Debt Nanny
Jul 27th, 2005 at 8:25 pm by Susie
I agree with Digby: doubling the credit card interest for people who are already on the edge will have devastating effects:
I’m sure there are a lot of people who have just been too dumb to realize that they should pay more than the minimums each month in order to keep up with the compounding interest on their debt. This may help them. But it’s also quite obvious that alot of people are going to be thrown to the wolves on this:
Of course, if your finances are already squeezed to the breaking point, the rate hike is a bitter pill to swallow — good for you in the long run, but hard to take right now.
“If you’re living paycheck to paycheck and your minimum payment goes from $200 to $275, spread over five cards, that’s an extra $375 a month,” says Brauer. “A lot of families can’t come up with that.” The banks already know that and are planning for it. Bank of America, one of the first to raise minimum payment requirements, worked an extra $130 million into its 2005 budget to cover projected losses from defaulting cardholders.
The same defaulting cardholders who are now going to have to pay much higher fees to go bankrupt and who, if they make above the median in their state, will no longer be allowed to file chapter 7. Quite the double whammy.
Boy if I were into conspiracies, this would make me wonder. First the change in the bankruptcy law and now the change in minimum payments. Almost sounds planned.
my question is this…. for those living paycheck to paycheck…. if they have to spend more on cc payments they’ll have less disposable income to pump into the economy. is it ok to hurt the mom and pop business down the street but not cc companies?