September 11, 2009
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News: Are CC Companies Silently Negotiating?
Just about every one of us has a friend or family member that has felt the wrath of credit card companies during the past year. Many have seen their credit limits slashed and interest rates skyrocket. Credit card companies have seen record breaking numbers of delinquencies and defaults. Most have claimed their action is a response to huge losses. With rising interest rates, most of the minimum payment goes toward interest, making it almost impossible for some to dig themselves out of debt. Americans have been overwhelmed by the media reports and blasting of the financial industry. It has become difficult for most to understand or believe what is true. However, a large number of Americans truly believe that credit card companies are out to break them.
On the surface, it would all appear to be true; however, a recent article in the Washington Post reports a different story. According to the article, more credit card companies are prepared to negotiate down debt with customers in an effort to salvage at least part of their investment. Many are not willing to broadcast it because they fear they will be slammed with excessive numbers of requests. Similar to the mortgage loan restructuring programs, many financial institutions have lowered credit card interest rates, monthly payments, and amount owed. They are very receptive toward the goodwill of the cardholder in meeting the responsibilities of their debt.
Don't be fooled by the news; credit cardholders are still held accountable and will most likely see some negative activity on their credit history. In some cases, lenders may require the customer to shut down the account to future spending. This move will have a negative effort on their credit score; however, it will certainly be more forgiving that defaulting on the debt. For this reason, Americans should proceed with caution. Carefully read the terms and conditions of such an agreement and consider all your options before making a decision.