Dealing with credit card line cuts

by Sundeep Kothari

Credit Card Cuts

 

This article discusses the reasons for the expected $2 trillion in credit card line cuts and some strategies for how consumers may deal with those cuts.

Credit card lines to be cut by $2 trillion

by Sundeep Kothari

Credit card lines to be cut by $2 trillion

Credit card companies are expected to cut credit lines by $2 trillion over the next 18 months.

This will lead to a sharp drop in consumer spending, which will lead to more trouble for retail businesses, which will lead to retailers laying off workers, which will lead to more foreclosures, which will worsen the economy.

But since banks have no money to lend out, they have no choice.

Proposed new credit card rules

by Sundeep Kothari

Proposed new credit card rules

In May of 2008, the Federal Reserve Board proposed new rules for credit card companies. These include:

1. Banning banks from raising interest rates until a minimum payment is at least 30 days late, a promotional rate is expiring or the customer has a variable rate.

2. Encouraging banks to send statements at least 21 days before the due date.

3. Banning the widespread practice of applying payments to low or no interest balances first, then higher balances.

4. Banning banks from charging over-limit fees if the limit is exceeded because of a hold placed on the account.

These new rules are certainly good, but are not enough. Here is another rule that I support: Reducing the default rate from 31% down to 20% on credit cards. This would have the effect of allowing people to pay down their debts at a faster rate. In addition, individuals will have more money to pay their mortgage payments, which will reduce foreclosures. Also, people will have more money to pay down their student loans, and other personal loans. Instead, when the interest rate is jacked up to the default rate, then many people go ahead and file for bankruptcy. And then banks get nothing in return. By reducing the default rate, banks will have more liquid cash, gain more stability, and the credit market will have some thawing.

Kothari Law Firm ad on classifiedads.com

by Sundeep Kothari

http://www.classifiedads.com/attorneys-ad1187358.htm

Above is my ad on classifiedads.com

Kothari Law Firm

10 Glenlake Parkway Suite 130

Sandy Springs, GA 30328

Kothari Law Firm ad on backpage.com

By Sundeep Kothari

Kothari Law Firm ad on backpage.com

Above is my ad on backpage.com

More customers resume using old-fashioned cash

by Sundeep Kothari

via Print Story: More customers resume using old-fashioned cash – Yahoo! News

More purchasers shunning credit cards, store cards and charge cards and using cash instead.

Debt management

by Sundeep Kothari

http://finance.yahoo.com/banking-budgeting/article/106188/The-Debt-Diet-Ways-to-Trim-Unsightly-Bills;_ylt=Ag66deoo4LIkbFquIHrWrysJo9IF

This article discusses various strategies to handle your debt.

CitiGroup expected to cut another 50,000+ jobs

by Sundeep Kothari

CitiGroup,  major credit card holder and banking giant, expected to cut over 50,000 more jobs and sell off numerous assets.

Credit Card Forgiveness program rejected

by Sundeep Kothari

A proposed plan that would have allowed the forgiveness of up to 40% of the credit card debt has been rejected by the federal government.