The Credit Card Companies Strike Again!

Hitting Consumers Where It Hurts

When it comes to developing innovative ways of burying consumers in debt, the credit card companies take the cake. According to MSNBC, credit card fees alone have skyrocketed from $2.6 billion to $21.5 billion since 1980. Plus, in addition to late charges, some credit card lenders add insult to injury by applying interest rates, in some cases as high as 31.99%, to an existing balance!

But, of all of the credit card companies' sneaky tricks, the most egregious by far has to be the "universal default clause", a provision that allows lenders to tack on an exorbitant "penalty" interest rate even when the borrower's account is paid on time. That's right. The default clause, a common practice among lenders today, allows for an increase to the ridiculous penalty interest rate if a consumer is late on any of his or her bills, including things like utilities. According to the advocacy group Consumer Action, while most default interest rates hover around 30%, it's not uncommon to see a penalty rate of up to 35%. Some analysts have even reported rates in excess of 40%!

Buried in the fine print, the default clause and other terms and conditions of a credit card account can be easily amended by the lender with a simple written notification that usually accompanies the monthly statement. Some reports suggest that many consumers end up trashing the notification, along with the usual pile of unwanted marketing material enclosed in the envelopes, without ever reading it.

If you have large credit card balances and don't think you can handle your monthly credit card payments doubling overnight, a Home Equity Line of Credit (HELOC) could be less expensive than credit financing, depending on your situation, and it may even be tax deductible.

If you or someone you know has an Adjustable Rate Mortgage (ARM) or Hybrid ARM that's about to adjust to a higher rate, the universal default may be the last of your worries right now.

Did you know:

• Many ARMs holders are facing 50% or even 100% increases in their monthly mortgage payments once their ARMs reset?


• There is no cap on the first adjustment of most subprime loans?


• Credit standards are tightening and, with each passing day, you may no longer qualify to refinance?

Please call us right away for a free consultation. Together, we'll sit down, analyze your debt, and make sure you're taking full advantage of every opportunity available to you.