War has been declared. The banks have declared their own customers the enemy and have launched an all-out assault to extort the most amount of money from them. You read me right. I said extort. Congress passed CARD or the Credit Card Accountability, Responsibility and Disclosure Act in order to reduce or, at best, eliminate predatory lending practices. However, CARD backfired. Banks simply found a way around the law while, at the same time, finding a way to make even more money than before. It makes me wonder, is America still America or has the America we loved died? Think about it. We bailout these renegade institutions deemed too-big-to-fail and their gratitude comes in the form of taking more and more of our hard earned money.
How do the banks get around CARD? Very easily. Congress was too cowardly to pass a cap on credit card interest rates. As a result, the banks have begun switching their customers from fixed rates to variable rates in advance of CARD, scheduled to take effect in February. By switching customers to variable rates, the banks get around the laws regarding interest rate changes. It has already started. One bank, First Premier Bank, is already pushing a whopping 79.9% rate at customers.
Variable rates should scare anyone with outstanding balances on their credit card accounts. With a base rate plus prime, the interest rate each month will increase exponentially. In the coming years, prime will rise as a result of our nation’s ever increasing debt. This, in turn, could push credit card interest rates to 30% and likely more. Plus, with a variable rate, banks can charge a new interest rate on unpaid balances each month. CARD was supposed to stop them from doing that. They were supposed to be able to change the interest rate on new purchases only. NOT. GOING. TO. HAPPEN.
Personally, I am unaffected by this garbage. I don’t carry balances on my credit accounts. So go ahead and charge me 100% interest if you want. I don’t care. Good luck calculating interest against a balance of zero. And, if you charge me an annual fee, I’ll just close the account. Despite being in that position, I can’t not care. (How’s that for a double negative?!) The fact is, I care very much. Many people have been taken in by these loan sharks. And yes, they are loan sharks. 30%, 40% and 50% interest is loan sharking. Sorry, but it is. Something must be done. However, Congress isn’t going to do it. They are the very definition of cowardly. Therefore, we, the people, must do it ourselves.
So how do us regular folk combat these thieves? The answer is easily and not-so-easily. The easiest and simplest way is to NEVER carry a balance on a credit card account. You’ll never go wrong with that strategy. However, this isn’t an option for everybody. For people not able to do that, there are options:
1. Take out a personal loan at your bank. Personal loans have fixed interest rates, fixed payments, and a fixed repayment term. Payoff your credit card balances with the loan proceeds. Collateral may be required.
2. Card hop. This is difficult and has an impact on your credit worthiness. To card hop, you essentially open credit card accounts and use balance transfers in order to get low introductory rates. Then, when the introductory rate is about to expire, you simply “hop” to another account. That way, you can pay down those balances.
3. Take out a home equity loan. This should be considered only in the most dire of circumstances. Home equity loans are there to help you improve your home, not finance everyday purchases. However, this option can really help, but it does require a lot of financial discipline. The goal is to payoff those balances, not simply tuck them away in your home.
4. Consumer Credit Counseling. If all else fails, help from a consumer credit counseling service could be the lifeline you need. They can negotiate, on your behalf, with your creditors to help you pay down your credit card balances to zero. They will negotiate terms and interest rates. Keep in mind though, this comes at a cost to your credit. Many lenders treat this option as a bankruptcy and it could affect your credit score for up to 7 years; but bottom line, you will get yourself out of debt.
Overall, I am appalled by what I see coming out of Washington. I love America. I am a native through and through. I’ve got red, white, and blue coursing through my veins. Even the last three characters on my Jeep’s license plate stand for the Star-Spangled Banner (SSB). Yet, I am really saddened to see my fellow Americans under attack, myself included. This crap isn’t right. We don’t deserve this. But, at some point, unless we begin to fight back, these horrible people will continue to take, and take, and take. The choice is yours. The choice is mine. Make a decision. Take action. You CAN take their power away.