average credit card debt
Question
Can a credit card co. raise your APR to a point that it forces bankruptcy?
I have $12000 in debt spread over 3 credit cards averaging 15% APR. One late payment (by a day!) raised one of them to 32.99% and that caused a ripple effect to the other cards. Now the remaining cards average 18.5% on top of the 32.99% one. I live check to check with NO room in my budget for fluctuations. My minimum payment have essentially doubled and that was just enough to tip the scale. Now, in order to not default, I'm cutting into my food budget. (I have literally cut any expense that wasn't necessary, i.e. savings, entertainment, etc.) Can a credit card company raise your APR knowing that by doing so, you will be forced to file bankruptcy? Is there any law to protect against this? I have offered to open up my earnings to them to show I'm not squelching on my debts... it's just been pushed beyond my means. Thanks in advance. ADD ON: I couldn't figure out how to respond to responses. In regards to living beyond my means, that wan't the case until a recent lay off amongst other personal issues. When I was making good money, my APR was low, but times are tough and now that my income is less than half of what it was, I'm expected to be able to pay twice as much toward my APR??? I don't need to be reminded who borrowed from the creditors. (thanks for the mirror comment, jackass. I was already feeling great about myself) I'm concerned with how to protect myself from bankruptcy. Or not eating for that matter. I'm not looking for any quick fixes. I've never defaulted on anything and don't plan on it now. Anyone got a link they wanna post?
2 months ago - 6 answers
Best Answer
Chosen by Asker
A few things in your question do not make sense. First of all to have been reported late and tripped the universal default clause you would have had to be 30 days or more late not 1. Second for anyone to have $12,000.00 in credit card debt means that you have been living beyond your means for several years now. Third no there is no law to protect you from the credit card companies raising your rates, they can do this at anytime for just about any reason, read your terms and conditions. Forth they know nothing of your personal money problems and could care less. You and only you put yourself in this position not the credit card companies. So, if you want to know who is responsible for this mess, go look in the mirror.
Source(s)
Finance Manager for over 9-years / 2009 edition Consumer Action Handbook.
by ?
2 months ago
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Other Answers
The credit card issuers know nothing of the kind - that's ridiculous. Bankrupting you would in fact hurt their chances of getting paid. It's the debt load that YOU accumulated that is "forcing bankruptcy."
by jlf- 2 months ago
I don't know but they don't want you to be bankrupt as they would rather have the money, not your old TV set or whatever. Having said that, it's their money you are using with your card and they are getting nervous about repayment especially when you are late.
by scoutma53- 2 months ago
They can raise the rates as you would find if you read your terms and conditions of the account, you agreed to all the changes and policies when you charged on the card. I agree with Jlf, to think a credit card company was knowingly forcing you into bk is ridiculous. Those fees are there for a reason, so people will pay their bills on time, and you did not, so you got demoted from the "preferred" group.
by Dixie Darlin'- 2 months ago
CNN Money Expert Clark Howard, on his WSB (Atlanta) Radio Show just the other day stated that many credit card companies, especially Bank of America, is starting to realize that 50% of the debt is better than 0%. He suggested calling the lenders directly, before they start calling you, and request a rate cut. Some are actually cutting APR to zero. Others may cut the interest rate and then follow by cutting the repayment months actually resulting in a higher payment, but you won't know until you try. Certainly doesn't hurt. May also want to read theis CNS News article on a way to avoid bankruptcy - "The average American household has assumed unprecedented levels of debt. And they can't afford to repay all of their debt, but they could pay a portion of it," said consumer finance expert Robert Manning, author of "Credit Card Nation." Most debt-management companies require people to repay all of their debt - or declare bankruptcy. But Manning, who works at the Center for Consumer Financial Services, says he's got a better way. It's a formula that determines how much a borrower can actually repay, based on income, local cost of living and local taxes. The consumer avoids bankruptcy, and the lenders get some of their money back. His innovative program is administered by two credit counseling agencies, InCharge Debt Solutions and Hope Financial. So far it's available in 25 states. Best of Luck!
by D T- 2 months ago
Yes, they can. They can raise your interest rates up to whichever is less of either (a) the amount that your account agreement allows, or (b) the amount that the state "usury" laws allow. As long as the new interest rate is less than or equal to both those amounts, they can charge that rate, even if it forces bankruptcy.
by StephenWeinstein- 2 months ago