Posted on 08/11/2007 6:39:42 AM PDT by Hydroshock
WASHINGTON — A "dangerous cycle of debt" is trapping too many credit-card holders, making it increasingly difficult to protect their financial security, according to a report.
About one-third of cardholders pay interest rates in excess of 20 percent, according to a report from New York-based think tank Demos. Also, borrowers with one slip-up can incur a "cascade" of penalties and end up in a "trap" of high-cost debt, the report said.
"The excuse of risk-based pricing is used to justify everything. These prices go far beyond pricing for risk. Some of these interest rates and payment fees seem to not accurately reflect the risk," said Tamara Draut, a co-author of the report.
Draut criticized practices such as card issuers retroactively applying rate increases. The authors also noted that companies can change terms at will, and that there are no legal bounds to the amount of fees and interest that borrowers can be charged.
"As a result, cardholders often borrow money under one set of conditions and end up paying it back under a different set of conditions," according to the authors.
(Excerpt) Read more at foxnews.com ...
Proverbs 22, verse 7
One simple rule to follow. If you can’t afford it don’t buy it. That would eliminate most credit card debts. It would probably go a long way to eliminating credit card companies.
That was back when there where debtors prisons and before bankruptcy laws.
It was sound advise over 5000 years ago, and it is today.
What if I need to borrow money to buy or fix a car to get to a job?
35 If one of your countrymen becomes poor and is unable to support himself among you, help him as you would an alien or a temporary resident, so he can continue to live among you. 36 Do not take interest of any kind from him, but fear your God, so that your countryman may continue to live among you. 37 You must not lend him money at interest or sell him food at a profit.
No it still applies to today.
If you borrow you are slave to the lender until the debt is paid. The reason you make money is to pay off the debt you owe.
The borrower is slave to the lender!
“What if I need to borrow money to buy or fix a car to get to a job?”
You’re irresponsible and shouldn’t have a CC.
A CC isn’t for the purpose of borrowing, it’s a convienence card.
If you can afford it go ahead. If you can't afford to pay for it don't buy money. Is that hard to understand?
The 25-30% usury interest rates serves the important function of sopping up excess dollars so the fed can keep inflation at about 10%. I expect credit card interest rates to hit 40% or better by 2010.
These two passages tell me all I need to know of the Lord’s few on debt. And it is one of the reasons I am so anti debt. I have enough to answer to before the throne already with out adding this. And liek my Grandfather once said, “Debt is the ugliest 4 letter word.’
Don’t you have a mortgage, servant?
This was even before debtor’s prison, in days when the lender could quite literally sell the debtor or his family into slavery.
That is why you have an Oh Crap fund. In an idea world it would be 6 months bills, mine is 2 but we are working on it.
No. I'll quit the job and apply for welfare.
There is NO positive side to credit card use. You will spend more if you use credit cards. Even by paying the bills on time, you are not beating the system! But most families don’t pay on time. The average family today carries $8,000 in credit card debt according to the American Bankers’ Association
I don’t think most folks up to their eyeballs in credit card debt got there by purchasing the basics like a car to get to work.
What If I already used that fund for crap like medical bills?
Yes sadly, but I am paying extra on my debts to get them paid off. My wife and I have a plan to be totally debt free in 10 to 15 years. We do not care CC balances, we have one car note and are hitting that with 2 payments worth a month. Yes I would love a new jeep, but my current one has on feature a new one would not have. It is paid for. Check out Daveramsey.com
Then you might want to declare bankruptsy and start over.
My only regret in running up a credit card balance was that the money wasn't spent on toys! Your advice is good, but realistically it is not possible if you have a real emergency situation that requires money to be spent immediately.
Of course though, I won't buy any toys until the balance is paid off.
Not if the contract is entered voluntarily.
“an idea world it would be 6 months bills”
I was taught that that was the absolute minimum and ever since i’ve had a bank account when I was 8 i’ve maintained much more than that. I always keep at least 2 months in my checking account.
If you use a credit card because you can’t afford it, how can you afford it with 20% interest on top?
Know the site well.
Sounds as if you meet my only criteria for running up your credit card balance. You can afford it. That concept seems to be beyond some here.
Wouldn’t you be more comfortable living under sharia? Check out Saudi Arabia.
Suckers. We paid our 2nd mortgage card off. No car payments, no nuthin.
Can’t wait until I can say the same. Great for you.
You can’t voluntarily put yourself in slavery? I think not.
If you owe something you are a slave until the debt is paid be that credit or anything else.
Proverbs 13:12 says “Hope deferred makes the heart sick, but when the desire comes it is a tree of life.” In other words, when you can see something at the end of the tunnel that’s not an oncoming train – something that’s real light and real hope – you get excited. Think about it. There’s not one place in scripture where God uses debt to bless his people. In fact, the Bible calls debt a curse.
The consumer deserves much of the blame but an equal measure of blame should fall on the credit card companies themselves. I don’t think a day goes by that I don’t get one or two mailings saying I’m pre-approved for this card or that card. I’ve got a maybe half a dozen credit cards, only one of which I carry a balance on, and I added the spending limits up the other day. If I wanted to max them all out I could ring up well in excess of $120,000. That’s insane.
retroactively applying rate increases is wrong.
Other than that, I have no sympathy for people who take out the card, swipe it, sign the slip when they can’t bloody well afford it!
My Grandfather once said, “Debt is the ugliest 4 letter word.”
Oh really, Paul. If you can’t afford it don’t buy it. Brilliant.
There are many valid reasons (medical expenses, auto repair, unforseen emergencies) that people have to put on credit cards.
Save your sanctimonious crap dude. Credit card companies suck. The average credit card holder does not.
I’m debt free as well Appy it took the Mrs. and I 24 months but we did it I am not any mans slave anymore!!
Do you live in some backwards country that doesn't have bankruptcy laws?
It wouldn’t be hard for you to justify getting money by any means for self defined “valid reasons.” Stealing from credit card companies, even though they “suck” is still stealing. Who will you steal from next? If you take money that you can’t afford to pay back isn’t it stealing?
“What if I need to borrow money to buy or fix a car to get to a job?”
Many of us have been there at one time or another in our lives. Here’s a serious answer:
Before you get a credit card, read all of the fine print. Don’t accept credit from a company that is going to raise the rates or levy huge penalties for late payments.
Once you have done that, figure out how much you are going to have to borrow on the card and if you are going to be able to pay it back. If the answer is no, try one or more of these:
1. Find another way to get to work.
2. Get help from family or friends, telling them the truth about the likelihood that they will get paid back in a timely fashion.
3. Find a different job, closer to home.
Then: Sit down and track every dollar you spend. Cable tv? Fast food? Ipod? Computer? Entertainment? Concerts? Magazines? Newspapers? Dump everything you don’t absolutely need for survival until you are living within your means.
Finally, once you are living within your means, get out there and increase your means! It’s a long process with ups and downs.
In any case, borrowing money when you won’t be able to pay it back will only make things worse.
Muslims are really big on the Old Testament. I think you’d like it.
So are Jews, a raced with a very laudable history of financial and academic success.
They've had a lot of financial success because they are famous for lending money.
Until you have been mugged. Then you will be glad you carry plastic and no more than forty bucks in cash in your wallet.
Bankruptcy is listed in the top five life-altering negative events that we can go through. Chapter 7 bankruptcy, which is total bankruptcy, stays on your credit report for 10 years. Chapter 13 bankruptcy, more like a payment plan, stays on your credit report for seven years.
Bankruptcy, however, is for life. Loan applications and many job applications ask if you have ever filed for bankruptcy. Ever. A common misconception is that you can use credit repair services to fix the damage from filing bankruptcy. If you lie to get a loan because your bankruptcy is very old, technically you have committed criminal fraud.
Debt is a trap that so many including myself have fallen into I learned I cannot be who God wants me to be while I was in debt.
Freedom is greater than I ever knew it could be!!
Yeah, and learn to live a mediocre life with no investments... no thank you.
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