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What Is The Cause Of Your Credit Card Rates Jumping Up
There is nothing more deflating and defeating during this hard economic struggle that many Americans are battling day by day, than to get a credit card statement in the mail and see that the bank has blown your interest out of proportion to nearly 30%, you do not need a calculator for that. And this is even after you have never missed a payment and been a customer for years and years. This brings to mind so many questions, but the main one is what allows these companies and banks to just raise your credit card rates? It seems to be totally unjustified and completely unfair.
Unfortunately, what allows the credit card companies to do this is the plain and simple fact that there is nothing that says that they can not do this. That is why the words of the President are so vital, and the movings and swayings of Congress should be paid attention to with diligence, as there is a promise of litigation that will put an end to these unjustified spikes in credit card rates. But why are these companies doing this at a time when many Americans can not afford such blows to their wallets? This is the true question to be asking right now. The average Joe needs some help.
It's a bit troubling when the answer to this question is a simple one word answer. Securitization. This whole debacle has to do with the way credit card companies for several years now have been selling off the debt on cards to investors. Does this sound a little bit familiar? It is similar to the practices with subprime mortgages for several years until it collapsed last year. So, when a bank sells packages up this debt with other things, it is passing on a risk to the new investor that the debt will go sour. But the banks have a way of increasing revenue with very little risk involved. And that's to jack up credit card rates for little or no reason, to get rid of the low interest cards, what a deal for them.
And we can not do anything against it, as of right now that is. There is no course of action until legislation gets passed and goes into effect. As consumers, we are just supposed to stand and take our lumps. What adds even more sting to the rising credit card rates that we have to face is the banks saying that securitization has nothing to do with the recent trends of raising rates. Even though many who work in the industry, experts, and analysts have spoken other wise.
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