Soaring Interest Compounds Credit Card Pain for Millions

snip> This year, credit card companies are changing the terms of their accounts at a historically high rate, said Michael Heller, an industry consultant.

As those practices spread, they are creating a rift between the lenders and some of their more lucrative customers, according to cardholders, current and former bank consultants and regulators who were interviewed for a joint report by The New York Times and "Frontline," the PBS documentary program.

People like Mr. Schwebel, who carry balances from month to month and pay finance charges regularly, feel they should be the favored customers of the credit card business, which is now the most lucrative segment of banking. They make up the profitable majority of the 144 million Americans who have general-purpose credit cards. To a degree, they subsidize the 40 percent of credit card customers who pay in full each month without incurring any fees or charges.

But increasingly, they say, what should be a warm embrace has turned into a painful squeeze as lenders employ new tactics to extract more and bigger penalties for even the slightest financial transgressions. In the last few years, lenders have more frequently raised customers' rates because of slip-ups elsewhere, like late payment of a phone or utility bill, or simply because they felt a customer had taken on too much debt.

http://nytimes.com/2004/11/21/business/21cards-web.html?hp&ex=1101013200&en=eb721dd0e2bf42cd&ei=5094&partner=homepage

You don't need credit even for the essentials. Don't buy a house - rent. And drive old cars.

Something always needs fixing. Grass needs cutting. Leaves got to be picked up. Going to be shoveling snow any day. Taxes are sky high. Shit. I am definitely considering selling and getting a condo. Or even renting.

You are right about the cars too. A am a Ford retiree and can purchase on the A-Plan which is below dealers cost and I still think used is the smarter way to go in the long run. Let someone else take the beating in depreciation during the first year or two.

Don

Owning a house is nice, but when you consider that you are the one that has to bear the burden then it becomes not so nice. And as far as the car goes, I agree buy an average car, take good care of it, and drive it till it completely falls....

Homes are way overvalued right now and unlike stocks you can't just unload them by pressing a computer key. If i had all my savings in a house right now, i'd be a nervous wreck.

Medical bills and items charged on credit cards are the # 1 and # 2 reasons for bankruptcy. The repuke congress will prohibit bankruptcy to these people for the benefit of its corporate masters.

MBNA, the biggest credit card company in the country, lent my congressman, Jim Moran, about $500,00 (I may be wrong about that figure, but not by much), and he backed a bill that contained a provision to specifically exclude credit card debt from bankruptcy proceedings. This was a couple of years ago, as I recall.

The bill never made it through intact, but Moran got financially clear to marry for a third time, and that one is the charm - she's got tons of $$$$.

And he's a Democrat .........

<sigh>

the big reason we have not seen a bankruptcy reform bill is election politics. Republicans don't wan't to be seen punishing the poor when the economy is bad. If there is an upswing, it is definitely on the agenda.

A second recent reason is that it would have to include a window of opportunity for debtors before it came into effect. That would likely translate into a massive upsurge in bankruptcies, which, needless to say, no one in the last congress would have considered in an election year.

I think the big dog vetoed it once. The provisions in the Chapter 7 section were positively medieval.

Bankers do Third World Countries as a whole, but each individual gets hit here. Nice racket.

:thumbsdown:

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"The results of the Cambridge Consumer Credit Index wildcard question
show Americans are dramatically split between the haves and have-nots.
The haves either don't use their credit cards at all or feel secure
about paying off their credit card bills when they arrive," said Jordan Goodman, spokesperson/financial analyst for the Cambridge Consumer Credit Index.

"The growing number of have-nots, however, are being forced to borrow to pay for their daily necessities, and are getting deeper into debt since they are just able to make minimum payments or sometimes not even able to make any payments at all," he added.

http://www.upi.com/view.cfm?StoryID=20040308-025133-2535r

large unexpected expense to start the debt ball rolling. Quit being so self-righteous, it could easily happen to you.

but I've known people who have had to charge medical expenses and groceries - you bet it can happen - and it's happening a lot.

You are in a bad financial situation.

I charge everything and then pay it off at the end of the month - works wonders for "points cars" - especially once that give good benefits. Some of my favorites are ones that give Gas credits, Cash back, - Heck diners club has one of the best points programs out there right now.

Infact if people paid off there credit card every month and used it as a secure way to pay (its the only insured purchasing program out there) they could get free cruises, free hotels, heck - free vacations every year or two and end up saving cash.

Just DON'T get the "Credit builder programs" - make sure you get good credit through better means as those cards have no incentive, HUGE "annual fees" INSANE interest rates and a pathetically low credit line.. 300-350 dollar credit card JUST ISN'T WORTH IT. One purchase even near 100 bucks can put you over if you miss a single payment..

For example on these "Credit builder" cards they give you a 300.00 credit limit, with a 159.00 "Service charge" that you have to pay down - if you go out and spend 100 and make one late payment then you get a 29.0 late fee, 50.00 over the limit fee and you get the highest interest rate they can shove down your face. that 100.00 charge becomes a 500.00 credit nightmare if you don't havet he cash to quickly pay it down within 6 months you will owe clsoe to 1200 bucks if you don't pay it off.

Its a game, however you CAN play it to win as long as you play within your means.

just about as convenient and depending on the institution don't end up costing an arm and a leg.

I have one credit card that I pay off every month. I received a notice last month that they were changing the fee structure, so if I use it for cash at an ATM I will be charged AT LEAST TEN DOLLARS PER TRANSACTION!!!

This includes using it at the Chase ATMs!!! (This is a Chase Mastercard)!!!

I don't use it for cash, but plenty of people do and they are gonna get a surprise next time they use it.

The point was almost made on page 2. Business is booming. The banks get a cut of every swipe of the card. They are making record profits. It's only smallcase fair to note that the corporate officers are pocketing record sums as well.

Are there Guidestar ratings for Citigroup? Didn't think so. So what's the point of trying to say that one group of consumers is subsidizing another?

And are there really two groups, or do people move from one group to the other as their life circumstances change? McGeehan noted at least one case of that happening. I suspect it's a little of both, but it's stupid to argue, in print no less, that one group is subsidizing the other. What purpose does it serve except to detract attention from where the money really goes?

The lenders didn't need to respond to this reporter. He's got them covered.

Eventually- and not too far down the line, IMHO- the entire house of cards that is the US economy is going to meltdown over the conglomeraion of practices like this- that suck money out of circulation in local economies. Added together with all of the other irrational economica policies of this administration- rewarding outsourcing, piling up massive budget and trade deficits- and all it'll take is a little hiccup- maybe a little bond market or real estate dive- and presto!

Time to collectively pay the piper.

possible.

I KNOW (from experience) that buying on credit is sometimes unavoidable, like when my car (which I --grumble, grumble--need to survive here in Minneapolis) suddenly needed $700 of repairs in one month. But I'm working on getting that balance down to zero.

And the lower my balance gets, the more eagerly the credit card company sends me "special offers" of "great deals" on junk that I have no use for anyway.

100 years on earth and poof -- dead as the dodo.

accounts for good. Only use my check card now. If I don't have the money I don't buy it, and only buy it if I NEED it. Means I have to save for things I want/need but I'm cool with that. Turns out everything they're trying to sell me is garbage anyways. I need none of that shit. Saved up $2k as a buffer for emergencies. I buy "thousand dollar cars" and drive them 'til they die (usually about 2-4 years).

My only current debt is my mortgage and my wonderful tenant offsets that tremendously. We are both "home" here and don't see ever having to move again. The mortgage I pay goes to build up my equity. I'm paying myself. Sure, I'll shovel the drive, gather up the leaves and mow the lawn. She (my tenant) loves to do it, too. I am quite blessed.

Now I can live simply and cheaply. I get offers all the time from credit card companies and I don't even open them. Rip them in half and recycle them.

card. it provides a buffer between you and your bank that protects you in a number of different ways, especially in cases of fraud.

And I agree with using credit cards as a "buffer" in certain situations, especially when purchasing anything online. I shudder at the thought of the wrong person getting ahold of my debit card #'s. The checking account could be drained before anyone's the wiser.

I try and talk to my family, they are up to their neck in debt. But, they don't care! you see, Jesus is coming to take them away next week...

The trouble is that they have been saying the same shit for the past 20 years!

They are totally convinced that Jesus is gonna rapture them, suck em up into the sky and into Heaven. They have said this same crap for the last 20 years, ever since they got conned into the Assemblies of Gawd!

and all of us Gawdless Immoral Democrats gonna be left behind!

when you have lost your job and gone through your savings, as a number of people have and can't find a job! and you need to fix your car or plumbing in order to keep looking for a job, or charge a Doctor's visit because you lost your health insurance , what are you supposed to do?

cards debt again. At least that might help somewhat.


Alternatively, people may just walk away from the debt; most of its
not secured by any guarantee.