credit card problems


Credit Problems - Are They Hurting YOU?

Credit problems can happen to anyone and there few of us haven't felt that pinch between what we need and what we are able to pay for at some time in our lives.

When the money markets become tight as they are today, with foreclosures and bankruptcies skyrocketing, the resulting cascade can affect even those who have always paid their bills on time and tried to be responsible in handling their credit.  You may find yourself owning a home (and mortgage) that has drastically declined in market value.  You may see your credit card interest rates double or triple in a month.

It is no accident that credit card companies are located in a few, select states in the U.S.  While most states have Usury laws that limit the amount of interest a creditor may charge, a few states have no such laws or laws with very high interest rates allowed.

Thus, credit companies establish their business in a handful of states that give them the freedom to escalate interest on your account to as high as 36%.  You can understand that a person who habitually pays their bills late might see their interest rate increased - but credit companies in the past few years have used increasingly broad "reasons" for charging higher interest rates.  Until the last couple of years, credit issuers were reluctant to drastically raise interest on accounts of good customers - but that has changed.

Credit companies are now complaining about the number of consumer accounts they must "write off" as uncollectible due to default or bankruptcy.  Truth is - they have only themselves to blame.  In their rush to post higher profit numbers for shareholders, credit issuing corporations have doubled and even tripled the percentage interest charge to consumers with little or no explanation or common sense.

Even a diligent consumer may be caught in the current nightmare of escalating interest fees.  If you have a credit line of $20,000 on a credit card, and use more than 60% of that limit - you go into a higher "risk" category and your interest rate may be increased.   

If you pay one credit card bill a few days late due to error or financial necessity - you may find ALL of your credit accounts have increased your interest rates.  The result can be monthly payment obligations that double or triple in one month!  Is it any wonder so many people are floudering financially?

The laws are currently favoring the credit companies - not consumers. If your own interest rates are rising for no apparent reason - or if you find yourself in a financial crisis due to drastically increased payments required - you can't afford to ignore the problem.

For many of us, there is a sense of shame and guilt associated with an inability to pay our bills and meet our obligations.  This emotional reaction causes us to deny the problem and to hide it from family and friends.  There is no shame in being taken advantage of - and that is what is hapening today to many consumers.  Understanding the truth of what is going on in the financial sector - and learning to protect yourself - is crucial to putting your personal finances back in order.

A second danger to those suffering credit problems are the hucksters selling quick fixes that don't work and companies promising to consolidate your bills that take your money and run instead of paying your creditors. 

It is critical that consumers learn to find the BEST source of their credit report - and examine that report to understand where a problem may have originated. There are steps consumers can take to fix a credit problem or to avoid a problem in the first place.  There are ways to arrange payment for debts, to pay less than the amount owed to eliminate the debt, or in drastic situations use legal means to eliminate the debt without payment.

You have a choice - you have options.  You can choose to react to predatory lenders as a victim - or you can educate yourself and be pro-active in protecting your own financial resources.  Guess which consumer comes out ahead?