I was just thinking something like this could happen...

[redsquirrel]

Mortgage meltdown to hit credit card users - The Red Tape Chronicles - MSNBC.com


FYI...Time to incur a spending freeze on yourself.

This could mean catastrophe for America. Since so many have been living on credit cards as of late due to lay offs & inflation, rising gas & grocery prices, this could be dthe straw that breaks the camel's back. If these credit card companies (who make millions from the interest we pay) actually lower credit limits & raise interest rates, we will see another Great Depression. If people can't buy daily necessities, how in the world will this economy EVER survive?? Not that everyone uses plastic to pay, but a good number.

There has got to be some regulation for these companies. This could ruin millions of peoples credit, make bankruptcies and foreclosures skyrocket to an unforeseen amount. People's credit scores will go down, and their minimum payments will skyrocket with potential over the limit fees, etc. I understand they have to reassess risk with card holders. But, please explain to me why making it harder for a consumer to pay will help realign their balance sheet, and get them into the black again.

I'm seriously going to Sam's this weekend and buying about a year's worth of food.

[Stonecold54]

[QUOTE]I guess I am in the minority that gluttony and bad judgement has put us here so maybe a swift kick in the ass to the lazy thoughtless american people/consumer will go a long way to the future. other people are looking for short term fixes.[QUOTE]

[Timma]

What it all comes down to is the credit companies need to make their money back and make more money. I for one am one of those people thta have had to use the plastic to bail myself out and i'm in so much trouble because of it. And if they go and do all of this i'm gonna be in serious trouble.

[Timma]

I guess I am in the minority that gluttony and bad judgement has put us here so maybe a swift kick in the ass to the lazy thoughtless american people/consumer will go a long way to the future. other people are looking for short term fixes.

Not all of it is gluttony and bad judgement. Mine goes back to my divorce last year. I had to get alot of things I didn't have when I got out and also pay for a lawyer. It put me in some trouble.

For a while I was starting to get out of it, but with the way the economy has been going it's been tough on the wallet.

[redsquirrel]

[QUOTE=Stonecold54;446705][QUOTE]I guess I am in the minority that gluttony and bad judgement has put us here so maybe a swift kick in the ass to the lazy thoughtless american people/consumer will go a long way to the future. other people are looking for short term fixes.

Well, gluttony & bad judgment is part of it. But for many its a means of paying for daily necessities. Did you read the whole article? They are talking about lowering credit limits and raising rates JUST BASED ON WHERE YOU SHOP & WHO YOUR MORTGAGE IS WITH. So, you could be a smart consumer, and not overuse credit, and still have these new conditions set on your account. That has nothing to do with gluttony & bad judgment.

Many people are in Timma's situation. It used to cost me about $75-$80/ week for groceries. Now it's over $100. Gas costs me typically an additional $50-$60/ mo. That's an extra $160/ month...So, with NO pay increases, and more inflation, that's what many people are forced to resort to. Then you tack on the new bailout bill that will cost each family another $10k per year??How can you deem that as gluttony and bad judgment?
Peope have to eat, and get to work.

This is a total ass backwards way for the crdit card companies to go about this. What they will do is lower everyone's credit scores, which guess what- will make it even HARDER for people to get loans. Now, while the credit markets are trying to dethaw, this will drive down FICO scores, and make banks unwilling to lend to people-THROUGH LITTLE TO NO FAULT OF THEIR OWN. This is pretty simple to understand. What will also end up happening, is that it will increase the amount and number of write offs these banks incur, if payments & interest rates spiral out of control which will just end up freezing the credit markets even more. The bailout package was implemented to get the bad assets of banks books to free up credit lines....please explain to me why they want to add more bad debts to their balance sheet.


I don't understand how you're not infuriated by this- REGARDLESS of your view of "lazy & gluttoned American consumers"

[Stonecold54]

i didn't read the article I was talking about the precedents that got us to whatever that article said or how the credit cards comapnies are reacting.

[redsquirrel]

Got it. But, some of the precedents mentioned in the article have nothing to do with how the credit card companies should be reacting. They are making credit limit reductions & interest rate increases based on nothing that reflects a consumer's ability to pay...So just because you may have gotten a mortgage through someone and it was sold to an unfavorable company, they can decrease your limit. Or, just because you shopped at Wal Mart, and other people who shop at Wal Mart didn't pay their bill, YOU get penalized with a higher interest rate. These things are the exact basis for why they are doing what they are doing!

I just don't know what this country is coming to anymore.

[hitmansb]

I think this is a good thing. Maybe this is the kick in the ass so many people need: you only buy what you can actually afford. It's a simple concept, but it has died the same death as so many other common-sense principles in recent years. Our grandparents' generation didn't plunge themselves into debt to live beyond their means; they were downright fearful of debt, and saved every penny until they could pay off the bank and burn their mortgage for the most part. My grandmother, who is 89 years old, has never had a credit card in her life...and thinks people who do use the hell out of them are crazy. Maybe it has something to do with living through WW2 in Poland; her family was very well off and owned a huge farm. Then the Nazis rolled in and they had NOTHING overnight. That generation of immigrants worked hard, saved money, and never lived beyond their means. She used to warn me to save and be smart whenever she told me the story of how they lost everything, saying "It could happen here too...you never know". Low and behold, we're on the brink of a depression, and it really could. I think we need to get back to basics, and learn the lessons of our grandparents to ride this thing out.

[redsquirrel]

I think this is a good thing. Maybe this is the kick in the ass so many people need: you only buy what you can actually afford. It's a simple concept, but it has died the same death as so many other common-sense principles in recent years. Our grandparents' generation didn't plunge themselves into debt to live beyond their means; they were downright fearful of debt, and saved every penny until they could pay off the bank and burn their mortgage for the most part. My grandmother, who is 89 years old, has never had a credit card in her life...and thinks people who do use the hell out of them are crazy. Maybe it has something to do with living through WW2 in Poland; her family was very well off and owned a huge farm. Then the Nazis rolled in and they had NOTHING overnight. That generation of immigrants worked hard, saved money, and never lived beyond their means. She used to warn me to save and be smart whenever she told me the story of how they lost everything, saying "It could happen here too...you never know". Low and behold, we're on the brink of a depression, and it really could. I think we need to get back to basics, and learn the lessons of our grandparents to ride this thing out.

That's a great point, and I agree we need a kick in the ass. But there are 2 problems with approaching it this way-

1) This will lower people's credit scores making it harder for them to run their businesses, and get loans for a car, or other higher priced merchandise that is needed; like appliances.

2) I know there is no mandate for discrimination for credit card companies. But, even people who say keep 1/10th of their balance could see a reduction in limit and rise in interest rates if they have a mortgage with an unfavorable company. This is not the way to stimulate the economy, OR avoid losses.

Approaching it in the manner will only make the economy that much worse. If all of the credit card companies adapt this approach, we won't be on the brink of a Depression, we WILL be in one. PERIOD.

[Timber]

I think there is a lot of reason for the current situation. I have watched people for years now mortgage the equity out of their homes to pay off their cars and $30,000 credit card debt just to run the debt up all over again. People tend to live beyond their means through their credit line. Credit card company's & many merchants have not helped either. I have made some major purchases over the last 5 years & if you try to pay cash for something they do everything they can to discourage you from doing it that way. I have also had my credit card rates go up for paying down my balance, Your credit lenders will penalize you for not keeping a running debt on your cards by increasing interest as if paying your bills down is the wrong thing to do. You also have vendors that will suck you in with no interest no payments for 1 to 3 years but if you don't pay the note off by the expired time all that interest is retroactive. There is a lot of reasons for why we are in the situation we are in, You can blame the credit industry but you also have to take some responsibility as a consumer to understand what you can afford and and what you can not. I have never lived pay check to pay check and keep a running savings in case of unexpected disaster. I grant you the circumstances are different for many people but in general it is the public that have caused this