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Cardholders Caught In Credit 'Trap': Report
http://www.foxnews.com/story/0,2933,292872,00.html ^ | 8-10-07

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 ...


TOPICS: Business/Economy; Miscellaneous; News/Current Events
KEYWORDS: credit; creditcards; debt; debtbad; onetrickpony; personalfinance
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The rich rule over the poor, and the borrower is servant to the lender.

Proverbs 22, verse 7

1 posted on 08/11/2007 6:39:47 AM PDT by Hydroshock
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To: Hydroshock

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.


2 posted on 08/11/2007 6:42:41 AM PDT by FreePaul
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To: Hydroshock
The rich rule over the poor, and the borrower is servant to the lender.

That was back when there where debtors prisons and before bankruptcy laws.

3 posted on 08/11/2007 6:44:28 AM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: Moonman62

It was sound advise over 5000 years ago, and it is today.


4 posted on 08/11/2007 6:45:52 AM PDT by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: FreePaul
One simple rule to follow. If you can’t afford it don’t buy it.

What if I need to borrow money to buy or fix a car to get to a job?

5 posted on 08/11/2007 6:46:21 AM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: Hydroshock
Leviticus 25:35-37

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.

6 posted on 08/11/2007 6:46:44 AM PDT by EternalVigilance (When Romney got done in MA, there were more Green Party candidates than Republican candidates...)
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To: Moonman62

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!


7 posted on 08/11/2007 6:48:12 AM PDT by Rightly Biased (Courage is not the lack of fear it is acting in spite of it<><)
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To: Moonman62

“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.


8 posted on 08/11/2007 6:50:48 AM PDT by dalereed
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To: Moonman62
What if I need to borrow money to buy or fix a car to get to a job?

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?

9 posted on 08/11/2007 6:52:15 AM PDT by FreePaul
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To: Hydroshock

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.


10 posted on 08/11/2007 6:53:03 AM PDT by sergeantdave
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To: EternalVigilance

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.’


11 posted on 08/11/2007 6:53:04 AM PDT by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: Hydroshock

Don’t you have a mortgage, servant?


12 posted on 08/11/2007 6:53:13 AM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: Moonman62

This was even before debtor’s prison, in days when the lender could quite literally sell the debtor or his family into slavery.


13 posted on 08/11/2007 6:53:15 AM PDT by Sherman Logan (It's not the heat, it's the stupidity.)
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To: dalereed; Moonman62

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.


14 posted on 08/11/2007 6:54:42 AM PDT by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: FreePaul
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?

No. I'll quit the job and apply for welfare.

15 posted on 08/11/2007 6:56:31 AM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: Hydroshock

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


16 posted on 08/11/2007 6:56:47 AM PDT by Rightly Biased (Courage is not the lack of fear it is acting in spite of it<><)
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To: Moonman62

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.


17 posted on 08/11/2007 6:57:22 AM PDT by Tijeras_Slim
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To: Hydroshock
That is why you have an Oh Crap fund.

What If I already used that fund for crap like medical bills?

18 posted on 08/11/2007 6:57:36 AM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: Moonman62

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


19 posted on 08/11/2007 6:57:47 AM PDT by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: Moonman62

Then you might want to declare bankruptsy and start over.


20 posted on 08/11/2007 6:59:05 AM PDT by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: FreePaul
If you can’t afford it don’t buy it. That would eliminate most credit card debts.

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.

21 posted on 08/11/2007 6:59:39 AM PDT by pnh102
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To: dalereed
I didn’t say I was going to use a credit card. I already used my emergency funds on medical bills. There is no bus service, and it’s too far to walk on my broken ankle I just paid for. I need the job to make money to replenish my emergency fund and to take care of other expenses so I don’t become a burden on society.
22 posted on 08/11/2007 7:01:39 AM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: Hydroshock

http://www.daveramsey.com/


23 posted on 08/11/2007 7:02:26 AM PDT by Rightly Biased (Courage is not the lack of fear it is acting in spite of it<><)
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To: Rightly Biased
The borrower is slave to the lender!

Not if the contract is entered voluntarily.

24 posted on 08/11/2007 7:03:31 AM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: Hydroshock

“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.


25 posted on 08/11/2007 7:03:44 AM PDT by dalereed
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To: Hydroshock

If you use a credit card because you can’t afford it, how can you afford it with 20% interest on top?


26 posted on 08/11/2007 7:05:10 AM PDT by listenhillary (millions crippled by the war on poverty....but we won't pull out)
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To: Rightly Biased

Know the site well.


27 posted on 08/11/2007 7:06:01 AM PDT by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: pnh102
Of course though, I won't buy any toys until the balance is paid off.

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.

28 posted on 08/11/2007 7:06:15 AM PDT by FreePaul
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To: Hydroshock

Wouldn’t you be more comfortable living under sharia? Check out Saudi Arabia.


29 posted on 08/11/2007 7:06:53 AM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: Hydroshock

Suckers. We paid our 2nd mortgage card off. No car payments, no nuthin.


30 posted on 08/11/2007 7:07:03 AM PDT by AppyPappy (If you aren't part of the solution, there is good money to be made prolonging the problem.)
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To: Moonman62
These passages are from the Old Testament, where you believe or not is your concern, but the wisdom that Proverbs and other passages hold is undenignable.
31 posted on 08/11/2007 7:09:33 AM PDT by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: AppyPappy

Can’t wait until I can say the same. Great for you.


32 posted on 08/11/2007 7:10:00 AM PDT by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: Moonman62

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.


33 posted on 08/11/2007 7:12:51 AM PDT by Rightly Biased (Courage is not the lack of fear it is acting in spite of it<><)
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To: Moonman62

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.


34 posted on 08/11/2007 7:15:05 AM PDT by Rightly Biased (Courage is not the lack of fear it is acting in spite of it<><)
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To: Hydroshock

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.


35 posted on 08/11/2007 7:15:34 AM PDT by Non-Sequitur (Save Fredericksburg. Support CVBT.)
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To: Hydroshock

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!


36 posted on 08/11/2007 7:16:01 AM PDT by Leftism is Mentally Deranged
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To: Rightly Biased

My Grandfather once said, “Debt is the ugliest 4 letter word.”


37 posted on 08/11/2007 7:16:56 AM PDT by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: FreePaul

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.


38 posted on 08/11/2007 7:17:08 AM PDT by fleagle
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To: AppyPappy

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!!


39 posted on 08/11/2007 7:17:25 AM PDT by Rightly Biased (Courage is not the lack of fear it is acting in spite of it<><)
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To: Rightly Biased
If you owe something you are a slave until the debt is paid be that credit or anything else.

Do you live in some backwards country that doesn't have bankruptcy laws?

40 posted on 08/11/2007 7:21:55 AM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: fleagle

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?


41 posted on 08/11/2007 7:22:50 AM PDT by FreePaul
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To: Moonman62

“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.


42 posted on 08/11/2007 7:23:32 AM PDT by Poser (Willing to fight for oil)
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To: Hydroshock

Muslims are really big on the Old Testament. I think you’d like it.


43 posted on 08/11/2007 7:23:36 AM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: Moonman62

So are Jews, a raced with a very laudable history of financial and academic success.


44 posted on 08/11/2007 7:26:59 AM PDT by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: Hydroshock
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.

45 posted on 08/11/2007 7:32:49 AM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: Rightly Biased
There is NO positive side to credit card use.

Until you have been mugged. Then you will be glad you carry plastic and no more than forty bucks in cash in your wallet.

46 posted on 08/11/2007 7:33:59 AM PDT by freespirited (Thank you for not lying about Republicans.)
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To: Moonman62

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.


47 posted on 08/11/2007 7:34:28 AM PDT by Rightly Biased (Courage is not the lack of fear it is acting in spite of it<><)
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To: Moonman62
But not getting in debt themselves. I have closely known two Jewish families in my life, both avoided debt like a terminal venereal disease.
48 posted on 08/11/2007 7:37:17 AM PDT by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: Hydroshock

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!!


49 posted on 08/11/2007 7:38:40 AM PDT by Rightly Biased (Courage is not the lack of fear it is acting in spite of it<><)
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To: FreePaul
” 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.”

Yeah, and learn to live a mediocre life with no investments... no thank you.

50 posted on 08/11/2007 7:39:57 AM PDT by Porterville (I'm an American. If you hate Americans, I hope our enemies destroy you. I will pray for my soul.)
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