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January 28, 2009

Do We Need a Credit Card These Days

Author: admin - Categories: Consumer Debt News, Credit Market Updates, Debt Relief Videos, Published Debt Relief Articles - Tags: , ,

Wondered why do we ever need credit cards? To your surprise, you actually need to have a credit card these days.  But you do NOT need credit card debt. As Suze Orman explains, Credit card debt continues to rise, but we live in a credit era that is automated and not having a credit card will limit some your opportunities.  If you have over $10,000 in credit card debt consider a debt consolidation loan or debt settlement.

January 20, 2009

What the Credit Card Companies Know That Keeps Them in Business

Author: admin - Categories: Consumer Debt News, Credit Market Updates, Published Debt Relief Articles - Tags: , , ,

It’s no coincidence that according to the Federal Reserve’s latest survey 46.2% of American families are holding credit card debt and are now in search of debt relief. Credit card companies have made a multi-billion dollar industry out of knowing how consumers think and by predicting the average consumer’s habits.

Here are a few things that banks know that credit card consumers are sometimes in the dark about:

- Possibilities for Problems in the Economy. Many credit card companies have entire teams dedicated to researching the economy and predicting possible economic issues that would cause consumers to use their credit cards more frequently. It is no coincidence that at a time when many people believe that the American economy has hit a recession due to increases in the price of oil, food, and other everyday necessities, the credit card industry is banking more and more interest due to an increase in the daily use of credit cards.

- 0% APR Offers Lure You to Spend More, Thus Owe More. A few years back, credit card companies began sending out numerous 0% APR offers to convince credit card holders at other banks to transfer their balances. While many people took advantage of these 0% offers to save money and pay off debt, they may not have taken into account the fact that by helping to free up money on their credit card accounts, these credit card companies were actually creating somewhat of a trap. If a consumer who is trying to pay off credit cards decides to use the new 0% APR credit card after a certain period of time (even if the 0% balance transfer APR is in effect for the life of the debt), the interest rate on that new purchase balance can shoot up to 18% or more, and is paid off last. That means that 10, 15, or 30 years down the line when the 0% balance is finally paid off, the amount you purchased on the card at 18% has been accruing in interest for all of that time as well. You may find yourself in the same boat as before!

- “Rewarding” You With a Higher Credit Limit Keeps You Hooked. Credit card companies frequently “reward” good customers who pay their bill in full faithfully every month by increasing their credit card limits. But in actuality, they know that as long as your limit continues to rise, you are likely to use the card even more. At some point in that pattern of behavior, you will reach a peak where the credit card company will no longer raise the limit and is profiting from the higher finance charges on your credit card bills. It’s all about predicting the consumer’s behavior.

- Your Past History Predicts the Future. Another bit of invaluable knowledge that credit card companies benefit from is your full credit card history. They have a detailed history of your past purchasing habits, balances, and what you have done in certain situations that have arisen in your financial history. What you have done in the past is a good predictor of your future actions. For example, maybe you started a business and used your credit card to purchase $1,000 in business equipment one month. Now your creditor knows that you are more likely to use your card for both personal and business purposes. In another example, if a creditor sees that you have a penchant for expensive designer clothing, they will not only assume that you will purchase more in the future, but also send you special offers in the mail for designer clothing from its advertising partners.

- Consumers Don’t Always Read the Fine Print. Creditors also bet on the belief that most credit card consumers are too lazy to read the fine print of their credit card bills and agreements. If a credit card customer continues to pay the minimum payment, not knowing what the APR is, and not knowing how payments are applied, they can become trapped in a long cycle where they will pay off credit cards for an extended period of time. Meanwhile, the creditor will continue to reap the benefits of the consumer’s lack of knowledge for a long time to come. Read the entire debt article.

January 16, 2009

Credit Card Debt Crisis

Author: admin - Categories: Consumer Debt News, Credit Market Updates - Tags:

According to the Federal Reserve, nearly half of American families do. Credit card defaults to reach 100 Billion dollars in 2009.  The report indicated thatnearly half of American families also have some sort of bank savings accounts.

 

The next crisis will be credit card defaults by the millions of unemployed. Further exacerbating the crisis and leading us closer to another Great Depression.

January 14, 2009

Fed Chief Requests Credit Market Stimulation

Author: admin - Categories: Consumer Debt News, Credit Market Updates, Published Debt Relief Articles - Tags: , , , , , , , , , , , , ,

In a recent article, Jason Cardiff discusses the impact of bad debts and defaulting mortgage securities being bought by the Federal Reserve and the US Treasury. He offered options to deal with bad credit mortgages and other poor performing assets held by financial institutions.  In addition, Bernanke suggested the government increase their intervention to slow down the foreclosure crisis as the housing market continues to sour.

The Federal Reserve chairman, Ben Bernanke talks about that the $800 billion recovery plan, a combination of tax cuts and increased government spending is now being massaged by the Obama team and the Democrat-controlled Congress could provide a “significant boost” to the floundering economy. He did however; reiterate that such a plan must be part of a broader, multi-pronged government response to fight the worst financial and housing crisis the hit the U.S. and the global economy since the Great Depression in the 1930s.  “Fiscal policy can stimulate economic activity, but a sustained recovery will also require a comprehensive plan to stabilize the financial system and restore normal flows of credit,” Bernanke said.

To help on that front, the Federal Reserve has agreed to lend billions to credit card finance and mortgage companies and purchasing some of these companies’ debt to rebuild the credit markets. The US Treasury Department is overseeing a $700 financial bailout program that has pledged to inject $250 billion into banks in return for partial government ownership.   Bernanke said “more capital injections and guarantees may become necessary” to stabilize financial systems markets while stimulating credit markets that should increase consumer lending. Visit Jason Cardiff Tips online for financing newsletters, real estate articles and debt relief reports at no cost. Read the original article > Fed Chief Says Obama Stimulus Could Revive Economy and Housing Markets.

In a recent CNN program, Lou Dobbs says, “I Told U So” to Secretary Paulson.

Dobbs reminds viewers that he warned the Treasury Secretary a year ago not to buy the toxic assets like defaulting mortgages and abandoned credit debt from these type of investors.