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.
Wednesday, November 19, 2008
Subscribe to:
Post Comments (Atom)
Posts
6 comments:
I created a couple of credit card websites a couple of years ago that predicted what was about to happen to the U.S. economy.
I even offer incredibly logical solutions to get out of the mess. Basically, just allow people to pay down their credit card debt with zero interest.
Then, put a warning on that unless one can afford to pay back FOUR TIMES THE MINIMUM DUE, you are headed for credit card hell.
lol, now you don't have to go to the link.
http://www.Credit-Card-Cap.com
The link below spotlights one of the biggest legal scams ever perpetrated on the american public.
http://www.Credit-Protector.com
Apparently not all credit cards are created equal. I just got an offer from a MasterCard account that I haven't used in about 2 years: Zero % interest for 12 month on balance transfers, new charges and cash advances between November 11 and January 12, 2009 plus 5% rebate on all gas charged to the card during the 12 months. No transaction fee either. My mother always taught me that if something sounds too good to be true, it probably is, so I called the financial institution that the card is through and asked what the catch was. They assured me that the only catch is you have to make regular monthly payments, and if you miss two consecutive payments it reverts back to their normal rate of 17.9%. Too bad I just paid cash for a 42" LCD flat screen.
The trick with the low interest rate balance transfer offers is you want to make your payments on time of course, AND, you don't want to use the card while you are paying down your debt.
What happens is the new credit card purchases are put at the back of the debt so while you happily pay down zero interest on balance transfer debt, your new credit card purchases are compounding at ridiculously high rates that range anywhere from 9.9 to 29.9. Your monthly payments don't touch the higher interest purchases until you completely pay off the lower interest offer.
Some offers force you to make monthly purchases at the high rate just so you can keep the lower rate on the balance transfer.
http://www.DailyPUMA.com
AND, you don't want to use the card while you are paying down your debt.
Yeah, Alessandro, I'm aware of that. My wife had a heart valve replaced 4 years ago, and the same credit card company was running a 2.9% special at the same time that our portion of her medical bill came due. The hospital gave us a discount for paying it all at once, and we took 2 years to pay off the credit card at 2.9%, but we locked the card up in our safe just so we wouldn't accidentally use it.
Now, in all fairness, my wife and I have a distinct advantage over many people who get burned by credit cards -- our credit rating is over 800, and the incident with the medical bill was the only time in recent memory that we carried a balance beyond the end of the first month. Just a word of advice to any young readers of this blog: building and maintaining a good credit rating is something that you will NEVER regret later in life. As an added benefit, the better your credit rating, the lower the rate that will be offered to you by credit card companies.
Wow sorry to hear about the Heart valve. It just goes to show we are all human and our security, employment, income, ect.. can be taken away at anytime leading to credit card debt.
I'm reading your blog. it's good read about your post and all comment.
Post a Comment