Posted on 08/11/2007 6:39:42 AM PDT by Hydroshock
WASHINGTON — A "dangerous cycle of debt" is trapping too many credit-card holders, making it increasingly difficult to protect their financial security, according to a report.
About one-third of cardholders pay interest rates in excess of 20 percent, according to a report from New York-based think tank Demos. Also, borrowers with one slip-up can incur a "cascade" of penalties and end up in a "trap" of high-cost debt, the report said.
"The excuse of risk-based pricing is used to justify everything. These prices go far beyond pricing for risk. Some of these interest rates and payment fees seem to not accurately reflect the risk," said Tamara Draut, a co-author of the report.
Draut criticized practices such as card issuers retroactively applying rate increases. The authors also noted that companies can change terms at will, and that there are no legal bounds to the amount of fees and interest that borrowers can be charged.
"As a result, cardholders often borrow money under one set of conditions and end up paying it back under a different set of conditions," according to the authors.
(Excerpt) Read more at foxnews.com ...
I tripled my money in the late 90’s in FLC, which was later acquired by RIG. I think you are correct. Oil is a great long term play...I haven’t been in since FLC, but I will check it out. I am currently getting my butt kicked by the mortgage stocks...oh well, it’s just money.
I learned (too) late in life probably, that one borrows on collateral, not take on unsecured debt via borrowing against a depreciating asset. If I have $100, I can borrow say, $50 on very favorable terms and not lose the use of my original $100, all the while building my credit history. I try to cover my borrowing on a dollar for dollar basis, as rates are historically low. Theoretically it is easy to make a little bit of money, sorta like picking up nickels in front of a steamroller. It takes a while, but otoh running up debt is very quick!!! I ran into some credit-card debt problems years ago, student loans, etc., so I try to keep spending more safe.
I don’t think you should have used your emergency fund on medical bills. Medical bills can be put off for a very long time. Emergency house and car repairs cannot and neither can the paying of the bill for those repairs.
I have medical bills right now. I only allowed my medical bills to use up half of my emergency funds. After that they just have to wait. There’s no interest on medical bills.
As far a cars go, you can find a good used vehicle for about 2 grand if you look hard. i just saw a 10 year old ford taurus for $1998 today. I’m sure it had very high miles but it looked in great shape. Surely you could scrape together enough for that, or at least some kind of small loan?
Don’t you have anything valuable and liquid you can sell quickly? Like firearms, jewelry, motorcycle, rare coins, etc?
I'm nibbling on GS and tempted by BSC, a new area for me - I've had like 0% brokers since I sold LEH last fall. Well, similar, held MCO til early July. It is now back to the price I bought it for more than a year ago, it deserves more respect! I think that the current turmoil has run these financial stocks down to throw away prices - blood in the street. Come next spring, there will be lots of political pressure to stimulate growth. If the markets don't work through these problems perhaps earlier, anyway. More likely if many more people start loosing their homes.
A few years ago, I just managed to get out of TOL in time for a small profit, held too long. I guess that is why I favor sectors with persistent uptrend's, like in energy. At least while I have to hold down a day job.
Lots of consolidation in the energy sector bought me out of fine companies at good premiums - really gooses the return.
But roll me back to 1991, I was using a charting service, Worden Brothers TeleChart, and watched BRK go from 5000 to 9999 over a few years, the limit of the charting software. Should have put everything in that stock and forgotten about it. Sigh! (today 111,500)
Good luck parker. I also have some major debt on credit cards I’m working my arse off to pay for.
For the average working class American, credit cards are a necessary evil. There are many people, such as you and I, who have used credit cards to grow a business, or some other worthwhile enterprise. Calculated debt is not a bad thing. Manageable debt is not a bad thing.
What are you talking about? Your post makes zero sense.
All I can say to you is that here on Planet Earth, credit cards are a necessary evil.
Wow. I’m not sure how to respond to such a lunatic post as yours.
Let’s see, according to you, a person who uses a credit card that has been legally obtained for necessary expenses that this person is paying back (with interest) is “stealing”?
Dude, you’re way off the deep end here. Take a breath, perhaps have some herbal tea, and regroup.
>>Anyone that borrows for anything but a home will wind up with nothing.<<
Is the sky blue in your world?
“Is the sky blue in your world?”
Most of the time!
did you read the article?
It says you can borrow because under the terms of the agreement you can afford it, the company can unilaterally for no reason change the agreement and your original decision would have no meaning under the new terms and you still owe the money.
Cool.
People who live debt free are a little like ex-smokers or skinny people. They have forgotten that each person’s life is a personal thing and what works for one won’t work another. I just smile, take a bite out of donut and go on about my day.
Thanks again.
I have to disagree. They are simply an evil. People constantly use them as if they were income. We have a huge problem postponing gratification in our society. Somehow we have determined that we "deserve" stuff.
Exactly. And people sign that agreement hoping the day of reckoning never comes. That's the problem with being in debt to someone. The lender controls the payment of the debt, not the borrower.
I get pretty fed up with day after day getting mailings for some new credit card offers. Plus they cram a lot of stuff into the envelopes where you cannot run them through the shredder. I ruined a shredder because they started putting in fake plastic cards inside. Each credit card offer takes about 2 or three minutes to open, find the app, shred it and toss the rest. What a waste of time ! I even sent the original app back with “VOID” and please remove from mailing list to no avail. Still keep getting the same junk.
just a moment there, moonie - we can't have a practical consideration get in the way of pious, self-righteous indignation, now can we?
Here on Free Republic, we smugly assume that people CHOSE to be taken advantage of by predatory lenders and that people's own foolishness and habits of sloth cause the emergencies that may require the use of a (gasp!) credit card.
As you know, moonie, most of us here on Free Republic pay cash for everything (including homes and cars), have portfolios bursting at the seams and several years worth of income sitting in savings. People who don't are stupid, wicked "welfare cheats" and Jesus doesn't love them like he loves us.
I only hope Jesus can forgive your wicked, evil thinking. I will pray for you.
I used to be the same way. Then I got smart.
Get yourself a red sharpie, write "REFUSED" in capital letters all over the application.
Then stuff everything back into the prepaid postage reply envelope and send it back to them.
Follow these simple steps and you will be surprised how quickly those pre-approved mailings disappear.
actually the law provides for adhesion contracts, the law also provides for prohibitions against blue lining (unilateral changes)
I think it is only a matter of time before this unilateral change dies either by law or court.
Well done sir.
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