August 21, 2009
-
CARDA's Immediate Effect on CC Consumers, Pt.3
What's next?Jacking our credit card interest 200% at the last minute was only a knee-jerk. Things will eventual settle out over time. The giants in the credit card industry didn't just decide they would grow large and become large. Over time, they had to prove to the consumers that they were worthy to be graced with more business. As time progresses, competition will, once again, take it's hold and credit card consumers will abandon high interest credit card accounts for those with lower interest, even if offered from a competitor.
This recent hike in interest was the wave of a minor tsunami breaking on the shore as the credit card industry had to shift the tectonic plates of how they structure their system. After Thursday, they can no longer jack interest on past credit card debt. Kind of like ordering up extra drinks after last call at the bar. Things will settle out, eventually.
Meanwhile, we credit card consumers have some work to do. We must scout around to replace those old accounts for new ones with lower interest. This is the time when we need to shore up our FICO scores. We need the empowerment of firing our credit card lender and hiring a different one. This keeps them honest. This will be the topic of another article entitled: "Ducking doesn't help when they're trying to break your legs."
For now, the message is: This was only a skirmish; bigger things are yet to come. We've just experienced a momentary backlash where credit card accounts with 5% interest were typically, raised to 15%. National Average figures rose from 10.69% in April 11.22% this week but this 1% change is watered down by the millions who did not see any hike. Those who did get hiked over CCARDA were generally hiked substantially.