I was talking to a relative about this a couple of weeks ago. He used to work at American Express and still has plenty of contacts inside the company. They're seeing a frighteningly large number of delinquencies from their platinum and black card holders. I'm not sure of the numbers but he said that he was given the impression that the issue was rather large. and growing.

A few years ago I paid off all of my card and cut them up... and they haven't let me alone since... its really insane.

A friend of mine signed up for a card online, mastercharge through some bank in Maryland... well they promised him $500 credit line. When he called up to activate it he was told that he would have $450 in fees right up front and only $50 in credit. He hung up the phone and they started trying to bill him anyway.

It is these predatory practices, just like the predatory practices in the mortagage business that have made such a mess of things.

This friend, had to fight them tooth and nail to get them to stop billing him for the fees + interest. He finally had to contact a lawyer and threaten legal action to get them to stop.

Eliminated a good (figuratively speaking) $15K in credit card debt between my wife and myself 3 years ago and have shredded every credit card offer since. My one card I destroyed I'd had since my Freshman year of college. I kept paying the min. through college and they kept raising the limit and it was at, like, $8k limit when I graduated (and the balance was close to the same, unfortunately).

I basically have lived without using credit cards for 5 years. When we decided to eliminate the debt we canceled all the cards we had and through a debt counseling service we were able to freeze the interest on them and pay the cards off in leaps & bounds. It wasn't easy, and I've been tempted to get a card just for emergencies, but in the end I've been glad to be free of the shackles they present.

...now if only I could crush those student loan bills as easily.

IMO, the only thing that has kept credit card companies form collapsing so far is their high interest rates. Let's face it, when you sit down over a pile of monthly bills and realize there's too much month left at the end of the money, who gets to wait? Food? No one wants to go hungry, although it can usually be trimmed. Electricity? Hardly. Water? Nope, absolutely necessary. Gas? How else do you get to work? Car payment? Nope, sorry, need that to get to work too. House payment? In a market where foreclosures are the norm, that's ridiculous.

You are left with one last pile of bills, the unsecured debt, where nothing gets immediately repossessed: the credit card bills. So you have a higher default rate, which is used to justify the higher interest rates. The higher rates mean more profit for the company in god times, and the ability to handle larger default rates in bad times. Now, however, in terrible times, the default rate is climbing as more and more people are finding themselves sitting down to that pile of bills that there is not enough money to cover.

I just heard this morning on CNN some advice from a credit counselor, who stated that should the Fed cut the interest rate, consumers should watch out for changes to their credit card accounts. Specifically, she warned that companies may switch variable-rate agreements to fixed-rate agreements in order to minimize losses form dropping interest rates! Oh, now this is a great idea: just let the company pick whichever arrangement they want to use when they want to use it. She also mentioned that they are required to allow an 'opt-out' option period prior to the change, so if anyone has credit cards and is reading this, read the fine print on every single piece of paper you receive! Falling interest rates favor the consumer in variable-rate accounts, so as long as interest rates are dropping or expected to drop, keep the variable rate. If you wish to opt out to a more secure fixed rate, wait until the interest rates fall, then change over.

I am amazed that companies are allowed to even do this. This should not be an 'opt-out' option, but rather an 'opt-in' option.

TheRedneck

Originally posted by grover


A friend of mine signed up for a card online, mastercharge through some bank in Maryland... well they promised him $500 credit line. When he called up to activate it he was told that he would have $450 in fees right up front and only $50 in credit.

your friend actually and seriously thought that volunteering their social security number, home address, telephone #, & a brief credit history...
to be awarded a 'free lunch' access to $500.00 credit was real & had no strings?

? Where's that Robot that always told Will, of Lost-in-Space: .... 'Danger...Danger...Danger...'


~~

Oh,
'my name is [blank], i've been credit card free for 11 years..'

...and it was difficult to not have the 'emergency use only' crutch,
which is a rationalization which can defeat ones 12 step program

I wish the cards would collapse lol

what they cant make it on 20% interest.. that's ridiculous... What a shame... let them fail!!!!!!!!!

I have one credit card with about $100 on it. I usually pay it off but then I use it again because some transactions are just easier with a card.

So a credit card crunch isn't going to hurt me much.

Credit cards the way they are used today are a really bad idea anyway. There is a lot to be said for the old fashioned lifestyle, where credit was only used if you were starving.

However, since there is a pretty good chance that we will all be starving soon, I guess this could be a problem.

I have a neighbor who makes about $60,000.00 a year. They have two homes, a Hummer and a second vehicle, are currently totally remodeling home #1, have already installed new windows and a new air conditioner, are planning some new landscaping, and buy everything they want, whenever they want. I can only guess that they owe like 10 times their net worth and have to take out cash advances on credit cards to pay their other credit cards. Crazy. But even crazier is that they choose to do this rather than change their lifestyle. And they have KIDS! What are they planning to leave for them? I don't know.

My husband and I chose to be poor so that I could stay home and raise our kids. It has been a big sacrifice - we get to watch everyone else we know buy new cars, fix up their homes, go on nice vacations, etc., while we drive a beat up old pickup truck and our house falls apart. In our nice suburban neighborhood we look like the "bad seed". People probably drive by our house and think we are some kind of losers, but they are wrong; we are good, clean-cut people who choose to live within our means. Most people today, at least in America, have NO IDEA how to do this. What happens to them when the credit runs out? They have to live in a run-down house and drive a beat up car.

Speaking from experience . . . if you've got access to credit cards and lines of credit and you get them up over 60 percent of the limit, you're toast as it is a tobbogan ride to hell down the side of a cliff from the interest rates.

Then, miss a payment or two and they jack your rate.

Then it's fiscal purgatory for you.

When that happens . . . either file for bankruptcy or petition the Fed for 'bank status' so you can get some of the bailout money because those are the only two things that will save your arse.

Sounds like that's what the credit card shylocks are up against. What a shame that they're powerless due to the unsecured nature of credit cards from exacting their pound of flesh.

It is a shame, though, that they'll get 'bailed' either directly by the government or indirectly when one of the already bailed out buys them for pennies on the dollar and then makes a freakin' killing on the vig from those who do continue to make their payments.

Wanna have some fun . . . let's all unite and refuse to pay our mortgages and credit cards . . . seriously, en masse . . .

What the hell could they do THEN?

Talk about a violence-free revolution!

I'm going to point something out that should have been obvious.

When the CREDIT CARD companies demanded to double peoples payment bills a while back, the entire population of consumers that were fueling the economy was swamped like a row boat. They now had lost every bit of monthly spending money because people had budgeted for the exact amount of their bills. When the could no longer make the payments on short term credit they began to allow defaults on long term credit. (home and other loans) They figured dropping the largest payments in default would give them the best chance to make it.

This is the root cause of the financial crises going on right now. it was Caused by greedy credit card companies and trickled up when the paycheck no longer payed the credit card bills. Lets say the credit pay was 1500 a month on short term. And there was a 600.00 surplus of cash. They doubled the card payments to 3,000 and now the consumer was short 900.00 a month. The decided to default on their homes and move into rentals to free up cash again.

The entire economy was destroyed when the legislation to pass the laws that allowed it was drawn up. Those people are the criminals who took kickbacks from the credit companies and caused the economic failure.

And it was voted on and signed into law by whom?

the biggest outrage about this is the cerdit you were given was based on risk and the banks accept a risk when they loan you the consumer money , it would be great to go to the race track and drop a grand on some ponies and then loose and say to the government, "hey i lost money on the ponies, i need a bail out" its the same thing these companies make money by risking there money.. that how they make money, these bail out are eliminating all risk to these companies.. its a huge sham.

They can make the most stupid mistake and the tax payer ends up wit the bill for there stupidity in putting someone working in McDonolds in a half million dollar house and 10k on his credit cards.

I love it how in very fine print that if you take out a cash advance and default by 1 payment the interest rate goes way up, I have seen it on some cards as high as 24.5% ! That is a freakin rip off and now way in hell will I get another C.C. One is enough!

Lord, I hope so! I would love the opportunity to pay back my credit card debt at pennies on the dollar...especially after they have gotten so much money from me through their outrageous interest rates. Maybe the government will come up with a bail out package fro the credit card compaines and they will pay off my debt for me!