Thanks to the bad economy and recent interest rate hikes from credit card companies, more and more cardholders are missing monthly payments and going into default. Now, according to the Orange County Register's Mortgage Insider blog, credit card companies are taking that a step further and writing off more debt as unrecoverable. The unrecoverable debt, called chargeoffs by the industry, is already at record levels, according to a Reuters story the blog linked to. And analysts expect it to get worse, Reuters reported, climbing to 9% or 10% by the end of 2009, up from 6% to 7% in December of 2008.
In response, Reuters said, credit card lenders are lowering credit limits, ending rewards programs, raising interest rates and adding new fees. That's true even for cardholders who haven't missed a payment, which has generated widespread anger. From a purely financial standpoint, these moves make sense -- until you consider the bad economy behind both sides' financial problems. Raising cardholders' interest rates could generate more revenue -- if the cardholders can afford the new minimum payments. If they cannot, the card company gets no revenue at all. And of course, responsible customers unhappy about the way they are being treated may simply stop using their cards.
As Orange debt settlement attorneys, we work every day with people struggling with high credit card debt. In some cases, high interest rates drive our clients' debt out of control very quickly. Arbitrary fee hikes and rate increases don't help, because they can mean the difference between barely making a payment and not making it at all. With unemployment and home foreclosure at record highs, cardholders may have limited options for dealing with a sudden increase in their debt. The result: default and chargeoffs for the card issuers and massive financial problems for the cardholders.
Howard Law LLP's Garden Grove debt settlement lawyers help clients get control of overwhelming debt from credit cards, medical bills and other debts not secured by physical property without declaring bankruptcy. We aggressively negotiate with creditors to stop harassing phone calls and get the debts discharged, often for a lower amount than our clients owe, in exchange for a lump sum. If you or someone you love feels overwhelmed by debt, we would like to help. To set up a free, confidential consultation with our Anaheim debt settlement attorneys, please contact us today.