Credit Card Abuse And Other Horror Stories

Credit card abuse is the modern American horror story, but it is also a problem which is now being seen gradually more the world over.

A thriving middle class consumer, with a steady income and a good credit history, enters middle age with the thought that it is time to start saving for his older years. Then, something unpredicted happens. It might be good news, such as a new birth, or it could be bad such as an illness, a divorce or an emergency of some kind.

By themselves, none of these events are usually sufficient to destroy anybody's financial future. But, they can be the cause for credit card abuse and the eventuality of some significant financial hardship. What might’ve been a problem for only a select few people who couldn't deal with credit in the past has become an growing problem for many.

It has become quite frequent for middle-aged, middle class consumers to have many bank and store charge cards at any time. And most of these people are carrying large balances. In the year of 2005, the common consumer had nearly $10,000 in credit card debt, or even the double or the triple of that if loans for cars and other large expense items are involved. Worst of all, in 2005, the credit "rules" were modified...

First of all, many credit businesses have now doubled their minimum monthly payment to four percent. This is not, in itself, a real problem for most consumers, as most cardholders might probably pay this anyhow.

Secondly, with no usury laws to prevent them - and despite inflation rates from 1-to-3 percent - credit companies have increased interest rates for "problem" cardholders to 30 percent and even more.

Thirdly, if there are problems with any creditors, such as late payments, other creditors do have the choice to cut their card's credit limit (which is often to the current balance), double or triple the interest rate and cancel any of their "special offers".

Some attractive offers are the "Six months no interest" or "Zero interest on all balance transfers for one year". However, the slightest infraction involving even one creditor and the next bill could include full interest charges - from the very beginning of the offer.

One creditor is sufficient to turn someone with a decade of good credit into a "problematic" customer. A bill past its due by one day could be the reason for an account to go up in interest, or down in limit, or both. And this can trigger other credit card companies to follow too, meaning that after a while, all your credit cards could be charging a higher interest, over-limit fees and even late charges when your bank account is hit by a higher interest rate.

Now a double minimum payment could become a serious problem, as that original $10,000 total debt begins increasing by $250 a month in interest, plus up to $500 in accumulation of over the limit fees plus yet another $500 in possible late fees! It’s not difficult to see where the problem is…

Another fact is that you cannot claim bankruptcy anymore. As of 15 October 2005, it became absolutely impossible for any American consumer to declare personal bankruptcy without losing even more money, his car and possibly even his home.

So be careful and take another look at those credit cards in your wallet, even the ones offering great promises of "easy payments" and a nicer lifestyle. The downside is though, that without care, these cards can turn into viral monsters, ready and able to destroy your life in a few seconds.

So, next time the opportunity arises, trade your credit card for some cooler cash.

Article Source: http://www.debtfinancearticles.com.

About the Author:
Patricia Mayers is contributing auto editor at http://www.debtfinancearticles.com/. This article may be reproduced provided that its complete content, links and author byline are kept intact and unchanged. No additional links permitted. Hyperlinks and/or URLs must remain both human clickable and search engine spiderable.