Why Are Credit Card Rates Increasing / Credit Limits Falling?
Because people are going deeper into debt and filing for bankruptcy more often, there is more risk on behalf of the credit company.  Therefore, they limit their risk by lower limits and increasing interest. For every person that goes bankrupt, there might be 10 that pay that new higher interest rate, thereby netting a profit even though they lost out completely on the one customer. The recent legislation limited how and under what circumstance rate are adjusted and raised, but not forbidden. As for the fact that these banks took tax money under the idea (we all thought) I see two points of view. We never should have had the credit we did, so they are correcting and you (like me and millions of others) are suffering for their prior mistakes.  It is an honest attempt to correct the system for long term stability even if we suffer in the short term. We gave them tax money, they need to not screw us over.  In response to the still frozen credit markets I would suggest penalty taxes to companies that do not lend. Penalties to companies that do not modify mortgages.  The second you take government money is the last second a you are entitled to a profit of anything.  Furthermore, we the people bought you and we the people get to decide your salary. The bottom line is there is truth in both statements.  Things are totally screwed up right now because we ALL made mistakes in the past trying to get a bigger profit or own a bigger house.  There are those among us who didn't make a mistake, and those among us who made nothing but mistakes.  As a society, we have to pay the piper either way. The best thing you can do now is pay down your debts, live simply and spend your money wisely. Of course your situation is very hurtful at a personal level, and I sympathize. I just don't get your point about being driven further into debt? It would seem that with a lower credit score you are prevented from taking on more debt. That can absolutely be hurtful especially to someone who runs a business that relies on short term credit. As for why they do this, they do it to reduce their risk - they don't want to lend more money, they are afraid that you will lose your job and default. Of course it is not as personal as I am writing it, not for you (they don't target you personally - they target your credit profile) and not for them (it is a matter of how the market views the debt and how much they can trade on such debt, not what they want to do personally). As for the TARP bailouts not releasing enough credit - this is reality. Goverment always thinks it can influence the situation more than it actually can. In order to unfreeze credit there needs to be a growing economy that makes the risk look acceptable. No amount of Goverment nudging will really change that more than marginally. By the way, legislation like this (forcing credit card companies to not raise their rates) can lead to credit restrictions. By artifically forcing the rates down the risk has to be ballanced somewhere - so it will be ballanced by lowering credit lines or by other means. Like any price control, if you restrict the price, it causes shortages. Intrest rates are the price of credit.
"The preferred accounts are designed to hope you do one of several things: Pay one day late.  Then charge you all the deferred interest. Many people think If they put $X a month aside, then pay just before the 6 months, 12 moths or no-payment before 2014 period ends then I will be able to afford the computer, carpet, or furniture. The interest rate they will charge you if you are late will be buried in the fine print. But expect it to be very high. Pay on time, but now that you have a card with their logo on it.  So now you feel that you should buy the accessories from them. They hope that you become a long time customer. They want to make money on your next computer also. Their ""Bill Me Later"" option on that site as essentially the same as the preferred account. In the end you will have another line of credit. They will do a credit check. The impact, both positive and negative, on your credit picture is discussed in other questions.  Because two of the three options you mentioned in your question (cash, debit card) imply that you have enough cash to buy the computer today, there is no reason to get another credit card to finance the purchase. The delayed payment with the preferred account, will save you about 10 dollars (2000 * 1% interest * 0.5 years).  The choice of store might save you more money, though with Apple there are fewer places to get legitimate discounts. Here are your options: How to get the limit increased: You can ask for a temporary increase in the credit limit, or you can ask for a permanent one. Some credit cards can do this online, others require you to talk to them. If they are going to agree to this, it can be done in a few minutes. Some individuals on this site have even been able to send the check to the credit card company before completing the purchase, thus ""increasing"" their credit limit. YMMV. I have no idea if it works.  A good reason to use the existing credit card, instead of the debit card is if the credit card is a rewards card. The extra money or points can be very nice. Just make sure you pay it back before the bill is due. In fact you can send the money to the credit card company the same day the computer arrives in the mail.  Having the transaction on the credit card can also get you purchase protection, and some cards automatically extend the warranty." These are the things to focus on... do not put yourself in debt with a car, there are other better solutions.  1) Get a credit card (Unless you already have one) -Research this and get the best cash back or points card you can get at the best rate.  - Start with buying gas and groceries every month do not run the balance up. - Pay the card off every single month. (THIS IS IMPORTANT) - Never carry a balance above 25% of your credit limit.  - Every 8 months or so call your credit card company and ask for a credit line increase. They should be able to do this WITHOUT pulling your credit you are only looking for the automatic increment that they can automatically approve. This will help increase your available credit and will help keep your credit utilization low. Only do this is you are successfully doing the other bullet points above.  2) Pay all of your bills on time, this includes everything from water, electricity, phone bill, etc. never be late. Setup automatic payments if you can.  3) Minimize the number of hard credit inquiries. -This is particularly important when you are looking for your mortgage lender. Do not let them pull your credit automatically. You should be able to provide them your credit score and other information and get quotes from those lenders. Do not let them tell you then can't do this... they can.  4)Strategically plan when you close a credit line, closing them will do two things, lower your credit limit often times increasing your credit utilization, and it may hurt your average age of credit. Open one credit card and keep it forever.  *Note: Credit Karma is a great tool, you should check your score monthly and see how your efforts are influencing your score. I also like Citi credit cards because they will provide you monthly with your FICO Score which Credit Karma will only provide TransUnion and Equifax.  This is educational information and you should consider talking to a banker/lender who can also give you more detailed instructions on how to get your credit improved so that they can approve you for a loan.  Many people can get their score above 720 in 1-2 years time going from no credit doing the steps described above. It does take time be patient and don't fall for gimmicks. "Congratulations on recognizing your problem and getting serious about paying down your debt. That's the first step. If you have a loan with 80% interest, yes, get that paid off as quickly as possible. Much better to be paying even the outrageous 20% on a credit card than the astounding 80%. As others have noted, if you can get a consolidation loan or refinance that 80% to something more realistic, do it and do it as soon as possible. Heck, if you have the credit limit, use the credit card to off the 80% loan. 20% on a credit card is better than 80%. Of course you may not have enough credit limit to do that. Cash-back rewards are nice if you are paying off the credit card balance each month. But in your case, you're not. 25% with a 2% cash back reward means you're still paying 23% the first month and 25% every month after that. That's worse than 20%. Remember you pay the interest on your balance every month that you don't pay it off, while a cash-back is a one-time thing. So if you're not going to pay off the balance, AT BEST a cash back reward could be effectively subtracted from the interest rate. 20% with a 2% cashback is effectively somewhere between 18% and 20%. If you're comparing 20% with 2% cashback to 19%, could be complicated to figure out which is better. But it's clearly worse than anything more than 20%. Besides that, you don't say what your total debt is in relation to your income. If you have a lot of debt, I'd say first thing is to figure out what you can do to cut your expenses. Lots of things that people call ""fixed expenses"" aren't really fixed at all, they just take some effort to cut. Like if you have a big expensive house and you're paying a large mortgage, you can (probably) cut that by selling the place and moving to a cheaper house. (I say ""probably"" because the housing market may make it impossible to sell for enough to improve your situation.) If you have large heating bills, you can turn the thermostat down and get used to wearing a sweater around the house. Etc.  Final note: I've talked to a fair number of people with debt problems, and I often hear them say, ""Yes, I really need to cut my spending and start paying off these debts. And I intend to ... right after I buy this one last thing that I really really want."" But of course after that there's one more vital purchase, and then another, etc. Avoid falling into this trap." First, you need to be aware that the credit score reported by Mint is Equifax Credit Score. Equifax Credit Score, like FICO, Vantagescore, and others, is based on a proprietary formula that is not publicly available.  Every score is calculated with a different formula, and can vary from each other widely.  Lenders almost exclusively only use FICO scores, so the score number you have is likely different than the score lenders will use. Second, understand that the advice you see from places like Mint and Credit Karma will almost always tell you that you don't have enough credit card accounts.  The reason for this is that they make their money by referring customers to credit card applications.  They have a financial interest in telling you that you need more credit cards. Finally, realize that credit score is just a number, and is only useful for a limited number of things.  Higher is better to a point, and after that, you get no benefit from increasing your score.   My advice to you is this: Don't stress out about your credit score, especially a free score reported by Credit Karma or Mint.  If you really have a desire to find out your score, you can pay FICO to get your actual score, but it's not cheap.  You can also sometimes get your FICO score by applying for a loan and asking the lender.  I last saw my FICO scores (there were three, one from each credit bureau) when I applied for a mortgage a couple of years ago, and the mortgage rep gave them to me for free.  But honestly, knowing your score doesn't do much for you, as the best way to increase it is to simply make your payments on time and wait. Don't give in to bad conventional advice from places that are funded by the financial services industry.  The thing that makes your credit score go up is a long history of paying your bills on time.  Despite what you commonly read about credit scores, I'm not convinced that you can radically boost your scores by having lots of open credit card accounts.  At the time I applied for my last mortgage, I only had 2 open credit cards (still true), and the oldest open account was about 1.5 years old.  The average of my 3 scores was just over 800.  But I've been paying my bills on time for at least 20 years now.  Only get credit cards that you actually want, and close the ones you don't want. With new credit scores tend to be very volatile. It could be something as small as carrying a higher balance or credit inquiries.  Like I mentioned, check Credit Karma to confirm nothing has changed. Also, see your inquiries. That may have impacted your score Bonds can increase in price, if the demand is high and offer solid yield if the demand is low.  For instance, Russian bond prices a year ago contracted big in price (ie: fell), but were paying 18% and made a solid buy.  Now that the demand has risen, the price is up with the yield for those early investors the same, though newer investors are receiving less yield (about 9ish percent) and paying higher prices.   I've rarely seen banks pay more variable interest than short term treasuries and the same holds true for long term CDs and long term treasuries.  This isn't to say it's impossible, just rare.  Also variable is different than a set term; if you buy a 10 year treasury at 18%, that means you get 18% for 10 years, even if interest rates fall four years later.   Think about the people buying 30 year US treasuries during 1980-1985.  Yowza. So if you have a very large amount of money you will store it in bonds as its much less likely that the US treasury will go bankrupt than your bank. Less likely?  I don't know about your bank, but my bank doesn't owe $19 trillion. "After this happened the second time, I wonder if there could be a ""catch"" on this.  No I mean, what is my bank's real motivation for allowing me to spend more money.  Credit card companies make money in a few ways. By giving you a higher limit the credit card company hopes you will spend more on the card. This immediately gets them more merchant fees and if they are lucky means you will have to carry the balance for a while earning them interest. If they get really lucky you will miss a payment or two earning them some fees. Of course if they let you borrow too much you might never pay it back. So the credit limit is a balancing act. Letting you borrow more money gives them the potential to make more money but also the potential to lose more money. As you build up a history of paying as agreed they feel comfortable lending you more money." In Canada section 347 of the Canadian Criminal Code makes it illegal to charge more than 60% annually.  Since most Canadian credit card annual interest fee is below this they are within that legal limit.  However this is limited only to the rate and not necessarily a cap on the absolute interest charges.