This morning on GMA Elisabeth Leamy met a couple who is directly affected by the ripple affect of the changes that the credit card companies are making. http://abcnews.go.com/gma Banks are now lowering consumer’s credit card lines. This in turn is causing credit scores to be lowered.
What does this mean to the average consumer? Their FICO scores are lowering and it is costing the consumer by paying more in interest on all their other loans. This can include car loans, mortgages, and personal loans. These consumers can no longer even consider refinancing, because based on their credit score; they will then receive a higher mortgage rate of interest.
Most of these companies are doing this with a computer-generated piece of software. It can blanket a large part of this market. These cases are not looked at on a case-by-case basis. When the consumer’s credit card limits are cut, it will then increase the ratio (the amount that they have already put on the card). The consumer does have a responsibility. They have signed a contractual agreement when borrowing these funds. Have they read the fine print before that have spent this money? Are people being forced into using these cards as an instant fix in a financial crunch such as loosing their jobs?
Chris Dodd-chairman of the Senate Committee on Banking, Housing, and Urban Affairs has proposed the Credit Card Accountabilty, Responsibilty and Disclosure Act. This is to insure against predatory practices. This Act is to protect the consumer by “bringing an end” to unfair practices and strengthening consumer’s financial security. It is outlined below: Protect consumers from “any time, any reason” interest rate increases and account changes; Prohibit unfair application of card payments; Protect cardholders who pay on time; Limit fees and penalties; Ensure that cardholders are informed of the terms of their account; and Protect young consumers from credit card solicitations.
My question being…when and how and why not now?
Renee Fogle
YourCreditCompany.com
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