Credit Cards Try to Make Nice?

Have credit card companies finally started paying attention to irritated consumers? When the bovine species sprouts wings and takes flight, you might think.

But consider these indicators. Citigroup (NYSE: C  ) announced that it will immediately end the practice of imposing universal default interest rates on its customers. That's the unfriendly practice that has some credit cards raising your interest rate if you make a late payment on some other completely unrelated credit card or loan.

Citigroup also said it would eliminate its policy of increasing rates and fees "anytime for any reason." Instead, rates and fees will change only when a credit card expires (after about two years) or if the card holder pays late, exceeds the credit limit, or bounces a check.

Before Citigroup's announcement, Chase (NYSE: JPM  ) declared an end to using the two-cycle billing system for determining a customer's unpaid balance and switched to the more common average daily balance. Chase said consumers couldn't understand the two-cycle billing, which can impose finance charges even if you pay your bill in full. Chase stated that the elimination of the billing practice would benefit customers by reducing finance charges.

About the same time, Capital One (NYSE: COF  ) told the Senate Banking Committee that it had revised the disclosures included in its marketing material to go beyond what's already required and lay out card terms in "plain English."

What's going on here? Could credit card companies have finally figured out that customers don't appreciate policies that let them change their product "anytime for any reason"? Could this be a sign of the coming apocalypse? Might it only be that recent congressional interest in holding a bright light to credit card practices has encouraged a few changes?

Whatever the motivation, it's some unusual good news for customers. And while you shouldn't assume that we'll see the dawn of a new age in credit card friendliness, the announcements serve as good reminders that credit cards are a competitive business and that you, the consumer, have a choice.

In fact, you have lots and lots of choices. IndexCreditCards.com currently lists 1,139 different credit cards to choose from, including those with rewards for gas, travel, or just plain cash. You can get a credit card embossed with everything from your alma mater's insignia to your favorite charity.

If you've gotten on the wrong side of credit, it can sometimes seem as though the issuers hold all the cards (so to speak). But whether your credit's in perfect shape or not, you remain the customer, and you can try to use that leverage to make the product work better for you.

• If your credit card has recently changed the terms of your credit agreement in a way you don't appreciate, make a complaint. Maybe they added an annual fee, increased your late fee, or shortened your grace period. In some cases, the credit card issuer will change the terms back. Sometimes they won't. Either way, they'll know that you noticed and that you're unhappy.
• Ask for better interest rates. They can always say no, but you don't lose much by asking. If you're carrying a balance, make this your first step toward getting out of debt.
• Study the competitors. If you find a better card, use that information to try and negotiate a better arrangement with your current card issuer. If it works, they'll be happy to keep you as a customer, and you'll be happier with your card. If it doesn't work, you've found a better card and you can take your business there.
• If you have a low credit score and little leverage, you might be stuck with a bad deal for a while. That will change as you work to improve your credit score.

Remember, you're the customer, and you have lots of options. Read these other Foolish articles for more help sifting through your credit card choices:

• How Does Your Credit Card Rate?
• "Unfair" Credit Card Rate Hikes
• Urban Credit Legends Exposed

Fool contributor Mary Dalrymple does not own stock in any company mentioned in this article. She welcomes your feedback. JPMorgan Chase is an Income Investor recommendation. The Motley Fool has a disclosure policy.