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BillSavings.com BlogShould You Take the Money and Run Away from Your Credit Cards?Posted By Sarah
BillSavings.com Brief:
After the mortgage defaults and foreclosures, the next big wave to hit the banking system may be massive credit card defaults. This is a good time to check out your credit card debt and make necessary changes.
In the next big wave of troubles to hit the banking industry, possible massive credit card defaults loom on the horizon. Banking industry execs have warned Congress that 2009 could be an awful year for the credit card industry. The unemployment rate, considered to be an indicator of the credit card write-offs rate, rose to 8.1% in February 2009. It's been estimated that write-offs for credit card defaults could reach 10% of the nearly $1 trillion in outstanding credit card debt in our country. That's a really big number! As credit card issuers are trying to figure out what to do about this potential mess, you may find some interesting opportunities, and benefit from tips on using your credit cards wisely. For example, American Express offered some of its cardholders $300 to pay off their cards and close their accounts last April. One thing to watch out for, though, is unilateral rate hikes from credit card issuers are on the rise. Even folks with stellar credit are experiencing rate increases on their accounts. Bankrate.com, which monitors the credit card interest rates offered at the 10 biggest credit-card issuers, has reported these increases. Low-rate cards today average 9.03%, balance-transfer cards are at 13.57% and cash-back cards at 14.22%. My own experience as a small business owner with great credit has been mixed. I have been able to get some super deals with balance transfer cards to get zero interest on balances, and save up the money to pay them off completely before the interest sets back to the higher rate. I also found my local credit union and USAA bank offered low rate credit cards and great service. However, I was dismayed when my Advanta business card raised the rate unilaterally to about 22.5% a few months ago (fortunately I don't carry a balance on it!) and then sent notice that it was no longer able to offer the card and closed my account. Whew! It can make your head spin trying to keep up with the constant change. Category: Credit Cards 6/9/2009
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