Movement for credit card forgiveness
Consumer advocates and financial types are pushing to have large credit card debts reduced by as much as 40 percent for card holders. Consumers are defaulting on their credit card bills in staggering numbers. Americans have $900 billion in credit card debt.
This proposal would be for those with crippling amounts of debt. The article does not say how much credit card debt is needed to qualify. Indeed, the credit card crisis is real.
However, I assumed that bankruptcy was a way to have your debts forgiven.
If people were to have their credit card balances cut, I would like to know what they used the cards to buy. If they had medical bills, that’s one thing. But if someone were acting like an extra on Sex and the City, buying up designer goods, I would be VEXED! I would really hate for there to be a Louis Vuitton bail out–especially because I don’t own one!
I digress.
Do you think there should be credit card forgiveness during these poor economic times?
18 Responses to Movement for credit card forgiveness
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Heck no. Bailouts only reward bad behavior. Why change the behavior (buying things you can’t afford – be it Manolos or a McMansion) if there are no repercussions for your actions? It teaches that you can do whatever you want and someone will always come to your rescue.
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I resent this movement. I also had high credit card debt, between my business and home cards, it was 60 thousand. I just finished paying it off. Why should I have to pay it off only to find others being freed from the debt. We did this to ourselves. It is each individual’s responsibility to pay off their own debt. On the other side, card issuers should be prevented from charging those huge fees and defaults to rates as high as 30 percent!
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Makes sense for the credit card companies – I’m sure they’d rather get some of their money than none of it. Still, it sucks for those of us who have been financially responsible.
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Forgive the interest, yes, but make them pay or work to pay off the principle! For many of us who struggled to save for a home down payment over years and lived within our means this is a true slap in the face and our wallets! But then, this is the socialized society irresponsible people seem to think is their right. This is what they are voting for with the Democrats. Spread the wealth from those who work and save, to those that take the hand outs and party with them and then complain they aren’t getting enough!
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Boy, I think if you are swimming in consumer debt, it’s your own fault. Like you said, medical emergencies and such not-withstanding, this is a terrible idea. This kind of thing is what bankruptcy is for. I do like this idea from Coco about forgiving interest. I have 2 credit cards, a credit union card at 8.5%, and a BofA card at 15.99%! I have called BofA 3 times in the past 3 months, I know that my FICO score is around 700, and they tell me there is nothing they can do to cut my rate. Bulls@#t! My credit union lowered my rate. My husband’s bank lowered his rate! I hate that because BofA is one of the only banks still doing well, they feel they can continue to fleece consumers.
I just want to make one other point about this whole “socialized society” argument I have been hearing so much about lately. I *must* point out that nothing about the current bailout is socialist. All we have done is given a ton of money to private companies, there are no more restrictions on how they spend it now then there was before the crisis. It is the reason why CEOs can go out and spend the bailout money on fancy golf trips and not be convicted of a crime. There are no government officials sitting on the boards of these companies. This is no different than the kind of tax shelter that big oil and insurance companies receive year after year. It is perfectly clear that no one is going to be punished for this mess, and government will not be running the day to day workings of any financial institutions, nor will they be making any of their business decisions.
And let’s talk about “spreading the wealth”. Qualifying for a 30-year mortgage by traditional calculations, with an income of $4,000 a month (that is what me and my husband make, we are both teachers) we qualify for a purchase price of $140,000 with 5% down. If our salary was doubled, we would qualify for a mortgage of $310,000. Think about what those 2 figures would buy you where you live. Where I live, $140,000 buys us a 700 sq. ft. 1 bedroom condo in a sketchy neighborhood. $310,000 buys us what would have traditionally been considered a starter home: 2 – 3 bedroom ranch in a working class neighborhood with decent schools. It’s not about “spreading the wealth”, it’s about giving some of us “middle-class working folks” a chance to survive and prosper…. which is what this country was founded on.
I implore everyone to take a few minutes and watch this incredible presentation on the middle-class squeeze, and how it has happened: http://www.youtube.com/watch?v=akVL7QY0S8A
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Savvy-You make some good points. Do you think the leaders want to avoid a total collapse of the economy? Or do you think that maybe that’s what we need now so we can rebuild responsibly?
Jeff-Tell us how you paid of $60,00) of credit card debt. That’s impressive!
Coco-Understood.
sgrangal-Thanks for commenting.
KO-Great post!
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@ Jeff – I disagree. No one is forcing people to do business with credit card companies. Therefore, if they don’t like the interest rates, fees or terms of agreement, they can walk. If you (the general you) don’t like the rules then don’t play the game.
@ Frugalista – The economy will not totally collapse. That’s just a scare tactic for the public to get consent for the continuting bailouts. IMHO, the problem is government/leaders continually try to artificially prop up the economy. If they would stop interfering, the economy would correct itself. Sure, things would get worse before they get better but that’s what’s needed to stop the rampant consumerism we’ve experienced over the last decade.
Look back 30-40 years, the economy and people did just fine without easy access to credit. People had CHARGE, not credit, cards that were paid in full each month. Homes required 20% down but the prices were reasonable then. If you wanted something you didn’t have the money for, you either saved up or put it on layaway. No, you couldn’t get everything you wanted all at the same time but our country, as a whole, was much better off financially.
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People who max out their credit cards or have huge credit cards debts are simply bad with money — and no bailout will ever help those people learn fiscal responsibility.
They will simply wind up in debt again.
I am against any bailout for people who are careless with their spending. Grow up and live within your means and save for the future.
What might work is if credit cards for three years offered a low interest rate — say five percent — to help people get out of the hole and pay their cards off.
The minimum amount due at the end of the month would be at least $50 to $100 more than what they typically pay per month.
And eligibility would be based on what past purchases they had done over the course of two years:
If the purchases were mostly for gasoline, groceries, prescriptions, etc. they WOULD be approved.
But if most of the purchases were for VIP bottle service at South Beach nightclubs, boutique shopping sprees, vacations, concert tickets, dinners at The Forge, and other such crap they would NOT be approved.
I would wager that 20 percent of the populace that is approved would use that opportunity to get their balance down close to — or at — zero.
But would credit card companies go for this?
Heck No!! Credit card companies want people to be in perpetual debt with interest rates on average of 18 percent!
Heck, credit card companies even fight Debt Consolidation companies when it comes to giving consumers reduced interest rates.
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@ savvy – Here here! I completely agree. If you can’t do the time, don’t do the crime. Of course I hate my 15.99% interest rate on my credit card, that is why I will pay it off and never use it again. As a consumer, I have the power to take my business elsewhere. I hope it does go back to taking 20% down in order to buy a house, maybe then housing prices will reset, and most Americans won’t have to leverage themselves to the hilt in order to get their piece of the “American Dream”. (Which, btw, I think is a farse anyhow).
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I’ve had a credit card with over 20% interest. I joined a debt program to pay off my balances at a reduced rate.
I’d love to magically make that disappear, but I do know one thing – the government isn’t going to lift a finger to help the people at the end of the line. The man only gives out money to help the other man!
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Absolutely not!!!! I just paid off 50K in debt from buying designer crap….so I probably would have been one of those people who would have been bailed out. That is wrong wrong wrong!!! NO! People get into this mess, and they can get themselves out. Where did we get to be a country that bails everyone out? Enough already.
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NO! I have some sympathy (but not much) for people who were roped into bad loans. But you choose to get a credit card and run it up.
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I agree that there are times when you have medical costs that cause issues. But isn’t that what insurance is for? To be responsible and help with these costs? So in effect, by not having insurance, you are willingly running the risk of having high bills? And then of course, all other debt that is accumulated she be made to be paid by the person who ran up the debt. It’s like giving them a slap on the wrist. And if they don’t want to or can’t, that’s the very thing that bankruptcy was made for.
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Whoa! Fruga, you have hit a nerve here. I don’t think we should bail out credit card debt. But I think the companies also should not be allowed to raise rates to 32 percent for any reason under the “universal default” rule even when the person is paying them on time. Shameful!
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Anyone with a brain knows that cc companies plays trick on people all the time.
I say forgive the interest, late fees because that’s where cc companies make their money and play their tricks. For as the original debt. The person has to deal with it.
Wheew, I ‘m glad I do not have cc debt!!!!!!!!!!
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Heck NO!!!!!!!!
Bailouts will continue to cripple our economy beyond the almost unfathomable stupidity that has alredy been wrecked upon it by reckless entitlement thinking. How do people get into such debt – by thinking they ‘deserve’ something whether or not they can really afford it. GET OVER IT – live within your means
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i don’t know what will happen if you forgive the ‘major’ credit card debtors vs. letting them just default? Either way no way is getting paid right?
Whichever way the pendulum swings, I would like to see the credit card regulated differently – more transparency, no more absurd fees that can drive your interest rates through the roof.
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I think that credit card forgiveness would work. How many people filed bankrupcy years ago only to end up in the same boat years later.
Maybe reduced interest rates, plus reduced late charges would help people from defaulting while allowing them to rid themself of this debt.
savvy