August 21, 2009
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CARDA's Immediate Effect on CC Consumers, Pt.4
Defend yourself.For those who have fallen victim of the swell in credit card interest rates, know that they will eventually recede again. Meanwhile, if you're impacted by substantial financial strain because of large outstanding credit card debt, know that you have some options:
Opt Out: Just say "No!" You can do that. The down side is that you'll have to use a different credit card for future charges. You'll be given five years to pay off the existing debt at the old interest rate. You're minimum payment requirement will probably be raised and that's a very good thing. Very few consumers realize how badly they're being ripped off by the credit card lenders with those extremely low minimums. It's like they believe the lender is looking out to protect them. No! The lender actually wants to keep them in debt forever and the minimums are set to do just that. They very-much need to be raised for the consumer's own good.
Fire Your Lender: Open a new credit card account with their competitor. Transfer the balance out of their hands. You'll need a good FICO score to do this, however. This brings up the next major theatre of battle "FICO--wars".
FICO--Wars; the Next Frontier: Those who remain oblivious to the new climate will be in bondage for a while. It should be understood by all that the credit card industry is up against the ropes and must take decisive action in order to survive. Due to the unprecedented charge-off rates (uncollectible credit card debt) they're facing, nearly all large credit card lenders are operating at a loss.
With our devastated economy and unemployment rates not seen since WW II (11.6% in parts of Florida), risk has become a raging conflagration. FICO scores are the most trusted guideline followed by the credit card industry. The minimum standard has been raised from 650 to 750 by the industry in recent days, just at a time when credit limits are being lowered (58 million accounts just last year). This action alone has lowered the FICO score of most of these 58 million account holders. Read more about it in the article entitled: "Ducking doesn't help when they're trying to break your legs.".