The Love of Credit…
We all love the convenience of using our credit cards. You walk up; buy something, swipe your card and you’re on your way. Credit cards come in very handy for frequent purchases like gasoline and groceries. They are great for automatically paying recurring bills, like utilities. And, they are indispensable for dining, travel and entertainment. Another popular use, is in covering unexpected expenses, like your car breaking down in the middle of nowhere.
The Mounting Debt
Nobody expects to wind up in debt. The problem usually starts small, with a broken car, a sick child, a lay-off or a vacation you can’t afford. Then, Christmas rolls around and the debt starts to swell. Most people can’t afford to pay their balance off completely, so they make a big monthly payment and try to work the total down. But, the interest gets tacked on, along with a couple of new purchases, and the balance seems to rise steadily. Pretty soon, you may be facing debt that seems insurmountable.
…the Root of All Evil
The forces of Evil appear from out of nowhere at the worst possible time. As soon as you are late on a payment, go over a limit or reach a mysterious debt ratio, the forces of Evil attack. Soon, you are besieged with cascading fees, your interest rates skyrocket and balance transfer offers quickly disappear. You have now entered the dark underworld of the subprime borrower. You will be bled financially and tortured mercilessly.
The Trap is Sprung!
Unknown to you, the forces of Evil have been waiting and hoping for this moment. Using insidious devices, such as Trigger Lists and Universal Default, they are well aware of your delicate financial situation and are they ready to take full advantage. The trap is sprung! You have now become a dreaded wage slave. You may be trapped for years or even decades, making minimum payments. Any attempt to escape is futile, since your bankruptcy protection has been recently gutted. Your politicians will consider you to be irresponsible, while encouraging your consumption to drive the economy. You have been betrayed.
Your only hope is knowledge. Your only salvation is discipline. Your only way out is to free yourself, using every means at your disposal. There is hope in many forms, as long as you have the desire to break free. You must expect that your bank, your creditors and your politicians will all maneuver to benefit themselves. You must also maneuver to benefit yourself. Fortunately, you are not alone in this struggle. There are many who are willing to help, as long as you are willing to help yourself.
I will cover many debt relief strategies in future posts. This will include snowballing, refinancing, balance transfers and credit counseling. To cover these topics in detail, it will take a full post per topic. I will also detail the underhanded tactics of the lending industry, in a future post. I guarantee that post will be both entertaining and enlightening.
Update – 3/2/07
Citibank announced today that they will be discontinuing “universal default” and “any time for any reason” rate increases. This is a huge benefit for consumers and Citibank should be applauded for abandoning these incredibly unfair practices.
My suspicion is that the Democratic Congress, who has vowed to protect consumers from predatory lending, combined with a dramatic increase in delinquencies and foreclosures, has compelled Citibank to protect themselves from pending legislation. In any case, I believe Citibank should be applauded for this move and other credit card issuers should follow suit.
If your credit card issuer still has universal default, perhaps you should consider voting with your feet. Declining profits from lost business is one thing that banks will generally understand.
Disclosure –I have been a Citibank customer since 1990. I originally selected their card because I travelled on business and their customer service was outstanding. However, in recent years, I have been extremely disappointed that they seemed to be employing subprime tactics. I am very happy to see Citibank returning to their roots of providing a credit card that has value and prestige.