Credit card defaults are rising quickly, and the banks are rushing to keep ahead of the game — but by raising payments for already strapped consumers they may be adding to the wave of foreclosures.
USAToday says:
The growing problem is reflected in cases such as that of Dennis Spaulding, of Corona, Calif. He bought two last-minute plane tickets for his father's funeral in 2006, a purchase that increased the amount of credit he was using and made him appear riskier to banks. The result: Banks raised the interest rates on four of his credit cards — to 24% and higher — doubling his monthly payments to about $2,000.
That led to a financial spiral that has put him on the verge of losing his home and filing for bankruptcy. "I see no light at the end of the tunnel," says Spaulding, a cabinet designer.
USAToday says that according to the bankruptcy lawyers and housing counselors that they interviewed, many people are coming in for help with good mortgages — and bad credit cards.
"There's a misconception that everybody who comes in the door has a bad mortgage," says Doris Latorre, national director of quality assurance for Acorn Housing, which counsels troubled homeowners. "There are people who have good" mortgages but get into trouble with other loans when their banks change card terms, she says.
Rate increases and dramatic reductions in credit limits can push borrowers deeper into financial distress, rather than encourage them to pay their bills, says Robert McKinley, chief executive of CardTrak.com, a card research site.
The Federal Reserve is expected to issue a new rule about credit card rate increases and other aspects of the industry — but some critics are still pushing for a law that would protect consumers from rate increases on existing balances.
For those of you concerned about this trend, it seems clear that your overall debt utilization ratio (how much credit you use compared to how much available credit you have) seems to be the main thing that banks are looking at right now.
What do you think?
Changing credit card terms squeeze consumers [USAToday]
(Photo: Nrbelex )
Sounds like this guy was able to swing the 1k but adding a extra $1000 bucks to the monthly bill was a bit much. Again we need more details to be sure.
]]>@SonicMan: Yes, assuming that for some reason you don't work a full-time job that pays at least part of your health insurance. And honestly, I've worked too many crappy jobs in too many of the most broke cities in this country to buy the "I can't get health insurance through any jobs anywhere ever" excuse. That's just your entitlement showing.
]]>@AcceleratedDragon: omg, I love you.
I drove a 9 year old car until it was an 18 year old car. Paid $3000 for it when I got it. Did it look like a POS? Absolutely. Did it get me from point a to point b? Absolutely.
When I was broke--yes, $40K in the hole at 20 with no college degree or home to show for it--I pulled myself up by budgeting like a bitch. Baked my own bread (it's actually easy and flour is cheap) and salvaged seeds from produce to plant in the spring in pots in my little apt. in Baltimore. Hell, when I only had $30/wk to spend on groceries, I managed to feed myself and my cat.
Point being: it's doable. It's not pleasant, but it's doable. Did I have to give up on my dream of being a travel writer, even though I was very good at it and hired freelance at the time I went broke, and become a wage slave? Yup. But am I still broke? No. I have a car and health insurance and can (and do) write freelance on nights and weekends. Not living the dream, but I'm not broke and bitching about it either.
There is no excuse but entitlement issues.
]]>@AsherDadgits: And you or your wife's profession is what that your premiums are that high?
]]>Yeap,they can regulate the credit card issuers just like the SEC regulated Madoff .
I understand these banks are taking A risk on an unsecured loan/credit card even using the word 'risk' to justify their fees,penalties and just plain old greed and price gouging .But DUH,WTF do they the 'risk' becomes when you raise someone's rate and increase minimum payments .
]]>Actually, if you are able to pay off the card in full every month (so you don't wind up paying the interest) while still putting money into savings and your retirement accounts, then, you can afford it. I used it as a way to carry over between paychecks so that I wouldn't spend the money I put in the bank. Once the second monthly paycheck would come in, I would pay the bill in full and not even touch the money I put in savings. This forced saving through automatic transfers allowed me to save 3 months in living expenses until I lost my job and had to pay COBRA, etc. (Those three months of expenses come in handy, in those situations, but I didn't think to include the cost of COBRA when I was considering what I would need, and it adds up quickly.)
]]>I would really like to see credit card reform. I have one credit card with a balance of a few thousand dollars, due to medical debt. I'm a middle-aged woman receiving Social security disability after working for years. My husband and I live in a dumpy apartment because we KNEW we couldn't afford a house and the lifestyle that goes with all that.
I would appreciate an interest rate deduction. I accrued those bills and I'm willing to take responsibility for them, but a little help would be nice.
Sometimes I feel as though I'm being punished for being responsible and NOT buying stuff we couldn't afford.
How to I figure out what the interest is on my existing balance? I recently called my credit card company and had them lower my interest rate to 9.5% from 12+%, but I'm not sure if that is the rate for the existing debt or only new debt.
I'm close to 7K in credit card debt, and I have student loans as well. (I'm not so worried about the student loans.) I transferred about half of it to a card where I don't have to pay interest on balance transfers for one year. (I didn't realize those existed any more!) I will make payments on both this year. Still, the interest on the 3.5K left in debt is still much more than I want to pay in a month. Cable wouldn't be that much more expensive than the interest, and I haven't had cable for years because it is too expensive.
FWIW- Most of the time (certainly not always) I consider myself to be a conservative spender. Most of the debt is related to losing my job last year, the related move to a cheaper apartment, the costs of storage supplies for the tiny place, prescription drugs, counseling appointments that weren't covered by insurance, and basic living expenses that were difficult to pay while I was on COBRA. Two years ago, I paid off my credit card every month, only carried student loan debt, and had saved about three months worth of living expenses.
70K in debt absolutely blows my mind, and I can never imagine carrying that much debt, but we don't know all of the circumstances for this guy. It said he went to his Dad's funeral; he could have been paying some of his medical costs as well, and those can add up quickly. In addition to raising the interest to an unsustainable amount, they could have also increased the percentage of the bill required for minimum payment. Why he didn't call the company and try to negotiate before it got this far out of hand or find a loan instead of using his credit card and letting it get this bad in the first place, I have no clue.
]]>Why didn't the guy in the story just reject the rate increase? He pays off the balance at the old rate, gets a new card. No fuss, no muss.
]]>I got that letter from USAA too. The rates on new car loans was 2% more than for my credit card, now the interest rates will be equal.
Not that I'm buying a new car anytime soon, I just thought it was interesting that putting a car on a credit card was a better deal for a while.
]]>some stuff really just does happen beyond what can be reasonably prepared for.
]]>I've met people who consider themselves "conservative spenders." I've met them at Disneyworld, while we're paying cash and they're flipping out the credit cards. I've met them at casinos, where I'm playing my mad money and they're playing their last $20 of grocery money. Funny thing is, I don't consider myself a conservative spender. I spend wildly when I have the means and reason, after savings and bills are paid. Based on my experience, I view others who consider themselves "conservative spenders" very suspiciously.
]]>I think the problem often isn't the having of kids, it's the having of kids and the failure to cut back other lifestyle expenditures or to accept the modestness of the material goods that one can provide them with. Pick one: kids or electronics.
]]>Also, as we've discussed on Consumerist before, some of those "studies" about credit cards vs. cash are problematic. Many aren't very realistically designed or abuse statistics to draw a certain conclusion. And it's not necessarily true that spending less is a good thing. Sometimes people NEED to spend on something, and don't have the means to do it RIGHT NOW. If you needed a medical procedure and didn't have the cash for it, it wouldn't necessarily be a good thing that your spending dropped because you delayed it.
]]>(This is all assuming you don't have savings, which a majority of people DON'T have, sometimes through no fault of their own)
One would move out of their rented apartment and be put on the 3 year waitlist for government housing (that's the length of the waitlist in my area).
During those 3 years, you would need to find either a source of income, or someone who likes you enough to take you in. If you don't have parents anymore, or they hate you, and you don't have a very, very good friend who doesn't mind you living with them for 3 years (or until you find a job) you are homeless and will need to visit a hostel at night.
As far as food goes, you need money for that. If you lose your job due to a fault of your own (ie: Being fired) you will need to go on welfare. It can take months for that to happen and the government doesn't backpay. If you lost it due to no fault of your own, you'll need to go on the pogey. This normally takes 9 weeks to process, during which time you also have no income and again, the government won't backpay.
While you'll be without money for quite a while, you're better off on welfare, as that will step your name up the housing lists. In that case it can take as few as just 12 months to be given housing.
Once you are on welfare, you'll have enough money for food, however, you won't have enough money for rent proper--however, you will have enough money to rent a room. Unfortunately, as the government must find you this accommodation, and they also must announce who they are, all of a sudden the rooms are "unavailable". Darn! Nobody wants to rent to a welfare deadbeat. These "benefits" aren't available while you are on the pogey, which for someone making $8.75 an hour pays something like $800 a month.
The question is, during the 2-3 months you're without food and shelter, are you willing to live on the street during the day and eat at a soup kitchen? Or would you rather run up your credit card a few thousand dollars that you can't pay back, since pogey won't pay enough, and you'll be lucky to pay your hydro bills on welfare?
Of course, again, during this time you will have no place to store any possessions at all outside your own pockets. Someone who loses their job at the wrong time who refuses to rack up debt will lose every single possession they own rather quickly, and will likely rack up debt trying to throw them away if they are unsaleable, which the majority will be.
Pick your poison.
]]>But I have to say, consumers are just as much a part of the problem. How the hell do you run up $70K in credit card debt? I would guess that in the majority of cases by not being able to separate wants from needs. I can't believe the amount money people spend on f'n cell phones. Several hundred for a new one, then sign a two-year contract to buy unlimited minutes for $100, unlimited text messaging for $20, unlimited Internets for $30 and now they're paying $150 so they can update their f'n facebook from anywhere there's a signal. In 2 years you'll spend about $3500 total -- $7000 in 4 when you get the new "must-have" phone and re-sign the contract.
And then at home we gotta have digital cable with 300 channels for $100+ per month, $25 for DVR, and super cable internets for $60, oh plus movie channels for $15. And throw in cable VOIP which works about 50% of the time for good measure and $30. There's another $2760 per year; $11,000 over 4.
Oh and gotta have a new car. Once it's 3 years old it hurts our image. We trade before we've even got half the payments made on our old one. Which means the registration and insurance are through the roof as well. Living close to work or using mass transit is for losers. It's gotta be an SUV, so it was costing something like $9,000 a year in fuel before the recent oil price collapse.
I haven't even gotten to the luxury apartment or the fancy house...
]]>"They bought their tickets. I say let them crash!" - Counterpoint Panelist, "Airplane".
]]>(Why yes, I did spend about six hours straight on the phone playing travel agent for a dozen elderly relatives all at once when my grandfather died.)
Unfortunately, emergencies are more expensive than plans are.
]]>Talk about a NINJA loan...
]]>If there were not a large group of financially irresponsible people who somehow thought that they were entitled to home ownership regardless of their meager earnings and savings, there would be no problem here. A child could understand the simple math, or at least know to avoid entering into an agreement where they did not understand the math, but somehow the foolish adult gets a pass on this. Why wouldn't you include the borrowers along with the banks in your formulation?
As for the fix: am I the only one who thinks that the bailout was the biggest sub-prime loan of all?
]]>But there's still a default rate of 29.99%. To hit that I have to be late or over my limit twice within twelve months. I'm basically fine with that provision, too- but what makes me annoyed is there's no provision for getting the original rate back once you've triggered the default rate. And of course, the end of the fine print says "All terms, including APRs and fees, are subject to change at any time for any reason." So I guess it's a fixed rate card to the extent that I can trust on a bank's goodwill..
So I guess you were right. There is no such thing as a fixed-rate credit card.
]]>Off topic, I guess, but can someone explain to me why some people spend so much time shopping around for the best price on something... only to stick it on their credit card and make minimum monthly payments? I'll never understand this.
These people feel good that they got the $1200 LCD TV for only $999, but ended up paying over $2000 in the long run.
]]>I'll also differ from you and johnva on the child issue--I don't see it simply as an expensive luxury, and it can be really tough to find a job that'll bring in money that covers the cost of child care, so it can often be cheaper for one spouse to do child care instead of adding to income. (The taxes seem on a par with what most of us probably pay, though, so I don't think he's being disproportionately hit there.)
I do think that you can budget to keep yourself from relying on an increasing credit card balance at 70k, but that it's tough to do that in some areas of the country. However, I think that's a far cry from the claimed 250k.
]]>a few things to consider though, if your job tells you to move to NYC to keep that job, you move. If you can't afford to live in NYC (which most of my friends don't) you find a place not too far away (for some its CT)
@AcceleratedDragon: I shouldn't have to justify my beliefs, if you don't agree with them thats perfectly fine. You also shouldn't assume things about people (which is hard to do given that it's the internet). I am growing up (I won't claim to be grown up yet, im too young!) but just for the record: I do work (but as a server so it doesn't really count in my eyes, lol), also I didn't choose to have a kid my terminally ill sister chose for me to be the legal guardian of her son (see lifes a bitch sometimes!)
My situation is somewhat unique, but so many people have stories, ya know. That's why its hard to gauge who people really are, considering how little we know about one another.
]]>I here that all time time. "it's so expensive to live in NYC/San Francisco"
Is this Soviet Russia? Do you need the Komissar's permission to move to a cheaper area?
It's a free country, move to a cheaper area. You will probably get paid less, but you will keep more of your money.
You pay a premium to live in premium areas. You're not a bohemian teenager anymore, you got a wife and kids. Time to grow up and act responsibly.
Hey, I'll admit it, NYC offers so much more than my town. I enjoyed my visits. But I'm a realist. I can't afford to live there, apparently neither can you.
]]>@sven.kirk: It depends. If you develop a medical condition and need expensive meds. Its either run up the cards or Die. Personally, I would run up the debt.
]]>Eliminating the remaining credit would be a move I think anyone would prefer, or possibly giving the consumer a choice between the two. Someone else mentioned a higher but locked rate. That's what everyone wants, but no one gets it: the credit market has engineered the opposite product. I bet if the customer were to have contacted Bank A before he took out a second line of credit he wouldn't have gotten a straight answer about Bank A's response. The whole thing is designed to get people like this man exactly where he is, and I think that needs to change.
]]>@sasper: 30K is not really that much. I Have tons of Credit Cards. I could probably payoff my home with Cash Advances if I had to.
Also, this was not for (ipods, TVs, dinners, ect) This was for a car. If I ever lost my job, the unsecured car debt is better than a car loan. They cant take the car this way.
If I did lose my job, I would probably try to payoff my house with Credit Cards and just ruin my credit, but not lose anything.
]]>"Self.... why am I saving in a savings account with 3% interest on a good day and paying credit cards with interest between 5% and 14%?"
So I cashed in some savings and paid off ALL of my credit cards (it was like 6K worth, maybe a little more)
Funny thing was that when I looked at that handy debt snowball spreadsheet Consumerist posted, it told me I could pay them all off by September 2010. But I paid them now. Yes, my savings hurt because of it... But I was paying out approx $1000 a month in CC bills anyway (payments, not paying off) so with them paid off, it's only 6 months to recoup that "loss"
Win.
I think people need to learn to be responsible for their actions. I've read of people on here screwing up and being in over their head in CC debt... and paying it off.
]]>Why are credit card companies allowed to jack interest rates up overnight?
Let's say I consistently pay off my credit every month. One month though, the mail is late or goes missing, and I end up being late on a payment. At their discretion, the credit card company can waive any late fee and leave my rate as-is. OR they can jack the rate up to 30%, ensuring that any balance I had on the card is now much higher and potentially more difficult for me to pay off. Compound that over time and you have situations like this one.
Instead of immediately increasing the rate, why not leave the rate alone (at first) but lower the credit limit? Credit card companies are much more likely to get their money back if they don't pile on the debt. They DO want to get their money back, right?
]]>Anyways, me and my wife and our son live off of a $70,000 salary and we barely get by. We have some credit card debt but not much. We get screwed in taxes though ($700 every two weeks), so when people hear about how much we live on they think weve got it made, when in fact we dont. We work hard and thats what got us here, but taxes, high cost of living, utilities (GAS, ELECTRICITY, INTERNET, etc) make it hard to stay ahead.
I guess I should have said earlier that you can make great money but still be relying on cc (to some extent) because everything is so damn expensive.
]]>Unless you've lost your job, have 5 kids, and have absolutely no cash in the bank OR have major medical problems w/no insurance, I don't understand how in the world you can accumulate $70k in credit card charges. That buys one helluva lot of big screen TV's, iPods, Xboxes, jumbo SUV, stainless steel refrigerators, etc. etc. I'd poop my pants if I had even $5k in rolling credit card debt. The interest would be stupid! Bastards like this will walk away from their debt through bankruptcy and leave everyone else holding the through higher rates, tighter credit, etc.
He needs a good swift kick in the ass and his Mommy to take away his credit card, if you ask me.
]]>@sean98125: I think the bigger problem is that people are using credit cards after they run out of their negative savings while unemployed (and to be fair, unemployed longer than historically normal). First you drain the savings, then max out the card, then default the card, then foreclose on the house. I love how USA today just jumps to conclusions.
]]>ALWAYS pay the mortgage FIRST, followed by the utilities, lease or payment on a car if you're unlucky enough to have one, followed by a reasonable BUDGETED amount for food, medicine, and school supplies.
THEN pay loans, then credit cards. CCs go dead last, because other than hurting your credit, harassing you, and after a looooonng time in collections possibly suing you (and garnishing you for FAR less than you owe, as long as you bother showing up in court), they can't hurt you -- but ONE missed mortgage payment can lose you your house! THE MORTGAGE ALWAYS COMES FIRST!
...Now if only one person was saying *that* for every one collections-agent lying to people about going to jail or losing their home over credit cards...
Counselor hat off.
]]>Well, one thing to remember: taxes. If you live in New York and make $250k/year, you're paying $100k+ in taxes, so that's 40%+ of your income right there.
]]>Because for every one person saying what you're saying, there's about a billion dollars worth of professionally-designed advertising in every imaginable public space, screaming that it's free money.
Who do you think is louder?
]]>What happens if a customer has the income to support a $5k credit line, so bank A gives that to them. They promptly borrow $4k. No problem so far.
Customer then goes out and get a $10k credit line from bank B, and charges $8k on that. All of a sudden, customer's got $12k of debt, which is way above what bank A thinks is safe.
So, this is a way in which the customer has become a much worse credit risk than he was when bank A gave him credit, and bank A had nothing to do with that. Bank A could eliminate the available credit on his card, which would limit their exposure to $4k (not the original $5k potential), but that's about it - since they can't "call the loan" and force the customer to repay, all they can do is jack up the interest rate in the hopes that this pushes the customer to pay bank A off _first_.
]]>Oh, you get the BLAME THE VICTIM PRIZE, though, for getting in there in less than the fifth comment! Go you!
]]>@jusooho: I have about 30K in credit card debt. But its mostly 2.9% or lower. Bought a car that way a few years ago. Still paying it, but using the card was lower that the banks rate.
2.9% should be good for the life of the loan now, but I too would be screwed if the back somehow was able to change the rules and make it 24%.
And the problem is that it's really hard to get off of it once you're on it, especially in this economy. Downsizing the house, unloading the cars, etc., are only effective if you can actually find people to buy the stuff and if you can do it without relocating so far you need to find a different job; I would also imagine the people in this situation have children, who are even more difficult to sell off.
Though I too am unclear on how somebody bringing in 250k a year can't make ends meet monthly unless they were overoptimistic--can you explain? Even a million-dollar house takes less than half of that in annual payments, and that wasn't requisite anywhere even at the height of the bubble; I'm having an even harder time seeing how the remaining $10k a month doesn't cover food, insurance, utilities, transportation, etc. even if we're talking four people. Is this perhaps a family that needs to rethink their commitment to private school for the kids?
]]>I know that some would argue that the credit card companies should be free to operate as they want, but this is a patent example of a lack of due diligence. If they can properly estimate risk, no one's rate should ever rise (provided they paid on time etc.). If they can't, it's time for intervention.
]]>@MadameX:
I say pay the car first... as per the Porsche Club motto, "You can sleep in your car, but you can't drive your house."
Truth be told. My friend is an excellent example of that. This person managed to rack up over $500 in charges and fees on their Old Navy credit card. They would barely pay the minimum balance and interest, but let the balance sit. Sometimes, they wouldn't pay at all, and Old Navy's collections hounds would constantly, um, hound them. I finally got sick of hearing about it and offered a bailout of my own. The card was paid-off, but Old Navy had already shut it down.
That was over two years ago. Before the Financiapocolypse hit, the person tried applying for a couple of credit cards; both designed for people with bad credit and one even carried an annual fee. They were denied for both. This person has no credit cards and a terrible credit rating. I tried my best, but it seems I cannot help the situation.
]]>It's REALLY hard for me to feel sorry for anyone making $250K and having CC debt. I can see someone making $30k a year having trouble living within their means, but $250K? You are always defined by the decisions you make!
]]>"it's called living"
I call bull@#$%.
Yes, a lot of cc debt includes medical bills not covered by their insurance. But most are over spenders.
1) high cost of food-myth
eating out $$$
eating prepared meals $$
eating low costs foods like beans, lentils, eggs and chicken ¢¢¢. It ain't fancy, but WILL come in under budget and well nourished.
2) utilities-myth
you don't NEED a cell phone "but my job..." if your job NEEDS a cell phone, your boss will provide one. IF self-employed, get a better job where you can afford a cell phone. saved $30-$60 month
cable/satellite bill get rid of it. you save $55 to $100 month.
3) get a less fancy car.
"WAAAH, but I need a reliable car"
I drove a 7 (later 11) year old honda civic for 4 years. I only had one "major" breakdown (CV joints) and only a few minor problems. (alternator belt breaking...)
You can find a reliable car cheap.
You can live within your means, but it's NOT easy.
"but I work hard, can't I enjoy life a little and splurge once in a while?"
Sure you can, but don't whine about credit card debt later m'kay?
There isn't anything in the Constitution (or the Bible) that entitles you to "nice things" if you work hard.
@OmniZero: One of the things these companies do is take one late payment on one card, and if there are multiple cards in the same name, all of the companies raise the rates. It could be something as innocent as the CC company moving up due dates (this never happens...) or someone screwing up and not having the funds available, but this then compounds the problem expotentially.
]]>That being said, while I understand that "life happens", someone is using their credit card monthly to get by is in an unsustainable situation. And I have zero sympathy for anyone who makes $250,000/year and can't get out from under credit card debt. I understand that it's hard, but they can sacrifice their standard of living for a while just like anyone else, by downsizing their house, delaying having kids, etc.
]]>@Jevia:
No, he wasn't originally "spending $1,000 a month on his cards," he was PAYING $1k a month on his cards. Using a typical 2% minimum payment, that could mean he had ~$50k in debt on the cards.
]]>But what really boggles the mind is how someone who can "barely" afford 2k a month in credit card payments gets into 70k in debt. That someone must be making at least 50-70k a year. But I would agree that if your rates increase, turning a 1k payment into a 2k payment, the correct course of action is to stop paying and screw the creditor. Call them up and tell them if the rates are not returned to where they were you will have to stop paying. See if they will accept reason. One would think they would rather get paid 1k a month, than have you stop paying if they up the minimum to 2k a month. Of course creditors don't always think logically.
]]>It's not those in debt's fault that our economy is bad, it's the banks that made those stupid loans in the first place. I don't trust the government to fix it, and I don't trust the banks to do what is right. So apparently we're all just screwed and hope you don't lose your (insert item here).
]]>I also agree that $70K for "emergencies" is impossible unless he did it in a really irresponsible and stupid way like using credit card cash advances for everything.
]]>It's one program I think should be required for graduation.
]]>That being said, its sad when someone gets put in a bind like losing a job. And then is put through it by having all their access to emergency funds, savings and debt, to get themselves back on track.
]]>Let him eat cake. He made his bed now he can lie in it. A fool and his money are soon parted.
[/cliche list]
Ya gotta have a place to live...
]]>Brilliant.
]]>In Dan's case, the credit card interest rate increased "doubled his payments to $2,000" meaning he was originally spending $1,000 a month on his cards. Still a goodly sum, but not completely outrageous. I carry a balance on my cards that I'm working to pay off. Not as high as the people in the articles, but more than a few thousand too.
I do hope that the new credit card rules go through and put some limits on the cards. They should not be able to raise interest on already existing balances, and they shouldn't be able to raise interest rates until one is actually late on their payments.
I also agree that High Schools should have a course on real life economics so kids don't get pulled into this kind of debt, especially while at college.
]]>I'm supposing you've never been out of work, broke, and needed to buy groceries and pay rent. Let me know how that works out for you, because it happens to everyone...
]]>I even know multiple people with credit card problems. They don't seem like idiots. I don't get it. I totally understand getting into trouble if you lose your job, but otherwise...what the hell is wrong with you? Who has a $2000 minimum monthly payment unless they're fabulously wealthy and put all their spending on their credit card?
As for cc companies raising the rate on existing debt - total BS. When you incurred that debt, you did so at a certain interest rate. They shouldn't be able to change it arbitrarily for existing debt.
]]>Same with McDonalds, its there but you don't have to eat there. I think that we are relying on someone else to blame and control what we do.
As for the article and using it for emergencies only? $70k in emergencies. That's a joke and he is lying to himself and whomever wrote the article.
Hell I replaced the engine in my Nissan and it was $4 grand. How much does his car breakdown or is he just driving too nice of a car and should downgrade to a Focus?
]]>One of our kids took a HS class for financial literacy last year. He knows more than most adults do now. Since things change constantly like what is the latest scam, teaching it in schools means we can also evolve the class content to tackle new bad ideas as the finance industry dreams them up.
I would have never imagined universal default would be a mainstream business tactic when I was in HS.
]]>Why would they be risking foreclosure? You pay your mortgage first, then the credit cards.
]]>They all contain them!
]]>Whoa, the banks must be SO happy to have destroyed the global economy while a Republican runs things.
]]>I like this rule. I voted yes in the poll because I was thinking of something like this. They can raise the rate on future purchases, but for them to raise the rate on my previous purchases doesn't make sense.
]]>Bad credit means losing your house that is paid to another bank? Crazy
Only if you stop paying your house off to pay your credit card bill. Which would be pretty stupid.
]]>basically fixes three problems unless you'd rather foreclose
]]>Now to take people with good mortgages and punish them that way for a credit purchase seems a little unreasonable.
I think too many financial things are intertwined. Bad credit means losing your house that is paid to another bank? Crazy. It's like Best Buy taking the TV you bought from Target because you couldn't pay Best Buy for a memory card you bought from them.
]]>This is definitely a place where people should learn the difference between secure and unsecured debt. For whatever reason, if you find yourself unable to pay all of your bills, the first ones to get ignored should be the unsecured ones. Pay off the house/car etc... (anything that can be repo'ed/foreclosed) and work to pay off your credit cards as you are able to.
I'm not excusing bad decisions and bad spending habits, but it should be a no brainer, you pay your house and you pay for food before you worry about other things (because let's face it a foreclosure looks worse than a few charged off credit cards)
]]>From the article: "Spaulding, 40, says he's a conservative spender who got trapped under $70,000 of credit card debt and high finance charges after 15 years of relying on his credit card for emergencies, such as car repairs"
Humans, we are very good at fooling ourselves.
]]>