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The Bad Side of Credit Card Companies

By Janet Lacey
Published: Monday, January 4th, 2010

Getting and owning a credit card used to be cheap and easy. But after the biggest credit crunch that the global economy has felt since the Great Depression of the 1930s, credit card companies become paranoid and credit card holders become more conscious of debts. Credit card companies become paranoid of them remaking the credit bubble that burst many businesses in thin air. This sort of paranoia made them set the bar higher for those who would want a credit card account. They made it by raising their required credit score. On the other hand credit card holders became more conscious of the implications of having debts. Unfortunately, a large number of credit card account holders who found out this truth too late.

During the recession many banks and financial companies were forced to declared bankruptcies to control the damage of failed efforts to make a financial recovery. But the hardest part for consumers was after the recession. The so called post recession trauma of the credit card business made companies too paranoid that they have started doing unimaginable steps just to maintain a good paying client base. These companies pushed to make the credit score formula more biased in accounting for credit balances. The new formula in computing credit score is now more focused on lowering the score of those who delinquently paying their credit card payments.

Credit card companies are also responsible for increasing the total debts of credit card account holders to $969.9 billion through multiple increases in credit card interest rates. Many credit card account holders who have exerted many efforts in managing debt were set back to where they started- being indebted.

Credit card companies have become more ruthless in cutting credit lines, at times even without prior notice because they do not want to risk crediting individuals who do not pay their bills on time. And the worst post recession trauma of credit card companies was the sudden proliferation of junk debt buyers and collection agencies. Credit card companies have started getting the services of collection agencies to help in getting delinquent payments. Most of these collectors are good in blackmailing the credit card account holders that they will record the late payments as a defaulted account which will dramatically lower the credit score of an individual.

Junk debt buying companies have multiplied its operations after the recession. Many credit card accounts are defaulted after the recession JDBs buy it at a cent per the dollar rate from the credit card companies. Afterwards, they start exerting all efforts to bring back defaulted accounts to life.

Availing a credit card recently has been proving to be a harder task as compared a few years ago. Credit scores are being used as a discriminating tool that enable credit card companies to see whose too risky and who is not. Borrowers should improve their credit scores because this number is a good indicator of how credit worthy he or she is and not for the wrong reason of being able to avail a credit card account. Getting debts can be helpful sometimes, but there is nothing comparable to a debt free financial life.

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