About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

3 Comments

  • hi,

    It seems so easy to spend when using credit cards. Now I start paying cash to buy something I want. Credit cards may help if you on holiday or emergency but not for person who cannot control their purchases. I’m using citibank credit cards and because I have good track paying the bill every month they increase my credit limits even though I’m just paying the minimum payout…Actually, I had a happy life before I started using that plastic.

  • I wrote a column last month discussing my family’s plan for the holiday season. Even though we carry no credit card debt — and have not suffered any kind of adverse action from our credit card companies — we are having a lean Christmas (by design). We’re not spending much money. We’re in a recession. This is a time to save. It’s not a time to spend.

    The sooner that consumers get the message that this is a good time to shore up their balance sheets at home, the better off they’ll be. They should be de-leveraging — not increasing debt. Maybe they didn’t get the memo.

    At my blog, I teach this: pay in full, pay in full, pay in full. If you don’t have money sitting in the bank to back those credit card purchases, don’t use the card. Most consumers don’t pay off their holiday purchases until well into March. The card companies just love this time of season.

    That said, and to address the point of this story, I think that credit-limit decreases are going to hurt consumers in another way. Because I know consumers won’t be able to refrain from going into debt, their utilization will be going higher. The credit-limit decreases will merely compound this problem.

    The hangover from this holiday season should be a doozy.

    Marcuss last blog post..Loss In Confidence In Banks Causes Huge Shifts In Deposits

  • Laws are stacked against the consumer, and we’re heading into a “perfect storm” as far as the credit card outfits are concerned. The bad economy means more people will be charging more, meaning more interest income; as people hit their limits, over-limit and late fees will compound; credit card vendors will LOWER limits to help facilitate that; bankruptcy laws (in US, anyway) make it harder to discharge credit card debts; in using their cards, most people have waived their rights to go to court over any disputes, and the Binding Mandatory Arbitration guys rule 98% in favor of the card vendors.

    I’m sure credit card outfits are just GIDDY at the prospect of the surge in revenues they’re expecting over the next 6-12 months!

    And I’d bet my bottom dollar that every single one of them will be raising over-limit and late fees before Christmas … just before they notify people they’ve cut their credit limit to about 10% above their current charge amount.

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