If you think today's economic news is terrible, hold onto your seat because it is about to get a lot worse. There is still one extremely large shoe to drop before all is said and done in the financial district. That shoe is full of lead and headed in one direction...down. Credit card defaults are about to skyrocket.
At this point you would think that these companies would start learn their lesson. Unfortunately, due to greed or pure stupidity these companies are about to send our economy further into the dark hole.
Most credit card companies were also the holders of those bad mortgages. In an attempt to recoup some of their losses, these companies are increasing rates on their credit card holders. Many of these rate increases are occurring with no apparent reason. What I mean is usually your credit card rate is increased due to late payments. When you pay your credit card bill late, the credit card companies usually will set your interest rate to the default rate. Those default rates are now as high as 35%.
Credit card holders all over the country that are being hit hard by other areas of the economy are now having their credit card rates increased to the these higher rates without a reason. They are already struggling to pay mortgages, food bills, and now their credit cards. Many of the people hardest hit by the economy were paying the minimum payment only on their cards. Now with the increased rates, they are unable to make their payments and are delinquent in paying their bills.
Instead of allowing customers to continue paying their bills at the current interest rates, these companies are forcing people into bankruptcy. Why wouldn't these companies want some payments coming into them? By increasing the rates and in some cases the minimum payments, they are pushing people into default.
Know your rights: Watch your credit card statements each month. If you see that your credit card company has increased your rate, you have the right to put a hold on the previous rate. If you call or write your credit card company and request that a rate hold be placed on your card. You will no longer be able to charge on that card, but they will not be able to raise the interest rate on the current balance.
If these companies continue with this practice, they will send more and more people into bankruptcy and it won't just be the credit card companies that don't get paid.