Credit Card and Its Affect on Your Financial Status
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One Leading Cause of Bankruptcy
Credit Card Debt is one of the leading causes contributing to bankruptcy. The exorbitant interest rates charged by many credit card companies can have a very profound affect on your financial status.
Affects of Credit Card Minimum Payments
Credit card holders who are struggling to make ends meet often end up making minimum payments where they experience soaring interest rates and various penalty fees. Once you get on the merry-go-round of minimum payments and start having trouble meeting all your other financial obligations, it is not unusual for some to file bankruptcy in order to get relief in eliminating overbearing debts.
After the completion of a bankruptcy, the bankruptcy filing can stay on your credit report for up to ten years.
Credit After Filing Bankruptcy
Since we in the United States depend on credit to obtain homes, transportation, utilities, certain jobs, rental units and various other things we need that makes life easier, it is important to maintain a positive credit record even after filing a bankruptcy. Since the use of credit cards can be one of the fastest ways to rebuild credit in the United States, this question often arises from debtors wanting to rebuild their credit after having filed a bankruptcy: “How hard is it to get a credit card after you have filed a bankruptcy?”
Companies Specializing in Credit for Former Bankruptcy Filers
You might think it would be hard to obtain a credit card after filing a bankruptcy, but if you thought this, you would be wrong. Credit card companies, like First Premier, recently made the news because of their ultra exorbitant interest rates in their attempt to specialize in offering a credit card for specifically people who have filed a bankruptcy. According to news reports, after the Credit Card Act of 2009 was made into law by Congress, First Premier started out for a brief time offering a credit card with a 79.9 % interest rate. The new law limited the fees credit card companies could impose on the debtors, so First Premier came up with idea of increasing their interest rates. They eventually did away with that particular credit card but are currently offering a card with a very high rate of 36% APR.
First Premier also demands some of the highest fees by a credit card company throughout the United States. They charge their credit card customers a 25% fee for a credit card limit increase request, and this is only after the customer has been with them for 13 months. Other fees charged by First Premier are monthly and annual fees, and these fees can also be exorbitant under certain circumstances.
Raising Questions About the Practice
With heavy fees and high interest rates companies like First Premier are charging successful bankruptcy filers, are they setting up the new financially free and former debtors for financial failure once again? Is obtaining these types of cards too much a price to pay to build your credit? This blogger is suggesting that the answer to both questions is yes.
Anything can happen to change your income and expenses in a hurry, and the temptation to rely on your credit card remains. With exorbitant interest rates and fees, you can quickly be sent back to the minimum payment merry-go-round that got you in this situation in the first place.
