With credit card companies using every tactic that they can think of to lure us into new debt, consumers are finding themselves in serious danger of financial insecurity.  The advertising is everywhere.  They are even telling us that they will “help” us with the mounting credit card debt by offering to take on our balance from another company and give us zero percent financing.  What they don’t tell you are the pitfalls associated with these zero percent deals.

One of the most common dangers involved with these offers are in the fine print.  They don’t make it obvious to the consumer that if they are late on even one payment the deal is off and you now have to pay up to 30% interest on your entire balance.  Even on the previous purchases you have made.  Also, and perhaps the most insidious consequence of a late payment is the relatively new concept of “universal default.”

Universal default is a mechanism the credit card companies use to not only raise you interest rate on your zero percent card.  But, all your other cards interests rates can also be raised.  By starting with a zero percent card to help with your balances on other cards, many consumers find themselves paying more than they would have if they had just kept the cards they had and paid down the balances.

There are benefits to the zero percent offers.  If used correctly they can be a useful tool to relieve yourself of increasing debt due to rising interest rates.  But with the practice of universal default, customers can actually find themselves in dire financial circumstances.  Universal default can affect everything from the interest rates on all your cards; they can also make it difficult to get credit that you actually need.  Even your insurance rates can be raised through the practice of universal default.  You get yourself into credit card trouble by breaking the rules of the zero percent financing deal and find yourself not only paying huge amounts of interest but you also pay more for your auto insurance and even have to pay expensive deposits to even turn your utilities or cable TV service.  All consequences of universal default.

If the consumer does use the zero percent offer responsible they can use them as a good tool to turn around their finances.  If you take your high interest balances and transfer them to a zero percent card you can save a lot of money.  But, only if you are diligent in being a smart consumer.  Make sure that you understand all the aspects of your agreement.  The credit card companies are relying on the fact that most customers will break the regulations and end up paying for the privilege of being in debt.  

Zero percent is really just a marketing ploy.  It is another way for credit card companies to get their hands in your wallet. Be careful and you can come out on the beneficial side of these offers.  Be complacent and you will find yourself in serious danger.

By now everyone knows that the economy is close to collapse.  Banks and lending institutions are the most responsible for the mess.  It was created by greedy lenders preying on those with poor credit.  In the late 90’s and early 2000’s credit became available to just about anyone with a social security number, and some cases even to those who don’t.  Credit card, personal loans, payday advances, and mortgages were readily available to people with bad credit.

The downside of this easy credit is that common sense evaporated when lenders started giving loans to those with bad credit.  Unfortunately, those with credit problems had to pay much more for the credit to be able to access the loans.  No one in the credit industry were concerned with the fact that easy credit prevents the poor from ever achieving a better way of life. 

Credit card companies preyed on the lower class and those with credit problems by giving cards to these people.  Their sights were set on the profit they would make by charging 30% interest rates to those desperate for credit.  The lower class is, in general less educated than the average consumer, which makes them an easy target for credit card companies, many of whom will go to any length to “hook” the borrower.  Credit card companies also falsely perpetuate the myth that having one of their cards is necessary.

It should not come as a surprise that when the consumer with bad credit defaults on payment their bad credit becomes even worse.  Not only are they now faced with a dismal financial situation, they also have to deal with debt collectors harassing them.  This downward spiral leads to depression, divorce, and a feeling that there is no way out.

The catch 22 of this situation is that if you can’t afford credit because of bad credit you have to pay more to get the credit you want.  Those with good credit pay less for it which on one hand they deserve but on the other hand the poor are penalized for being poor which leads to default.

The subprime mortgage industry has probably contributed the most to the pain we are all feeling now.  By giving loans to anyone they have caused the entire economy to crash.  Those borrowers who got mortgages despite their bad credit were lured by lenders into APR’s that they can afford when the loan begins but then face foreclosure within a few years.  These defaults, have contributed to the drop in home prices and cost everyone money.  Because of the mortgage industry’s greed many consumers were led to believe that they could afford what they couldn’t which has led to0 many who have lost everything they have, including a home for their families.

The damage has been done and will probably get worse.  The only positive consequence of this disaster is that now it is very difficult to credit, which makes it nearly impossible for those with bad credit to get it.  This is the way it should be.

If you’re in debt right now, the best thing to do is simply lower your credit card rates.  Even if you’re not in debt, it never hurts to call up the credit card company to see if you can simply get a lower rate than what you currently have.  If you pay your bill off in full each month then good for you, you don’t have to worry about your rate. 

I came up with a few steps that you can take in order to lower your credit card rate –

Start doing research- Look at what kind of rates you’re paying now.  If you have a lot of credit cards or you simply have one.  Write down your rate on a piece of paper.  If you want a credit card similar to yours, start looking online to see what the competition is offering compared to your rate.  If it’s lower, use this as evidence when you call.  If most of the rates are higher or the same then you might already have a decent credit card rate.

Call the company- Once you do your research, you’ll have some evidence right in front of you.  The next thing you’ll want to do is call up the credit card company and simply tell them that you would like a lower rate.  Depending on the issuer, they may say no or they may say yes.  If they say no, start using your evidence.  Say things like “Well, company X has this rate” or “You can get it lower elsewhere.”  If they still don’t budge, you’ll probably want to go elsewhere but 99% of the time you will get a lower rate.

Move on – Since you already did your research, you may want to actually go to that company.  Sometimes you may find that the card will actually give you a nice balance transfer rate such as 0%.  This is a rate you should take advantage of.  Be careful of this though and read the fine print because after the 0%, you may be paying a higher rate than expected.

If you do by chance get a lower rate through the credit card company you currently have, you’re going to want to make sure you ask for it in writing.  That way, if you still get your statement and it has the same rate, you can consult with them and use the letter as evidence.  Remember to be aggressive on the phone.  If they won’t budge, simply move on.  There are so many cards out there that you can transfer too.

If you’re either in debt or you’re afraid that you might encounter a lot of it someday, there are a few things that you can do in order to control your debt so it doesn’t explode on you.  These steps are actually fairly simple to follow and as long as you take action, it shouldn’t be hard to avoid that D word for the rest of your life.

Think negative for a second – I know it’s not healthy to think negative but when I say this, I want you to think of the worst thing that can happen to your family money wise.  What happens if you and your spouse lose your jobs or you lose a ton of money in the stock market overnight.  What are you going to do?  Always have a back-up plan and plan for the worst.  That way, if the time does come, you’ll be prepared for it.  If it helps at all, make sure you write down some steps that you can take if the time does come.

Always stock up the cash – No matter what your spending habits are, always make sure that you have at least 6 months of emergency cash set aside.  That way, if you don’t have any money coming in, you’ll be able to pay your bills for 6 months.  By the end of the 6 months, you should be able to find a job.  If you don’t have a job by then, you may want to consider moving or thinking about taking a temporary job at a retail or fast food joint.  Remember, no job is ever below you.

Have high credit card rates? Are you in debt right now?  If so, you may want to glance at your credit card rates and see what they are currently set at.  You may want to get a balance transfer on your credit card of your simply may want to call up the credit card company and ask them if they can lower your rate.  If they refuse, you can always set out and find a different credit card company.  There’s always a lower rate out there for you.

Concentrate on bills – I know paying bills isn’t fun at all but just think about it.  If you can attack your car payments and mortgage, think of how nice it would be to not have those bills at all.  Seeing that most mortgages are anywhere from 20%+ of your monthly spending, the more you pay per month, the less you’ll have to pay in the long run.

Controlling your debt or future debt isn’t really that hard.  Just by following these steps alone, you’ll be able to avoid it.  Just make sure you don’t spend over your head and you save at least 10-15% of each paycheck for retirement.  I don’t care who you are.  No one wants to work forever.

Credit cards have become as common as television sets in our society.  You probably don’t know anyone who doesn’t have at least one.  They do have a purpose and there is nothing wrong with them.  However, while just about everyone has a credit card, almost everyone has had or has heard a nightmare story.

The problems with credit cards are pervasive.  Fraud is rampant.  Identity theft, mail fraud, and excessive debt are just a few of the problems we face as credit card holders.  With the emergence of the internet, fraud has increased dramatically in the last ten years.  While the industry has taken great pains to protect their customers, the criminal element always seem to be one step ahead.  We put our financial security at risk every time we put our credit card numbers online.

It is not surprising that criminals go to great lengths to steal our money.  Today’s thieves are smarter and more resourceful than ever before.  They steal our mail to use our credit cards, go through our garbage, and take our personal information to apply for more credit cards.  If we are not careful it may take months to realize that we have been ripped off.  Credit card companies limit our liability in most cases but the damage to our credit scores are devastating and may take years straighten out and we have to jump through never ending hoops to get our finances back on track.  Some innocent people have even found themselves arrested for crimes that thieves have perpetrated while using our identities.

Not all credit cards nightmares are caused by others.  With the advent of easy credit, many people find themselves thousands and even hundreds of thousands of debt that can never be paid back.  This debt affects families in many ways and in some cases lead to divorce and in a few tragic instances even suicide.  Although these may seem rare they are anything but extreme, there are people all over the country who find themselves caught up in the “credit card trap.”  Unfortunately the credit card industry enables this nightmare through easy credit.  The amount of money spent by these companies to market their product is staggering.  We are inundated with offers through the internet, with television and radio advertising, and direct mail.  The credit card industry has made it easy for us to find our debt spiraling out of control.

With today’s attitude where we want what we want now, the concept of saving to buy the things has evaporated.  Our parents and grandparents were raised in an era where credit was looked on as almost evil.  With the exception of their homes, many of our grandparents never found the need for credit cards.  Today however, it is difficult to go through our everyday lives without a credit card.  It is hard to rent a car or even check into a hotel without plastic.

While credit cards are not evil, today’s society must become more diligent with our credit to avoid the “credit card nightmare.”