Leadpile’s Blog

Some recent laws passed regarding our credit cards are taking effect this Thursday. Currently credit card issuers have an ability to change interest rates on existing balances without any sort of notice. Part of the new law taking effect Thursday will put a restriction on the credit card companies from doing this without a 45 day notice. They can still charge you penalty fees for late payments and over-limit charges, however being able to freely increase the percentage rate (fixed rate percentage) on an already existing balance, will be going away. Any change to our interest rate, late payment fees, over-limit fees or finance charges can still increase, but they have to now give us a 45 day notice. It seems that a lot of credit issuers have recently become very aggressive in even shutting down card holders cards if there was no activity. There is a potential “risk” involved to the credit card issuers, and they are scrambling to get rid of those sorts of consumers. The other thing that we are all witnessing is the credit card issuers reducing balances on our credit cards if they are not being utilized. Once again, this is the credit card issuers reducing their “risk” or potential exposure, however it is very much an inconvenience for many people that want to then utilize their credit cards for a larger purchase.
Reading over anything that comes in the mail from your credit card company is probably the safest thing to do to keep up to date on what is going on with your account. Maybe even utilizing your credit card randomly might even be a good idea if you want to maintain the credit card availability. That sounds a little odd, because the “right” thing to do is really maintain a debt free life and live within your means. The credit card companies are almost indirectly pushing Americans to use their cards… or LOOSE them.

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.