Mergers: Better for Creditors, Not Consumers
Even large companies feel the effects of the financial crisis. No sector of the economy has been hit as hard as banks, and one method they have used to offset their losses is to merge. You may have had an account with Washington Mutual, which has been bought by Chase, so now the credit line you use is a Chase line. These mergers may seem like nothing more than a name change, but they can have devastating effects on you and your finances.
You may have chosen a credit card with a particular bank because of a low interest rate or lack of annual fees. When mergers occur, those privileges may disappear. A credit card that previously had no annual fee may start charging you one after you deliberately chose the competitor who has been bought out by a bigger, badder company. This may feel unfair, but it is completely legal (although the new credit laws going into effect in February 2010 may restrict some of this behavior).
Another hidden impact is that you may no longer be able to transfer your balance between credit companies, since many companies have been scooped up into mergers that reduce competition in the lending sphere. This becomes a problem if you have habitually transferred balances or had a system worked out to help you now if your funds are too low to pay your balance off regularly with current interest rates. This may have a positive effect long-term, since balance transfers just extend the time between now that that imaginary debt-free future you may have been putting off because of lack of current funds. It will be harder to transfer balances and you might want to pay up to end the vicious cycle.
Be aware of any changes in your bank or credit company's corporate structure and read the fine print. It will be easier for you to make a smart choice if you know pertinent information, and the sooner the better. Bank mergers end up benefiting the banks more than you, but if you follow the game closely and pay attention to changes, you can end up on top.
- Understanding Credit:
