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Credit Card Abuse - The American Horror Story!
It is the modern American horror story,
but one now being seen increasingly throughout the world...
A successful middle class consumer,
with a good income and excellent credit history, enters
middle age knowing that it is time to start saving for
retirement. Then something unexpected happens. It may
be good news, such as the birth of a new baby, or it
may be bad - an illness, a family emergency, a divorce...
None of these events by themselves,
are usually enough to destroy anyone's financial future.
But, they can trigger credit card abuse and eventually
lead to significant financial hardship. What may have
been a problem for only a few people who couldn't "handle"
credit in the past has become an increasing problem
for many people.
It has become quite common for the middle-aged,
middle class consumer to have many bank and store charge
cards at any given time. And most, if not all, are carrying
large balances. In 2005, the average consumer had nearly
$10,000 in credit card debt, or even double or triple
that if loans for cars and other large expense items
are included. Worse still, in 2005, the credit "rules"
were changed...
First, many credit companies have now
doubled the minimum monthly payment to four percent.
In itself, this is not a real problem for most consumers.
Most cardholders probably pay this anyway.
Second, with no usury laws to stop them
- and despite inflation rates from 1-to-3 percent -
credit companies have pushed interest rates for "problem"
cardholders to 30 percent or more.
Third, if there is a problem with any
creditor, such as a late payment, other creditors have
the option to cut their card's credit limit (often to
the current balance), double or triple the interest
rate and cancel any "special offers".
The "Six months no interest"
or "Zero interest on all balance transfers for
one year" are attractive offers. But the slightest
infraction involving even one creditor and the next
bill may include full interest charges - from the start
of the offer.
It only takes one creditor to turn someone
with a decade of good credit into a "problem"
customer. A bill one day past due may cause an account
to go up in interest, down in limit or both. And this
can spur other credit card companies to follow suit
meaning that in a short time all your credit cards could
be charging a high rate of interest, over-limit fees
and even late charges when your bank account is hit
by the high rate of interest.
Now a double minimum payment becomes
a serious problem, as that original $10,000 total debt
begins growing by $250 a month in interest, plus up
to $500 in accumulated over limit fees and another $500
in possible late fees!! You can begin to see the problem...
And what about bankruptcy to solve the
problem? Not any more. As of 15 October 2005, it became
virtually impossible for an American consumer to declare
personal bankruptcy. At least, not without a lot more
cost, a lot more time - and the certainty of losing
everything, including home and car.
The moral of this story is this. Take
another look at those colorful bits of plastic in your
wallet, the ones offering those great promises of "easy
payments" and a better lifestyle. See them now
for what they really are...Viral monsters, ready, willing
and able to destroy the cardholder's life in the blink
of an eye.
Next time, think about handing the sales
clerk some colorful cash instead.
1howto.com
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