Americans Falling Behind on Credit Card Payments at Alarming Rate

Here's an analogy for you.

On the anti-freeze container it says don't drink or you will die. You drink it anyways and die, now its the anti freeze companies fault?

reply to post by BluByWho


It is if its in fine fine print....at that point the courts would look at comparative negligence and probably would score it 20-80 with the person who died winning. Especially if the warning was on the bottom of the bottle barely legible, but we arent talking about drinking poison....that might be too harsh of an analogy although quite comical
What if it was a bottle of vitamin juice or something and the warning that says dont drink more that 16 fluid ounces a day or else you will go into cardiac arrest is in such fine print that you need a magnifying glass. So people start having heartattacks.....are you going to tell them it was there fault for not playing the private eye investigator in the supermarket? Lo and behold we find out later on that the same people who make a heart attack medication make this vitamin juice drink. O MY GOD!!! sounds like a self-perpetuating system to me, all pretty legitimate because the "warning" is technically on the box but really it was a scam to begin with. A dangerous scam.....

Originally posted by Extralien
You are correct of course.

Here it is..

Make a payment through the post or deliver a sealed envelope with the payment inside. With this payment you write a simple basic letter stating that this is the full and final payment.

If they credit your account with the payment , that's it, all clear, they've accepted your payment as full an final payment. No more debt.

If they take you to court over it, you've got a copy of your letter which includes the payment details and date and account number etc. plus your latest statement showing the payment was accepted..

They've not got a leg to stand on.

Technically you're right as the finance company accepting and banking your payment amounts to agreement to party to contract.

Sheer bloody genius idea too!

I've wondered if I can make a £10 payment onto a never-used but current credit-card and charge my bank interest on the positive-balance payment if they again accept that payment with a craftily worded letter as proof of contractual agreement...I'd love to be able to write snotty letters to the bank and charge £25 per letter

reply to post by jackinthebox



Since you are challenging my logic, I can only gather you disagree with me, so here's my analogy to you:

Sigarms sends you a 9mm handgun in the mail. Now before you even receive it you know the basics, it kills people. Regardeless you go out and empty the clip on a crowd killing a number of people. Now knowing what you knew after receiving the gun, you contend sigarms is responsible? Now you had to apply for the firearms owners ID card and they did a background check on you.

Chase sends you a credit card in the mail. Now before you even receive it you know the basics, credit cards have interest and late fees. Regardless you go out and rack it up. Now knowing what you knew after receiving the credit card, you contend chase is responsible? Now you had to apply for the credit card and they did a credit check on you.


People want to play the victim when they feel cheated. Everyone knows the credit cards charge fee's and fines, they go out and use their credit card and everything is fine, then something happens (could be anything. death disease, divorce). Then they find out just how much interest and fees can cost because they didnt read the terms and conditions and feel cheated. Or in a time of desperation didnt care or disregarded the consequences. So they play victim and want to blame everyone but themselves, when at the end of the day the lesson learned is. Damn, I should have read everything before I borrowed this money. Pay it back and chalk it up to a lesson learned.

When in all reality when someone is on the inside looking for a way out it's a lot easier to blame those on the outside for putting them there. Once they are back on the outside they will understand. The first step to getting out of the hole is to realize that YOU really are the reason your in the situation in the first place, nobody held any guns to anybodies heads.



[edit on 3-1-2008 by BluByWho]

reply to post by GUICE2



Too harsh of an analogy? What would you call your date rape analogy a page back?

reply to post by BluByWho


I am out of the hole now with credit cards, but still say that the system is terminally flawed. I am now homeless since my credit ran out and I bankrupted. (I am not using my own computer.) Let me clarify that I am not disagreeing with your base premise, only your follow-up conclusions.
Regardless of the fine print, people do know that they are borrowing money that they will have to pay back with interest.

The problem is, that the lenders lobby the government to put the economy in such a financial state that will force the public into borrowing. There was a time when even a house could be purchased outright without need of a mortgage. This has been a slow but ongoing process, going back to at least the Civil War actually. Now it's crunch time again.

If anyone is personally to blame for irresponsible spending, look at Bush and his trillions of dollars of debt placed on the backs of the taxpayers. This is more detrimental than if every single American defaulted on a $30,000 car loan.

reply to post by BluByWho


Right...mine was even worse. Hahahahaha.
Nobody blamed the bank for my debt....i blame the bank for making it 100percent harder on people like me to get a fighting chance to pay it off. At this point so many years down the line 18% interest is un reasonable. i want to pay off my debt so give me zero percent for a year or two so i can have a fighting chance.

reply to post by GUICE2


When you're in that situation, the only recourse of action is to try take the banks/lenders to court on a civil-action and plead your case as hardship and attempt to get your outstanding debt interest rates legally enforced at 0% rather than the 18% you mention.

This can be done in the UK under an 'Administration Order' where you file for your own 'bankrupcy' and can include any other debts to a total value of £5000 as long as at least one of the debts is in default to the point of having recieved a CCJ (County Court Judgement) notice and is psychologically a better standpoint than having a full-blown bankrupcy order imposed on you and your assets stripped and sold-off to recover any debt by bailiffs.

The downside of taking this course of action is that you are blacklisted for 6 years on any credit-check which can affect all areas of life, including job opportunities if the employer requires a check before hiring.

reply to post by citizen smith


I see what you mean however fractional banking does not lend any legitimacy to the credit industry. This is probably why they cannot garnish your wages right away even though they threaten to...because there was no money to borrow in the first place. If someone defaults on the loan they just erase the accounting entry and mark it up as a loss at the end of the year.

reply to post by BluByWho


What's sad is he is been using this same logic in another thread. He just copied and pasted it, because he's got nothing. He is hopeless. He's mad that people exist who cannot and will not blame their personal decisions on the government or the "economy."

reply to post by GUICE2


The banks are insured against any 'personal debt losses' so whether you pay or not they still get their money at the end of the day...As a former 'bankrupt' (I took the course of action I described in my previous post) those 6 years in the financial wilderness taught me more about recourcefulness and using the legal-system to my advantage...It was an immensely satisfying moment to stand in court representing myself against the corporate lawyers, stick two fingers up at them, and win!

I may only have whats in my wallet (about £30) as personal financial assets right now, but those 6years was a real education in how to survive and barter with what cash I had to hand and what tradeable skills I had.

:handshake:

all power to ya mate!

The news posted speaks for itself. I for one am intelligent enough to realize that all of these credit card holders did not suddenly decide in the last year to start spending irresponsibly. There are quite obviously other factors in this equation that are being denied out of sheer ignorance or deliberate disinformation, by posting irrelevant comments attacking other members.

Thread got long, while the news came out that unemployment is up to 5%.

So for every 100 credit card holders, five have only the governments monthly check (70% of their salary I believe) right now to pay their gas, electric, food, rent, phone and credit card bills.

Thats just the 5% of working age Americans they are counting on "unemployment".

Not all the people who work for wal-mart and need food stamps to get by,
or people who received their last check a month before the report, or the people
who worked off the books.

The news posted indeed does speak for itself. I for one am intelligent enough to realize that all of these credit card holders started overspending years ago. They were able to keep afloat due to plentiful low interest offerings and bankrupcy laws that were very generous to consumers. As the economy headed toward a long-predicted recession and bankruptcy laws changed, interest rates went up to correspond with increasing risks. Consumers could not afford to continue their bad spending at these rates. It's comically simple. Now people pay for their bad spending habits.

reply to post by LightinDarkness

They were able to keep afloat due to plentiful low interest offerings and bankrupcy laws that were very generous to consumers. As the economy headed toward a long-predicted recession and bankruptcy laws changed, interest rates went up to correspond with increasing risks.

If someone is making their payments on time, there should be no change in their interest rate. In fact, it should drop over time as the borrower increases their credit score and finds better lenders who will take on balance transfers at a lower rate. I ended up having transfer offers at 0% until payed off.

You have foolishly brought up bankruptcy laws to make your illogical argument. If someone has a credit card, then they have not bankrupted. Futhermore, the new bankruptcy laws were in favor of the lender, not the borrower. So if the lenders are now better protected by bankruptcy laws, then interests rates should have dropped.

reply to post by jackinthebox


More comedy, as always.

Creditors reserve the right to change the terms (THE INTEREST RATE) at any time, and for any reason. They do so. The reality of course is that most people who are incapable of controlling their spending do not bother with actually getting their balances on 0% or other low rates offers. There is a reason why most banks are profitable - and it's not because most people qualify for or use 0% offers. Instead, credit cards for the past few years have had naturally low VARIABLE INTEREST RATES that were tied to the LOW prime rate. The PRIME RATE HAS INCREASED, so have VARIABLE interest rates. As the prime rate rose and variable interest rates also rise, it becomes much harder to keep up bad spending and pay on time. Which is, of course, exactly what happened.

You made the foolish mistake of not being able to understand bankruptcy laws. I am sorry you are incapable of doing that. The point is before it was much easier to enter bankruptcy, and now that its harder many people don't even bother trying, so they just go ahead and enter into long term default. Banks are under no obligation to raise and lower their rates according to their perception of the legal environment.

reply to post by LightinDarkness

The reality of course is that most people who are incapable of controlling their spending do not bother with actually getting their balances on 0% or other low rates offers.

And you know this how? Since you have taken it upon yourself to define reality, I suggest you provide data to support such a presumptuous statement.

You made the foolish mistake of not being able to understand bankruptcy laws. I am sorry you are incapable of doing that.

Again you are making illogical presumtptions as to my capabilites based on your own weakness of fact and emotional need to attack me personally. I undertand bankruptcy law quite well thank you.

...and now that its harder many people don't even bother trying, so they just go ahead and enter into long term default.

Again you present statements of opinion as though it were fact. I anxiously await your supporting data.

reply to post by jackinthebox


And you know how that everyone just started charging up their cards? Do you have any proof that default rates only mean recent increases in credit spending and are not the result of a long-term trend? I apologize for stating something that is commonly known as fact to be fact. Here you go, I'll spoonfeed you:

Calem, P.S. & Mester, L.J. (1995). Consumer Behavior and the Stickiness of Credit-Card Interest Rates. The American Economic Review, 85(5): 1327-1336.

This article provides evidence that credit card interest rates lag behind the state of the economy: as interest rates rise and fall, credit card companies respond in a lagging manner, but when they do, consumers continue with their spending habits regardless of changes.

Gross, D.B. (2002). Do Liquidity Constraints and Interest Rates Matter for Consumer Behavior? Evidence from Credit Card Data. The Quarterly Journal of Economics, 117(1): 149-185.

This article shows that consumers increase spending patterns during periods of plentiful credit (the past few years), but do not reign in those habits when the supply of credit changes.

Now, where is your academic peer reviewed data to the contrary? I'm waiting.

reply to post by LightinDarkness


This is exactly my point. Borrowers did not suddenly go on an irresponsible spending spree. The economy has faltered, and Americans can no longer afford to live in the lifestyle to which they have become accustomed as a result. Thank you.

reply to post by jackinthebox


Wrong again. People are defaulting because a low interest rate environment allowed them to buy what they could not afford. As the evidence shows (read the articles), this is why most Americans are now defaulting. They bought optional items they could not afford in a interest rate environment where such luxuries were affordable, for a time. Interest rates sky rocketed as the economy heads towards a recession, and they must now default for buying things they did not need and could not afford.

This is not everyone, of course, a few people got into their debt due to medical bills or an Act of God. But this is not most debtors, and the evidence shows that.