Burn Your Credit Cards (Just Don't Close 'Em)

We've been writing for some time about the screwing of the American consumer by the credit card companies, despite the so-called overhaul of the credit card industry. Even though it was passed, it doesn't go into effect until February. That's given them several months to bend you over and slam it to you.

Here's an important thing we want to pass along. READ THOSE MAILINGS THEY SEND YOU. Discover and banks that distribute Visas and MasterCards are jacking APRs to an astonishing 29.99%. They do warn you, but you have to read the letters they flood you with. They generously offer you to opt out of the rate hike, but you must close the account and stop using the card. Then they'll magnanimously let you pay it off under the old agreement's APR.

Problem. Closing credit card accounts negatively impact your credit score since you need credit to get credit. So you can save money - but it comes with a price.

We've also stated many times that credit companies (not just AMEX, but the rest are joining in) are now eliminating high credit limits, slamming them down to current balances. This eliminates your debt-to-available-credit ratio which is also devastating to your credit score.

If you have time to wage battles and make a living chasing down the credit bureaus, you can probably knock your score up several points. You can also fruitlessly seek out new credit. Chances are, however, you'll be declined and that (say it with me) will ALSO give your credit score the smackdown.

It's a lose-lose-lose situation for Americans, and February won't fix what they're putting in place now.

Budget yourselves. Stop using credit if it's at all possible. We know it's tough to do these days. But sell the Wii. Drop the video subscriptions for now. Eat at home. Stop impulse buying because something looks like a great deal (I love ya, Woot, but these are lousy times). Start selling stuff on eBay and donate the rest - it's the end of the year and you should beef up those charity donations for tax time anyway.

And read this new article: "10 Ways Credit Card Companies Are Still Screwing You." There was a time when if they did just any ONE of these things, it would send shockwaves through the industry. In the last year, we have seen every single one of these implemented, and it's horrifying.

It's a game we're all losing to unregulated greed. Sorry, "libertarians," but this is free market at its worst. This needed government intervention years ago, but we had a government that didn't want to interfere (even though we're still paying them to HELP US).

We're right there with you on this, and we'll pass along any good news if God forbid we actually get any. Try to have a good holiday season. And if the in-laws just get a card instead of a big shiny new thing, they should understand.

Comments

[David Aquarius]

Send them a homemade card, they'll love it!

My life has been turned completely upside-down by just two credit cards. Agreements made by a rep on the phone aren't worth the paper they're not written on. One company, after working out a payment scheme, called my PARENTS to inquire about me.

Everything I thought was illegal in chasing down a debt is standard procedure to these thieves. It wouldn't surprise me to see them hire Blackwater goons in black sedans to pull up to cardholders homes, shoot the dog as a warning and drive off.

[Tom Joad]

You know what would be ironic? If the "free market" actually worked (too bad it is somewhat dependant on people acting in their own best interests...something many of us seem incapable of) so many people stopped using their credit cards, as form of protection AND as protest all rolled into one.
And then we found out the credit card companies were "too big to let fail" and so they got bailed out with taxpayer money! Boy that would be a great joke on all of us. Wouldn't it? Ahh...maybe it isn't so funny (or farfetched) as I thought....

[Helena Montana]

This is why I only use a debit card. I stopped making big purchases a couple of years ago.

[Sarita]

We finally made it to Europe this summer - first time and the thing we noticed that was the cars were smaller, the housing was smaller and all in all the Europeans didn't seemt to have so much "stuff" - but they had a higher standard of living: better food and a better quality of life. We stayed with a friend in Holland and their house was sparten by comparison to ours - but they seemed to have everything one could need, including a one car garage that wasn't full of crap. We have just gone nuts with "things". We don't need this stuff and credit cards are the means to getting everygthing imaginable. I agree - now is the time to STOP.

[eurail pass]

Completely agree with the thread and other posters especially Sarita. I too was in Europe a few months ago and realized they simply don't pile up all the crap every American home has.

Burn the credit cards is the best advice anyone can give - and never take one out again and if you must, get one for gas or what not, not ones with $15,000 limits!

[Tammy]

Leave the banks and take you business to credit unions.

Better rates and better service.

Tammy

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