Wealth Impacted By Credit?
By Sandy Morris on May 20, 2008 in Wealth
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Wealth impacted by credit. Is it time to stop the madness? Have you ever wondered how in the world you were going to pay off all that debt? Or why the credit card company just lowered your limit?
Remember the old days when life was simple - when credit card companies were stuffing your mailbox with all kinds of 0% offers? And approving you if you could prove that you breathed? Well those days are gone by the wayside along with any sort of customer service. I mean real customer service not just lip service about being unable to do anything for you.
Today’s credit card companies have become a powerful lobby and have higher rates of return then ever - right up there with big oil. They are also increasing the pressure to lower your limit for little or no reason. The words credit crunch generally stand for those times that banks cut back on lending by raising the approval bar to a higher standard but credit card companies have changed the rules of engagement. In the past changing guidelines were brought about by losses they had incurred but today’s changes are in anticipation of defaults.
It is a fact that credit card companies have made great strides in getting laws enacted that impact you without anyone really taking notice. Here are just a few changes:
1. A little known item called universal default penalty. This little gem allows the card issuer the ability to increase your interest rate drastically if you miss a payment…wait…not their payment…a payment with any other lender. In addition to this they have added an ’special’ adjustment for you having a dispute with another lender or even the more common collection accounts such as medical.
2. The grace period they allow can change each month so that you will not receive your statement the same time each month and it will be easier for you to miss that payment being made on time. Another cute practice is to charge you an additional fee to make the payment over the internet on the day it is due. I bet your lender even charges you to make an automated payment over the phone.
3. Excessive late fees and over limit fees. Have you ever missed a payment by say 1 day? Chances are you were then charged a late fee (today averaging around $35). In 2006, the US Government Accountability Office found that consumers paid $7.4 billon in penalty fees. That’s BILLION. Can you say show me the money? How about an over limit fee? Tell me how can you go over your limit? Doesn’t the card issuer approve all transactions? Could there be a financial incentive hidden somewhere? All the computer has to do is decline the charge.
With Congress currently beginning to show lukewarm concerns for the ‘folks at home’ some lenders have begun to amend their vague guidelines for universally classifying you less than worthy. Some have taken “actions that lead us to deem you less creditworthy” out of their several page agreement. Have you ever read yours? I bet not. So you probably do not know if your “wealth is impacted by credit”.
It is time folks. Time to take back some control of our lives. I am not saying cut up your credit cards. If you did that you would be in worse shape. You couldn’t get a mortgage without current credit. Begin by learning how to play the game, my first credit tip for you is - NEVER have a credit card balance that is more than 75% of your limit. The closer you get to your limit the more a credit lender thinks you are near default.
I am suggesting we help Congress with HR5244. It is a beginning but not a cure all. If you want your voice to be heard, read the bill House Bill HR5244 and then email your congressman. This is one step for mankind - you and me kiddo! Don’t let your wealth be impacted by credit.
Additional articles you might find interesting:
- Credit Card Default
- Playing the B Card
- Possible protections for credit card holders
- Credit Card Companies Boosting Your Rate
- 0percent APR Credit Cards Tips and Tricks
- Will the ticking credit card time bomb impact donations?
- Credit Card Fine-Print Pitfalls
- The Worst Is Still Ahead Says Meredith Whitney
- Kayla owes $30k to credit card companies. Collectors keep calling. If she keeps paying on them can they take legal action?
- This is why when it comes to making a decision between just starting to default on the credit card debt, it might be time to pull out the stops and go after the credit card companies to put a stop to the escalating bill. …
- They’ll have statistics that show that customers who make a late payment are much more likely to default than customers who are never late. Maybe a few consumers will comment about the basic unfairness of agreements that the credit card …
- The industry term for this practice is “universal default.†Credit card companies are monitoring your bill paying habits-remember it’s all there to see in your credit report-and looking to see if you’ve tripped up anywhere. …
- When applying for a 0% APR credit card, it is always better to read the terms and agreements of the credit card. Not to overstate an obvious question, but why should one do so? Simply because many credit cards may come with a default …
- … person used their Diner’s Club card to buy a dinner for friends that he/she couldn’t afford… but with the reality of the housing implosion hitting home now - many people think a credit card default crisis is closer than we think. …
- Universal Default Clause - The universal default clause is an egregious provision that allows credit card companies to tack on an exorbitant “penalty” interest rate if a consumer is late on any of his or her bills, including items like …
- US regulators’ plans to boost oversight of the credit card industry will force banks to raise borrowing rates and cut the amount of credit available to consumers. Whitney estimates about $2 trillion of credit card lines will be removed …
