Credit card crisis looming?

[Traden4Alpha]

Just had dinner with a friend who is in your situation exactly -- high credit score, always pays off the card and Cap One raised the rate to 29%. Like you, he's not materially affected, but he is pissed.

Given the rising default rates and the scarcity of credit, I'm not surprised that the card companies are doing this. Perhaps the government can cap interest rates, but I suspect that will only mean that the card companies cancel a very large number of accounts.

 

[Bingoking]

Quote from Traden4Alpha:

Given the rising default rates and the scarcity of credit, I'm not surprised that the card companies are doing this.

Definitely an indication that the financial landscape is changing. And I think it will push even more people over the edge with huge amounts of uncollected credit card debt out there. I feel for the people who are going to be stuck. Honest people who will be forced to do something they never thought they would do, default on their debt.
I think it will be spreading to the other cards. All the more incentive to keep your balance paid of if possible.

 

[bears21]

this happened to me a few years ago. cap one and chase started to cut my limits down from where they were at 25% utilization to make it look like it was 90%. next they raised my rates from 11.99 to 29% without ever missing a payment. coincidently my score went from a 730 to a 575. they then considered me high risk and jakked all my rates up. i tried to negotiate but they werent having it. so i decided to beat them at their own game. lucky enough my wife and i live in north carolina and we both didnt have any joint debt. so my wife and i stiffed them all. lucky in this state with being tennance by the entirity there legal means are quite limited. no leans can be place on our property since we are both on the deed and have no joint debt. same holds true for bank accounts. no wage garnishment in north carolina either. i am a full time trader who conducts business through my llc. so ask me if i have a shread of remorse about doing this, the answer is none whatsover. all of this without claiming bk and getting the courts involved. these cc companies deserve everything they get coming to em and believe me its only the beginning.

 

[number22]

Quote from Bingoking:

I called them but they never offered to waive i for me. Odd. Never missed a payment and always kept a low balance.
No skin off my nose - will just move on with someone else.

Anyone know if they got bailout money?

The problem is that people either don't use credit cards or over extended their credit, how do you expect credit card companies making any money from either dead beats or thrifty person?

Credit card companies are toll highway for commerce, they make money from charging tolls from merchants and/or interest from card holder.

I only have 2 credit cards from different vendors, 1 card from Citi which all my monthly expenses go, and of course I payout every month. The other card is my ATM, I withdrew cash from it.

 

[CaptainObvious]

The plan is to drive as many people in to BK as possible. Since it's now nearly impossible for an individual to go Chapter 7 it's a huge win for the lenders. They get to recalculate their balance sheets and still have a court ordered payment coming in. All thanks to their buddies in congress.
You think they didn't see this coming? They were lobbying for new BK laws 4 years ago. They knew then that this economic catastrophe was coming because they orchestrated it, and congress was a knowing and willing accomplice.
Game, set, match! Re-boot and run the scam all over again with a "stimulus plan".

 

[arnoldtrades]

even with good credit, it is hard to get credit cards today. I doon't think this will last long

 

[IanMacQuaide]

Quote from lrm21:

Actually this is to be expected

1) Credit is now scarce

2) short term unsecured credit is very scarce

3) as a result Cards can jack up rates, many people will be unable to rollover the debt or shop around, most will be unable to pay off balances. So they are stuck paying high monthly mins

Oh no, Sir, they aren't stuck paying anything.
They'll just laugh when the bill collectors call, and hang up. Many will just run up every card they have with cash advances and buying food.
CC companies can file suit in state district courts all day against people with no money. Good luck.
(not being argumentative)

 

[dinoman]

Quote from Bingoking:

This is scary: I have a Capital One credit card. Had it for years with 9.9% interest. We have a FICA score around 820. I get a notice in the mail today that they are changing my interest rate to 29.4%. This will not hurt me as I only have a little over $100 for a balance due. Needless to say I will be shopping for another card.

My sense is with so many people out of work they are living on their credit cards and not making payments - so the credit card companies have to raise rates.

I heard a while ago that this is the next crisis coming down the pike. Odd that they would do it to a long-standing customers with an excellent credit rating. Not sure what the reasoning is behind that. Capital One has to be desperate for cash. I wonder how many others are?

Anyone else getting notices like this from other credit card companies?

That is a default rate change not and actual rate change. Read it carefully!

If you pay on time nothing to worry about.

 

[matgallis]

Quote from CaptainObvious:

The plan is to drive as many people in to BK as possible. Since it's now nearly impossible for an individual to go Chapter 7 it's a huge win for the lenders. They get to recalculate their balance sheets and still have a court ordered payment coming in. All thanks to their buddies in congress.
You think they didn't see this coming? They were lobbying for new BK laws 4 years ago. They knew then that this economic catastrophe was coming because they orchestrated it, and congress was a knowing and willing accomplice.
Game, set, match! Re-boot and run the scam all over again with a "stimulus plan".

You should change your username

 

[the1]

I received the same notice from Cap One. I have a zero balance on that card and it will stay that way. In fact, I should just cancel it because it's had a $1,000 credit line for about 10 years -- they've never raised it so I never used the card.

This is definitely a looming crisis. Banks are starved for cash! They are not lending and they are trying to increase the inflow of cash any way they can. As unemployment rises CC defaults will rise. There is also a fresh wave of ARMs ready to reset this Spring. Put the two together and things could get much worse before they get better.