rates.

As always, if you have any questions or comments please feel free to drop me a line at CreditExperts@credit.com

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