All the information, articles, and tools that you need when facing debt and bankruptcy!
Wednesday, March, 10th, 2010
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All the information, articles, and tools that you need when facing debt and bankruptcy! Wednesday, March, 10th, 2010 |
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Credit Card Interest Rates The millions who file bankruptcy each year, and the millions more who are working through debt consolidation organizations to eliminate their debt had lots of help from our federal courts. Unfortunately, none of it was in a positive way for the consumer. Take two forgotten rulings that added billions of dollars to the national consumer debt each year in higher interest payments and fees. The first ruling struck down state usury laws that protected the consumer from outrageous interest rates and another the ruling eliminated state caps on late and other penalty fees.In 1978, the 37 states that had usury laws saw them struck down by court ruling. The court effectively eliminated usury laws that until that time had limited the amount of interest that could be charged on credit cards. Most limits were at 18% or less. The court held that national banks could charge credit card customers the highest interest rate allowed in the bank's home state, instead of the state they were doing business in. As a result, major banks moved to South Dakota and especially Delaware, where there were no usury ceilings on credit card rates. As the credit card market became dominated these banks, the state usury laws became useless in controlling interest rates. In 1996, another court ruling eliminated state laws on the amount of fees charged by credit card companies. Late fees, for instance doubled from an average of $16 to $32. All the major issuers now raise a cardholder's interest rate when their payment is late---often to 29% or even 34%. Millions of card holders find themselves deeper and deeper in debt. They are unable to pay down the principle, seeing most all their payments going to pay off the higher interest and other fees. Helping them along, banks and other credit card companies are mailing their statements closer to the due date. In lowering the turn around time, they hope you will miss a payment date. Most credit card issuers do not have a grace period anymore. Your payment gets delayed by a day in the mail and you not only have to pay a $29-$49 late fee but you will also see your interest rate jump. Besides keeping you in debt to them, the credit card companies made over $7 billion in late fees in just one year. But that is nothing to what they get for all the other fees they tack on. Those fees accounted for another $17 billion in 2004. The total figure on profits from credit cards - over $30 billion in 2004. The news doesn't get any better. Even if you have never missed a payment with them, most credit card companies now will raise their interest rates if they find you missed any payment. They also check your credit score often to see if there is any decrease in your rating. This decrease may only be a result of buying a new car, or moving and incurring a higher mortgage. It doesn't matter to them. Read the fine print.  |
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