Knowing that new rules take effect February 2010 that will restrict their ability to raise rates on existing balances, credit card companies are rushing to raise interest rates on existing balances for the vast majority of their customers, even those with excellent payment histories. As a result, credit card holders who may have been paying 9% on their credit card balances are now having to pay’% or 29% or 39% or even more!
Credit card companies have long been able to raise a customer’s interest rate, even on an existing balance, at any time and for any reason or for no reason at all. In other words, just because they can. The Credit Card Accountability Responsibility and Disclosure Act of 2009, which was passed by Congress in May of 2009 and whose main provisions take effect in February of 2010, will limit the ability of credit card companies to raise rates on existing balances although by giving a 45 day notice, there is no restriction on the raising of rates on future purchases.
Credit card companies are not covered by state usury laws. Usury laws are laws that limit the rate of interest that a consumer can be charged in financial transactions. Since usury laws don’t apply to credit card companies, credit card companies can literally charge the consumer whatever they want. Some consumers are currently being hit with credit card interest rates over 40%.
Hard hit consumers are having to choose between paying credit card bills and keeping a roof over their heads and food on the table. With significantly rising interest rates and the resulting rise in minimum payments required, credit card problems are a huge financial headache for many consumers in the United States.
Under the bailouts, the banking industry has received billions of dollars in taxpayer assistance. Part of the stated purpose of the bailouts was to provide funding for new consumer lending to stimulate the economy. Instead, the banks took the billions and still are not lending and are cutting back available consumer credit. Even customers with excellent pay records have seen their available credit either eliminated entirely or cut drastically. The banks who benefited from the bailout are squeezing the very taxpayers who helped them with raised interest rates and lowered credit limits.
While the banks have been helped, the consumer is left to go it alone. Consumer credit card problems are a fact of life and will continue to be so the foreseeable future. A record ONE BILLION dollars worth of credit card defaults are expected for 2009 with high default rates continuing into 2010.
While the banks have been bailed out, there is no one to bail out the consumer. Consumers are expected to default on ONE BILLION dollars in credit card payments in 2009 with the defaults continuing at a high rate into 2010. Credit card problems are going to continue to be a way of life for United States consumers into the near future.
Credit card companies collect more than 90 billion dollars annually in interest and fee payments from consumers in the United States. Consumer credit card problems were not really a factor in the banking industry troubles. And thanks to the taxpayers, the banks are again profitable.
What is the consumer with credit card problems to do? Credit cards, while highly profitable to the issuing banks, are fundamentally unfair to consumers. With the bank’s ability to change the terms and conditions including the interest rate at will and with no lawful ceiling on the interest rate, the consumer often finds himself/herself in a downward spiral of debt from which escape is difficult, if not impossible. This is by design! According to a CNN Money table, paying off a $10,000 credit card debt at’% interest by paying the minimum payment will take over 42 years and over $26,000 worth of payments!
According to recent Credit Card Debt Statistics, American families are spending more than 92% of their disposable income on debt payments! What about you and your family? Get real solutions without bankruptcy or debt settlement! This one of a kind program truly works!
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