Credit Card Solutions.
Please join my Credit Card Protest at DAILY-PROTEST.com
I predicted todays economic woes over two years ago, and I predicted it would be the credit card industry that would lead the way.
A borrower can be labeled a bad credit risk if they eventually fall behind and are late on their credit card payments. The odds favor the bank that the longer the payments are extended the customer will be late on a payment. As it stands now Credit Card Companies can raise interest rates without really warning the customer! It is clear to me that at some point in the credit card paydown, the customer must be given an interest free paydown option.
My Credit Card proposal would cap the total interest paid by the consumer at 50-75% of the amount of money that was originally borrowed. As time passes and the consumer that borrowed a 1,000 accrues 500-750 dollars in interest charges, the remaining debt could then be paid off interest free. Capping the amount of credit card interest the customer has to pay at 50-75% of the total amount that was originally borrowed creates a safer balance between consumer debt and indentured debt that may never end. I think that when the customer has reached 50-75% in interest charges the banks have already profited handsomely on a zombie debt.
When interest payments totaling 50-75% of the original borrowed amount have accrued, the consumer should then be offered a choice, either paydown the remaining debt with no more interest charges as long as the customer pays back between 2% to 3% per month of the remaining balance. Or the consumer can continue to dwaddle along paying the same interest rate plus 1% of the total due. It's a choice that the consumer has EARNED.
My point is that after a certain amount of interest has been paid back to the bank the consumer should then earn the right to choose how to pay down their remaining credit card debt.
Another approach could be to age credit card debt and then after 2-3 years, allow for all older debt to be paid off, interest free.
Cap Total Interest at 50% of Loan.
The banks have several ways to penalize the consumer while also lowering their credit score yet I see no plans that reward consumers with fast interest free paydown options once certain total interest payment requirements have been made. I would call this new interest free paydown CONSUMER EARNED INCENTIVES.
How about the Earned Incentives Act of 2008. (it is now 2009) Once a consumer, over time, reaches 50-75% in total interest paid on a credit card loan, they can paydown the rest of the card INTEREST FREE, as long as they agree to pay back 2-3%% of the total due every month. Who could really complain about this idea?
The banks get paid back their money at a higher and faster rate so they can reinvest it, and the consumer can reduce their overall debt. The word "earned" is important to include in this act because it gives the consumer back the dignity they have already earned by paying back 50-75% in total interest charges. The banking conglomerate has perfected the art of indenturing americans with misleading yet rising interest rate charges. Consumers need their own "act" to combat the bank's one sided ways.
If this Credit Card Total Interest Payment Cap Idea was implemented, it could provide an unforseen benefit to most americans. As people reach the 50-75% total interest payment cap, they will begin to experience their debt dropping much faster. This could create renewed enthusiasm to reduce debt, and that is probably a good thing and most likely better than someone giving up and declaring bankruptcy. The more people that agree not to give up on their debt, the less maneuvering the banks will have to do to shift the unpaid debt onto the shoulders of those who believe in the system and continue to pay their debts.
Lets not penalize those who do not file for bankruptcy by making them cover the debt that is left behind by those who choose to give up and file for bankruptcy rather than pay an overly prolonged debt.