something needs to be done IMHO..I have a friend who has made nothing but minimums due to job loss for the past 6 months and their credit card rates have been raised from 9.99 to 32.00% due to their “increased risk”..by raising their rates, they’ve pushed them into bankruptcy territory simply because they’re “perceived” as a risk..
In my specific case, I’ve had a credit line reduced from 5 figures to under 3k (due to the shaky economy reducing the lenders risk according to the lender) which significantly increased my debt ratio and the commensurate drop in credit score..I’ve been clobbered through no fault of my own..
I think these banks WANT the defaults in order to sell the accounts and take the write off.
it is a debt version of a credit default swap.
I can understand dropping credit limits as long as it does not affect current accounts but I have never understood the thinking when banks jack interest rates sky high and force a person to default on a credit card debt. It seems so obvious that they are running afoul of the law of unintended consequences. Interest rate increases should only affect future transactions, not current accounts. I hate to say it but the credit card business has been full of shady operators all along and some of them deserve to have people default on them. They have dreamed up many ways to encourage people to run up huge unsecured debts at high interest rates.