First Mortgages.... Now Credit Cards...
I predict, by the end of this year, first half of next year we will see wide scaled crecard companie failures, Record personal bankruptcies, and a whole slew of more financial problems. Including the bankruptcy of Bank of America. I also forcast that more large banks will also collapse with in the next 12 months.
Driven mostly by the boat anchor, also known as credit cards.
Take this article as a PRIME example as to WHERE we are headed:
http://redtape.msnbc.com/2009/07/whe...-of.html#posts
Credit card firms try out new squeeze tactics
Posted: Friday, July 10 2009 at 05:00 am CT by Bob Sullivan
When James received a great credit card offer two years ago – a 4.99 percent interest on balance transfers for the life of the card – he jumped at it. He used the cheap money to remodel the kitchen of his Los Angeles-area home.
He never expected the new kitchen would turn him into a pawn in a chess match playing out among Congress, bank regulators and credit card firms.
The offer, from JP Morgan Chase had only one obvious stipulation: No late payments. Because the rate was far lower than a home equity loan at the time, James used the credit card for the construction project, borrowing around $20,000. His monthly payments were very affordable - just under $300. Paying the minimum 2 percent each month, he'd pay off the loan in about 8 years.
James, who requested anonymity because he’s uncomfortable discussing his personal finances in public –made sure to pay on time each month, jealously guarding the terms of his cut-rate loan. Little did he realize that Chase could find a way to make his life miserable without raising his interest rate.
But Chase recently threw James-- and perhaps hundreds of thousands of other consumers – a huge credit card curveball. The firm sent letters to customers beginning in late June indicating that minimum payments would be raised from 2 percent to 5 percent. In August, his monthly payment will spike to $750.
"What they're doing is pushing decent people into such tough situations," he said. "I'm between a rock and a hard place."Basically there goal here is to FORCE more people into the 30% interest bracket.
Around the Web, Chase customers are screaming about the change.
"I’m stuck with a combined monthly payment going from $525 to $1,445," wrote one consumer on a blog devoted to the change in Chase terms. "I explained that this could possibly force me into default for which Chase would not receive any payment. (The customer service agent’s) response? 'Chase obviously factored that possibility into the decision for changing these terms.'”
New world order
Consider this the opening salvo in the new world order for credit card firms. Before Congress passed credit card reform legislation in July, bank lobbyists repeatedly warned that the law would cost them revenue and force them to raise rates and fees on consumers. The aggressive step by JP Morgan Chase - effectively a 150 percent increase in required monthly payments -- marks one of the first major changes by a card issuer.
Chase spokeswoman Stephanie Jacobson said the change impacts "less than 1 percent of their customers," but would not divulge a precise figure. Even 1 percent of Chase cardholders would represent nearly 1 million consumers, however. Now, take note the spokespersom for Chase, said '1 percent' as if its no big deal. They say that because they know, people, ordinanry people li9ke you and me are going to say 'oh 1 percent? thats no big deal' But, when you have hundreds of millions of customers, 1 percent is ALOT. Put it into perspective, 1 percent accounts for just about every man woman and child west of Rottenchester in NY.
Chase customers like Daniel Lindenbaum of Coatesville, Penn., say they are being given a Hobson’s choice. He said he transferred an $8,000 balance to a Chase card, enticed by a 5 percent interest rate -- and never missed a payment. Nonetheless, his monthly bill will now jump from $163 to more than $350.
“I don't mind paying a little more than the minimum payment every month, but going to over $300 a month when I was paying $163 a month is a big jump for me,” he said. “It's not easy to come up with extra cash like that. I called customer service and they … suggested for me to transfer my money elsewhere.”
The problem with that, he said, is that he’d have to open a new account with another company and face recently increased transfer fees. Bank of America, for example, just raised its transfer fee to 4 percent. And Chase has said it plans to raise transfer fees to 5 percent.
Lindenbaum figured he’d have to pay at least $200 to switch to a new card. He was confused about why Chase would want to drive him away.
“They are still making money off of me each month and if I pay off my balance faster, they will be losing money in interest,” he said. “If I transfer my money to another credit card company, they will lose my money all together.”
Surprised by marketing success
James said he thinks Chase made the change for a simple reason: It wants to squeeze consumers who have low-interest loans, force them into a misstep and then rope them into far less desirable loan terms.
"They don't want people to have 5 percent loans out forever and ever,” he said. “I don't think they considered how successful their marketing efforts would be.”
Jacobson, the firm’s spokeswoman, essentially conceded that strategy in an e-mail to msnbc.com.
"Tens of millions of Chase customers have taken advantage of our promotional low rate financing over the last five years,” she said. “Most of these loans have been paid back in less than 24 months. However, there have been a small percentage of customers that have not made as much progress in paying down these loans. Our desire is to have these balances paid back in a reasonable period of time."
Bill Hardekopf, who runs LowCards.com, said banks are following through on warnings that credit card expenses for consumers would rise after passage of the Credit Card Accountability, Responsibility, and Disclosure Act.
“From an issuer standpoint, they are looking at their default rates going up, they are in tremendous economic distress and they are trying to minimize their risk as much as possible,” he said. “Issuers feel they need to find ways to make up for revenue they are projecting they are going to lose once the legislation takes effect.”
Chase told msnbc.com that it would work with consumers who are unable to make their new payments, but James said that's merely an invitation into a lion's den. The only offer he received was a severe change in terms to his account with a much higher, variable interest rate.
When the new federal regulations take effect next year, they will severely limit banks' ability to change rates unless cardholders have variable-rate agreements, so banks are trying to steer consumers away from fixed-rate cards. Bank of America, for example, recently sent notices to cardholders with fixed rates telling them their accounts will be changed to variable rates starting next month.
James said all these changes seem particularly unfair because through 2007, even as the recession started, Chase was still aggressively marketing the low interest cards.
He said he will be able to make the payments with great difficulty, but he wonders about other consumers.
"I've got to stop my retirement contributions, or maybe even ask for an advance at work," he said. "But I don't know what other people are going to do."
Banks are pulling this crap after receiving hundreds of BILLIONS of dollars from us 'customers' and now they want MORE~! Their business models have failed. Management has failed. Their compnay has FAILED and now, we the 'customers' are being FORCED against our will, with out our consent, to continue to give them FREE money? Well what the **** man? When is the govt going to give me MY FREE money?!
One last thing, if you have money left in the market, any substantial cash, remove it while you still have cause when theis shoe drops we are going over that cliff into a depression.
Willful ignorance is the downfall of every major empire in history.
"Political power grows out of the barrel of a gun." - Mao, 1938
live above your means and you get screwed end of story - if you cant afford to pay it outright - dont put it on a cc - theres your story - there is alot of things I cant afford to pay outright and then I dont buy it - it sucks, but thats the way it is
I couldn't said it better myself. You go without if you can't afford it, bottom line.Originally Posted by CAugust
“Two percent of the people think; three percent of the people think they think; and ninety-five percent of the people would rather die than think.”
See that line of thinking works, if your somewhat wealthy. I use that term loosely.
If your poor, in the ghetto, and have a car and a credit card... and say its just you and and your husband, gas prices go from $2.50 to $4.50 all of a sudden you need SOMETHING to just get to work... that where you begin charging gas to your credit card because you cant afford to buy gas at $4.50 a gallon.
there are millions of people in this boat that have racked up credit card debt because of the gas prices last year.
Using the 'old' wisdom, that means these people should have stopped going to work.
And all you mass transit supporters... I dont know if you noticed, but mass transit - ie buses arnt available everywhere.
Willful ignorance is the downfall of every major empire in history.
"Political power grows out of the barrel of a gun." - Mao, 1938
Ok I see your point, but if you are living in the ghetto as you said, then you probably qualify for a lot of free education and can go to college and if you are in the ghetto, again as you state, then the availability of public transportation is probably alot more accessible than if you are living in the burbs.
Did you realize that good managers of burger king and mcdonalds can make well over 40k a year? I am by no means saying that that is rich - but its a far cry from the ghetto ..... and as far as I know, you dont need a college education to do that job and they are always looking for people .... I would think if you started out and moved up to shift supervisor and worked hard and then worked to asst mgr and then mgr - well I think you are getting what I am saying .... I was an asst manager at bk a very long time ago and made about 25k plus bonus' - so I would think a good manager now would be looking at well over 50k plus bonus .......thats not to shabby when you come from the ghetto -
I think its more a mind set or way of life .... no one HAS to have a 2400 sq ft home - sure, its something to work towards .... but its not something that is a must have .....
This is still all about the predatory business practices of the cc companies. Read the piece, they are changing contracts and putting burdens on families which are not any of their doing. There is a certain unfairness in the practice. No, not a certain unfairness, and undisputed unfairness in the practice.
b.b.
regardless being late on a payment is unacceptable
Being late, and being perceived as late are two different things. The IRS, the most feared and hated of ALL governemt ad private sector 'companies' will accept your payment up to April 15th, 11:59 PM postmark.
However if your bill doesnt hit the computer till AFTER 1PM at the CC processing centr, you get NAILED with a $40 late charge and quite possibly moved to the 32% bracket. At 32% on $5000 there is NO WAY you will ever pay it off unless your making $300-500 payments each month. 32% on a credit card, which you used to subsidize your income, due to lack of work for whatever reason.... Come on now...
hell peanut butter, went from 11.1 cents an ounce to 12.5 cents an ounce. While that may not sem like much, a jar of peter pan peanut butter used to be 18ox for $1.99 now its 16oz for 1.99 that is a price increase. People, especially those who are classified as 'poor' are suffering the hardest and are using credit cards not to live the high life but just ot 'bet by' while times are tough.
These are the people when they hit 32% on their cards are going to say 'screw this' and give up. Since they dont own anything of real value, they will allow the hit on their credit.
Also, while you fast food mgr idea is worth while, not everyone can be a fast food mgr...
People, espeicially those in the middle class and up, ioften forget about those who are trying to /make it/ but because of the depression we are now in, they will be forced to use predatory loans, which are not geared in the favor of the customer at all.
These credit card companines are now, in the position of 'squeeaze what they can, and screw the rest' positition. Credit card companies, particularly those back by BoA are is major trouble. and as the economy worsens it will only get worse.
Willful ignorance is the downfall of every major empire in history.
"Political power grows out of the barrel of a gun." - Mao, 1938
I agree with your take here. There are jobs out there.
I have been in the credit crunch myself. I was lucky enough to be able to pay off the cards and had learned a great lesson. If I use my CC at all, I no longer charge more than I can reasonably pay off. These parasites are currently trying to get as much as they can from anyone who has a balance right now because there is a new bill coming up to regulate the CC companies. If you have money on a credit card and they are treating you unfairly, you have a few options.
1. Call the issuer and see if you can get them to lower the rate voluntarily.
2. Move the balance to a card with a lower interest rate.
3. Take out a low interest loan from a family member, bank, credit union, or Home Equity and pay the CC debt.
4. Take a second job that is used fro paying the CC debt.
Just as CAugust has so articulately said, there are jobs out there, you have to be willing to take those that are available. Good luck!
**free is a trademark of the current U.S. government.
or to solve the problem, dont' get a CC, pay for everything in cash! Get a Debt card, theirfore you can never spend more than you have! The biggest reason people give for having a CC is that it boosts their Credit Score, well if you use a Debt card it does the same thing!
When i was in college i was able to live off $250 a week. Living in buffalo is dirt cheap! it's when people feel their entitled to have cable, a cell phone, internet, a big car that get's 12 MPG, an 85 degree house, a big screen tv and a house that's brand new and updated when things go wrong!
"I know you guys enjoy reading my stuff because it all makes sense. "
Dumbest post ever! Thanks for the laugh PO!
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