Let’s ask a question: If you could borrow all the money you wanted for ZERO percent interest….and you could then charge everyone you supplied credit to 24.9% to 29.9% plus a variety of extra charges if you don’t dot every “i” or cross every “t”…..how long might you continue to do that?
As if you haven’t noticed….your list of Credit Card suppliers are busy sending out “New Terms” ….left and right. If you are lucky enough to have an 800 FICO score….well, maybe only 2/3rds of your credit card providers will be contacting you…in the near term.
These Credit Card providers “are boldly going where no man has gone before….” “Space….the Final Frontier!”. Their concept is to simply rip off every American they can, as fast as they can! Perhaps this is just too harsh an assumption. Hey, these are the same guys that bought “Credit Default Swaps”…”Sub-Prime Leveraged Loans” and had no qualms about letting people borrow 50K or 100 thousand dollars at very low interest on their American Express Black Cards. Hey, if you had a good FICO you could flip Real Estate with Credit Card money. Everyone knew they could buy a big million dollar house on Newport Coast and flip it in a few weeks and get that money back into their Credit Card account….before a payment was due.
So, Credit Card companies would gladly nail the little old lady with bad eyes who failed to make her $30 dollar payment with a late charge of $29 bucks which she didn’t understand that she had to pay…that got added another $39 bucks for “very very late fees”! In the meantime, those big customers were even given late fee forgiveness…especially when they were paying back over $100 thousand dollars.
Now comes the Meltdown, Downturn, Crash, Deep Recession, Depression or whatever else you want to call it. Their little house of cards came apart and they yelled for help from who? Yep, American Taxpayers! They borrow for little or no interest….and now have the temerity to raise everyone’s APR….What is an APR? That’s how much they charge you for purchases! They try to confuse everyone..by saying they have several rates: One for “Cash Transfers” and One for “Balance Transfers”. These rates may differ from your APR “for purchases”! The “for purchases rate” is the most important for most people. Only idiots would take cash out of their Credit Cards. It is much akin to going to a “Check Cashing” location and paying 50%! Additionally, there are deals going on regarding 0% percent “Balance Transfers” for a specific time….say up to a year. We will get back to those later!
“The Banks” are merely taking money out of our pockets and putting it back into their pockets…because they bet on poor investments and got free money from the government and want to double dip by raising all of our APR interest rates with impunity. This is at the least….”A Moral Outrage!” The time has come to Regulate Credit Card APR Rates! This should be a very transparent system. Right now….it is anything but. Since Banks have no qualms about denial of loans, credit cards or leases because of ones FICO score – it should be fairly academic to figure “a range of acceptable credit card rates” for a specific FICO Score! Credit Card companies certainly do not have to accept any client, simply because they apply for a card. However, once they do accept that client….they need to have a limit on how much they might raise their APR for purchases. There should be no such regulation on “Balance Transfers” or on “Cash Withdrawals from Credit Cards”. Those are optional choices.
The worse thing that the Banks are doing is: “Reducing Available Credit Lines”! You may have received a letter saying that your “Available Credit has been analyzed…and it has been determined that your “Available Credit has been reduced greatly!” The Banks are very cryptic about the “whys”. They are hoping that you will not pay attention and not question their actions. It is very important to reassess your relationship with this financial company, pay off any residual balance….and do not use the card. Use another card.
The Government is trying to rebuild out economy…and the key to that is “Consumer Spending”. Raise those rates on Credit Cards and watch how quickly…people STOP BUYING anything but staple goods to live on! When someone wants to buy a 46 inch LCD Television….at a cost of say $1788 dollars plus 9.25% tax right here in “The OC”….and add another 18.8% to 29.9%….and by the time you have finished out paying for it…your are talking close to $2600 dollars. On top of that, what about other purchases added to that? It will not take long for consumers to figure out…they can’t afford it.
Finally, now is the time for each of us to review the terms of our individual Credit Cards. Some folks have up to 100 Credit Cards. Add to those all those very nasty Store Cards…with very terrible terms. Well, now is the time to call each and every one. Ask these three questions: (1) What is my Available Credit Maximum? (2) How much is my current APR for purchases? (3) How much and what terms are you offering for Balance Transfers? You will need to be very careful if you do chose to take a good Balance Transfer deal. One missed payment and the rate goes from ZERO percent to 29.9% for the life of the loan. Make sure that your Balance Transfer payments also do not exceed 50% of your Available Credit. Make sure you stop using that card until you pay off the Balance Transfer completely!
The Banks are not our friends. They offer a service designed to take money out of our pockets and put it into their pockets. Don’t be ripped off and learn how much each and every Credit Card in your Lending Library costs you to own! Do not forget: The Banks are taking TARP money from the FED for ZERO percent interest. They want to charge you 29.9%, plus fees to get back the money they lost for stupid Derivative and Hedge Fund investments. Let us not aid them in their future stupidity. Let us demand that Congress and the Administration create “Consumer Protections” that make sense as well as aids and encourages “use of our credit cards without uncalled for punitive interest rates”!
*Travis sir,
The reality that the banks were bankrolling the
whole Real Estate flipping game along with taking
the short money in the Hedge Market….is not exactly Space Science.
The further reality that people with Credit Limits less than $10,000 dollars can ill afford
to pay 29.9% when they max out their cards either.
The big boys are so busy moving their cash around that it is always hard to nail those people. The concept of this blog was to simply let the lesser guys know….that they can play the game too.
It is also very important to keep asking for those Credit Limit increases….till you get above $10,000 per card.
Now, this year is the time to kiss off those credit cards, the gov bought the debt with tarp funds and the card companies are wheeling and dealing with the balances.
Screw the FICO score and break the cycle of debt.