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February 19th, 2009, 01:55 PM #1Defaults to start a credit jam
Bloomberg.com has an interesting article about credit card defaults:
Bank of America, AmEx May Suffer on Card Defaults
Possible consequences of the default affecting everyone are cuts in credit lines with an increase in interest rates.
As for the decrease in mail solicitations: that is the one benefit.
I hated that "pre-approved" junk mail solicitations from banks!~Rhia7 -- Remember the 7
February 19th, 2009, 02:29 PM #2
- Join Date
- June 10th, 2008
Yeah, I have a great credit history but still had one company just last week try to jack my my rates way up (more than double, they tried to add another 9.5 % to my existing rate). I told them to cancel the card, I figure I shouldn't get screwed because they were dumb enough (or greedy, is more like it) to give credit and high credit limits to people whose abilty to repay was suspect at best (and of course as your balances go up, the credit card companies just keep raising your credit limit, gotta keep you spending). You have to be careful if you cancel a card though, as it will temporarily affect your credit rating (for 6 months to a year, maybe?).
I too would welcome the decrease in mail solicitations, I get several a week. We shred them and use them for bedding in our chicken coop.
February 24th, 2009, 09:47 AM #3
- Join Date
- May 9th, 2005
There is another consequence: the credti card companies will do their best to leech creditworthy customers who pay on time. I always pay on time with autopay but I know that the annual interest rates with credit cards is over 30% in Hong Kong whereas my mortgage rate is only 2.45% now.
AMEX has just told me that they will charge a US$100 renewal fee this year for the primary card holder and a US$50 fee for a secondary card holder. That is unless we apply for a waiver beforehand.
Another VISA card issuer has told me that they will charge nearly US$200 renewal fee this year for the primary card, and over $100 renewal fees for secondary cards.
On further investigation, it seems that all credit card companies with whom we have got accounts with have introduced similar fees this year.
SO WATCH OUT!
February 24th, 2009, 11:00 AM #4
- Join Date
- January 18th, 2005
- Los Angeles, California
Good motivation to do something that's smart in any environment: pay off CC balances ASAP, preferably at the end of each month.
If you're paying 11% on a CC but making only 2% in a savings account, you're losing 9%. Move the money, pay 'em off, live better.Richard Gaskin
Developer of WebMerge: Publish any data feed on any site
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