The Gathering Credit Card Storm
Our current financial crisis is a case study in ripple effects. A lot of bad mortgage loans, bad loans between organizations, bad evaluations by ratings agencies and bad oversight by government collectively toppled big Wall Street firms. This caused our credit markets to freeze, leading to business contraction, massive job losses, and deep economic pain on Main Street.
First came the crisis over bad paper, now the crisis could get worse because of bad plastic.
Consumer credit card defaults are a gathering storm. At the same time it's becoming harder to get new credit, Americans have almost $1 trillion of credit card debt outstanding. Defaults are rising. Delinquencies are at a six-year high.
And the credit card debt itself is only part of the problem. While consumers are struggling, credit card issuers haven't let up on some of their most questionable practices, including exorbitant penalties and rate hikes. To make matters worse, just recently several credit card issuers have announced plans to raise interest rates, even for people who've paid their bills on time.
We can't afford to watch consumers' finances dragged down by unfair credit card practices. It wouldn't be fair in any situation, but at a time of such national financial turmoil, it's an even bigger threat to our economy. Inappropriately high credit limits, high penalties, and high interest rates have nudged so many people toward bankruptcy in the first place.
http://www.huffingtonpost.com/robert-menendez/the-gathering-credit-card_b_144626.html
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