June 11,2009
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Brave New Credit Card World, Pt.1
New game; new rules.The long-awaited "Credit Card Holders' Bill of Rights Act of 2009" has finally been signed into law after a two-year battle. Although the law was passed on May 22, it's protections won't kick in for almost a year. Meanwhile, even though the battle may be won, the war is far from being over. It seems now that the credit card industry is retaliating with a vengeance. Nothing's to stop them for most of that year. Already, 'good deals' have almost entirely gone away. A credit card holder must have an impeccable credit to get anything reasonable any more. The industry has long been warning us and now they're making good on their threat. Woe to us.
Here's where were at right now:
Over half of us hold at least one credit card burdening us down with further debt on top of other things like car loans and burgeoning mortgages. Even without counting the mortgage, we’re looking at about $2.5 trillion of debt. According to government numbers, credit card debt has jumped a full 25% just over the last 10 years. Which way are we going here? By the beginning of this year we had reached $963 billion in credit card debt alone. According to trusted research by CreditCards.com, we were averaging over $10 thousand each in credit card debt at that time.
Here's what we've got (or, at least what we can look forward to until the law takes effect in a year):
Credit card accessibility is shrinking rapidly. New interest rates are starting right out at 17% and those currently with lower rates are also being bumped to that high level unless their FICO score are touching the top. Just being 'good' doesn't get it any more. Now, more than ever, we all need to concentrate foremost on getting that debt down.
In the wake of the current recession, urgency has been given to provide consumers with financial education. Pulling consumers out of that deep black hole of credit card debt, has become a monumental challenge; one that will not go away soon enough.