Leadpile’s Blog

This past June many card companies such as First Third Bank decided they are now charging their customers $19.00 for not using their credit card. They added this fee to help increase their revenue, and a way to “encourage” their customers to use and manage their credit card accounts. With the amount of credit card debt and late payments, is this the only option of increasing revenue? Probably not. A lot of credit card companies such as Amex and Discover will simply send you a notice that your account will be closed if you do not start using the card. This seems much more reasonable than charging your customers for inactivity.
Climbing your way out of debt is hard enough, but fixing your credit score can be even more challenging. When an individual finally pays off their credit card, the first reaction might be to close the card so you do not get yourself into that situation again. However, depending on your debt to credit ratio it can actually lower your credit even more. So what is the best to do? Close your account and potentially lower your credit or leave the account open but get a fee for non use? This really puts people in a pickle.
One option for the consumer is to charge only one or two small items on the card a month. This will keep the card active without getting a fee or affecting your credit in a negative way. If you are one of the many that are in debt, debt consolidation/settlement maybe something worth looking into. Everyday at LeadPile, we match lenders with consumers to try and help with their debt needs, but each person needs to know the basics about their own credit/creditors. Knowledge is power!

Credit cards are a way of life for most Americans. According to Time.com, in the last 10 years credit card balances have gone up 75%, yet consumer’s wages have gone up only 4%. Increased balances and the number of credit cards consumers have, has allowed credit card companies to reap the rewards for years.  These credit card companies have always survived in tough economic times because they were able to generate lots of revenue from things such as late fees, however more and more consumers are now facing charge off. The charge off rate for default consumers is expected to reach 10%, which is double what the rate has been for the past 10 years. If there are more charge offs, that means credit card companies will be in the RED, because defaults/charge offs will far surpass the revenue they are bringing in from things such as late fees. So, what does that mean will happen?
In the case of American Express, they just became a bank holding company in order to receive some low cost funds and a piece of the $700 billion bailout. In the case of Citigroup, they layed off 10,000 employees and will begin imposing higher interest rates on it’s 54 billion cardholders. With other credit card issuers, there is bound to be some increased interest rates passed down to the cardholders and increased fees. The only way to really avoid the effects of these credit card issuer’s hardships, is for consumers to manage their money better where they avoid any additional late fees and also look at not incorporating any new debt. The only option I can see is looking at debt consolidation or debt settlement to avoid getting in a deeper hole. Leadpile Lead Exchange generates a lot of debt leads where consumers need help and need help now. Hopefully, they can ride the wave before any sort of credit card “bubble” bursts and they are affected in an even worse way.