I just read an older article from the "Free From Broke" blog site. The article was titled (if you can believe it) "Credit Cards Don't Suck, You Suck!". That headline naturally caught my eye, so I stopped and read the author's rant. Though he made a few good points, overall I felt like he really was missing the boat. He blamed card holders for not reading the fine print, for not paying over the minimum, for being late, etcetera, etc.
I remember when I had a mountain of credit card debt. I had had an excellent credit rating and made a nice income. My card rates were all under 14%, with most around 7%. I had used my cards to finance business purchases and had earned some very high credit lines too. Then, one day business wasn't what it had been and I fell into some debt. The expenses I had taken on were starting to become unmanageable and then the business went away altogether. So now I had debts and car payments and it took time to unwind some of these things. When all was said and done, I found myself unemployed and about $40,000 in debt after closing the business. It wasn't long before the credit card companies somehow found out about my predicament. I had a couple small investments and was able to pay the minimums with the profit I was making there, but that was before the card companies took action. Without ever having been late on a payment, all (and I mean all) my credit card interest rates were jacked up to 20% or above. What had been a difficult (but what I still felt a manageable) situation, suddenly became a nightmare. My credit card debt skyrocketed over the next year as my plan for employment (I put myself through a trade school) became delayed by a full year. Though I continued to make all my minimum payments, the increase in the interest rates I was paying finally took me under. When I finally declared bankruptcy (under the pre-2005 laws when you could still erase any credit card debt) I had never been late on a single payment, but was floating on a sea of credit card debt. I had not made a card purchase of any sort (other than possibly gas) for the previous year either.
My point is: yeah, I had a big hand in what happened. But I couldn't have predicted the collapse of my business market, or the interminably long time it would take to get into a new profession. I did all I could to pay my debts and stay timely with my creditors. But in the end, the CARD COMPANIES THEMSELVES helped dig their own graves. By jacking my card rates up from 7% to 25% they insured that I would not be able to pay them off, almost no matter what I did. They virtually forced me in to bankruptcy.
I still wonder today, whether I would have been able to get out from under had the rates been left as they were. I guess I'll never know.
But to the author of that other article; sure, there's a sucker born every day. But sometimes it's you, and sometimes it's the card company.
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