Got Credit Cards? Here’s Another Reason To Say Goodbye!

There are some that are so adamant about the fact that credit card companies are NOT bad, and do NOT take advantage of consumers.  I disagree, and I think that an article I came across from dailyfinance.com proves otherwise.  For the minority that have the discipline to not carry a balance, you will be okay, but for the rest of you who use credit cards to subsidize your income, you might want to consider cutting the cord!

The article states that, “credit card companies are insisting upon exercising their right to abuse their customers in the name of higher profits“.  Now I’m positive that is not how the companies themselves would word it, but I think it is dead on!  According to a survey of recent activity done on the top eight credit card companies, they have “implemented even more onerous practices, raised interest rates more aggressively and increased the number of fees that they can impose on their customers“.  The report said, this was done on an “any time, any reason” basis. {Shocker!}

I think that credit card companies have been taking advantage of consumers all along, so I am not surprised at all by this news.  One of the things that have irritated me in the past, has been the fact that these companies have had the right to raise your interest rates on credit cards that you have paid on time, just because you made a late payment on another card from another company.  My opinion is that even if you choose to play with these snakes, each card should be handled according to your payment history on THAT card!

What’s the reason for the sudden spikes in interest rates and increased fees?  The survey indicates that it is because the Federal Reserve announced new rule changes, to take affect in July of 2010.  The credit card companies that you think are out to give you FREE hats and air miles, have been fooling you all along, and now plan to maximize their profits on your behalf!  They have been sucking you dry and enjoying the nice life, while you have been slaving away just to make your minimum payments each month! What they give you is immaterial compared to what they take from you!  However, it is not only the credit card companies fault, some of the blame is yours.  You signed up for the card, and used it when you didn’t have the cash to back it up, they just gave you the opportunity to do so!

This is why I love when Dave Ramsey compares credit card companies to snakes!  It may take a while for you to get bit, but the longer you play with them, the more likely it is to happen.  It’s just a matter of time!!  Are you considering a possible “break-up” with your credit cards?  I hope so, but depending on your circumstances, you need to do it right.

The very first thing to do would be to STOP BORROWING MORE! Stop the bleeding before you dress the wound!  Now you should do EVERYTHING you can to get an Emergency Fund in place so when life happens, and it will, you will be able to handle it without accumulating more debt in the process.  How much should you save?  Dave Ramsey suggests that you save $1,000, unless you make under $20,000 a year, which would drop it to $500.  It’s really up to you, but whatever you decide, make it happen fast!  (e.g. Have a yard sale, cut spending, sell everything you can, get an extra job!)

The idea is that once you have an emergency fund you have created a buffer between you and life, and can then focus 100% of your attention to knocking out your debt via the Debt Snowball! (Baby Step 2) Your Debt Snowball is all of your debts except for your house, on a list from smallest amount owed to largest amount owed, regardless of interest rates.  (Psychologically you receive motivation by getting some quick wins.)  If you have a second mortgage, or a Heloc, if it is less than 50% of your annual income, you would add it to your Debt Snowball.  Otherwise you would handle it when you pay off your house which is in Baby Step 6.

Cut your liabilities by cutting your cards!  Get them out of your life and learn that it is possible to have a life without them!  You have been programmed to believe that you can’t do it, but I assure you many people have, and so can you!!  Now go do it, and experience the feeling of freedom and empowerment once and for all!!  Put your foot down, and scream ENOUGH IS ENOUGH!!!