One of the biggest drawbacks of using credit cards for purchases is the high risk of getting yourself into debt. If you are a smart consumer, then you are probably keen on keeping up to date with your monthly balances and you probably pay it off every month.
However, emergencies and sudden financial disasters, such as the current economic crisis and high unemployment, can easily destroy your monthly credit card payment schedule. As a result, you have probably found yourself in deep debt now. Unfortunately, now is the worst time to carry any balance on your credit card.
Credit card companies have been trying to recover from several financial setbacks that have happened to them in the past few months. The economic collapse which led to a consumer buying slowdown meant that credit card spending slowed down as well. Consumers, now faced with a weak economy and an increasing unemployment rate began to hold on to their cash more. The result was an increase in debt delinquencies and write offs which cost credit card companies billions of losses. While trying to stem the tide, credit card companies were recently hit with the credit card bill, a set of legislations which will cut off the more predatory practices of credit companies and attempt to balance the field for consumers. This has led to a panic among credit companies as they foresee a slow down in earnings once the credit card bill becomes active which should be on the first quarter of next year.
Due to the many financial problems and profit threats that credit companies are facing, they are now aggressively doing everything they can to earn as much as possible and to change their business models so that they are positioned favorably when the government activates the credit card bill. It is well known that any problems that credit card companies face will ultimately be passed to the consumers and the situation is no different now.
Currently, credit card holders are seeing rapid increases in their interest rates and credit card fees. More and more banks are also introducing fees into their credit cards such as yearly membership fees. They are also cutting available credit as fast as they can. The end result of all these changes is that credit card holders are finding it more and more difficult, not to mention expensive, to pay off their debts and to use their credit cards. Even worse is that these changes are having very negative effects on the credit scores of many credit card holders.
These days, if you are carrying any balance, you are certainly in a world of trouble. The best move is to pay it off as soon as you can and, once you've done so, avoid using your credit cards in the meantime.