Finance on The Web

The 5 Worst Ways Credit Card Companies Keep You In Debt, Preventing You To Double Your Income

Credit card debt is major problem worldwide and its ramifications are acerbated by the growing number of consumers who can’t make their payments in this unstable economic climate. The long term effects of paying late even once can be disastrous for someone but financial institutions keep making it harder and harder to pull yourself out of the hole. Why did it get so out of hand?

Although it’s true that the desire to have what we want when we want it did have something to do with it, the primary fault belongs to the financial institutions and the deregulation of the banking industry. The total computerization of the lending process means that people have become dehumanized through the lack of a personal interaction; at most we talk with customer service every so often. Once we became numbers instead of faces, it became easier to treat us that way; profit became king and human beings just income generators, with no regard for the dire consequences and havoc that uncontrolled debt can have on their lives.

That’s why, every day, mega-corporations send out several million emails and direct mail packages designed to get people to go further into debt. Vast marketing campaigns make it too easy to do something that really isn’t in your own best interest. They entice you with reward programs, so-called free gifts, low rate balance transfers and cash back offers while hiding the true costs in the fine print. By the time they are finished with daily and annual compounding, late fees, penalties, bonuses and arbitrary changes to your interest rate you could be paying as much as 500% interest.

Further, your contract with the bank or financial institution is specifically written to be difficult to understand. For example, we all assume that our credit cards represent an ongoing loan but every month of your agreement is actually considered a new loan. The interest rate is recalculated based not just on your payment record, but on the current payment practices of all their customers and the financial situation at large. The companies know that they can get away with these rate changes because most consumers don’t know to check the
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day and annual percentages at the bottom of their statements.

There are some laws to protect you from such outrageous usury but, since they were written by lawyers working for the credit card companies, they are easy enough to work around. Additionally, two US states have no Usury Acts at all. The credit card companies merely need to incorporate in one of the two to circumvent the regulations regardless of where you live. That’s why many of your bills are mailed out of South Dakota.

This entire situation can really do significant damage to your credit rating which, in turn, could keep you from getting a mortgage, buying a car or being hired by a new employer. For business owners a personal bad rating is even worse since it can stalemate your ability to do business. Even if you pay your bills on time or don’t have a revolving balance, you could be turned down based on ancient behavior or resolved issues whose ultimate result didn’t make it the appropriate database.

Here are five things you should know or do that “Dump your debt expert” Randall Blaum says will help protect and manage your credit rating:

1. You don’t actually have one rating, you have three and each of the major companies has its own data base. An old problem left on only one record can ruin everything for you.

2. Checking your history and keeping it current is your responsibility, not there’s. It’s important to request an up to date history from each reporting agency at least once a year.

3. When even a minor issue arises, you should document that there is a dispute and send it to Experian, Equifax and TransUnion. Send paperwork again when the problem is resolved.

4. Put all but one of your credit cards away

5. If you are in trouble do an internet search for “counseling service, my city.” Choose someone who’s accredited or certified; make sure your first session doesn’t cost anything and is between 60 and 90 minutes.

By: AaronRaymond

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Raymond Aaron,New York Times Top Ten Bestselling Author, “Double Your Income Doing What You Love” published by John Wiley and Sons, New York City.

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