Credit Card Bailout for Consumers?

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Tue, Jun 16 - 2:08 pm EDT | 5 years ago by
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87868419SP005_Credit_Card_RWe’ve all heard about the great deals being cut for a number of companies. They’ve enjoyed bailouts and preferential treatment on their financing. Now, consumers may be able to get a bit of a break — and the intiative is coming from the credit card companies.

Credit card debt settlemtent made easy

It has always been possible to employ debt settlement as a method of getting rid of unsecured debt. However, the process has long been fraught with complications and strenuous negotiations. Not so much anymore. CNBC offers an example of what happened when one customer asked to settle his credit card account:

Mr. McClelland’s credit card company was calling yet again, wondering when it could expect the next installment on his delinquent account. He proposed paying half of his $5,486 balance and calling the matter even.

It’s a deal, the account representative immediately said, not even bothering to check with a supervisor.

As they confront unprecedented numbers of troubled customers, credit card companies are increasingly doing something they have historically scorned: settling delinquent accounts for substantially less than the amount owed.

Clearly, the economy is forcing credit card companies to consider their options. With delinquencies and late payments on the rise, it is often easier to collect whatever the customer can offer than to try to collect on a debt that the consumer may not be able to pay. With unemployment and the threat of foreclosure forcing people to prioritize their obligations (your mortgage payment should come first), it is becoming a necessity to accept a debt settlement.

Even though you are getting a good deal with the debt settlement, it is worth noting that by the time you get to this point, you have likely paid more than you originally borrowed — and then some — due to the high rate of interest. Credit card companies may not get their entire interest earnings from you, but they’ve probably already made their profit. And, you should also realize that your credit score may be impacted.

Image source: Daylife

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  • Jim

    While the credit card companies and the banks are providing the rope, it is the greedy consumer trying to live beyond their means who ties the knot around their necks and swings in the wind. I’m old school and don’t believe in these easy settlements. The process of getting out of debt should be very painful and leave a lasting impressing so this behavior is not repeated again. Making things too easy only reinforces the bad behavior.

  • Miranda Marquit

    Honestly, since it is the credit card companies offering this, I don’t really have a problem. It’s a business decision for the card companies. They are reaping the consequences of their poor decisions in extending too much credit due to the greed factor. Consumers and companies are to blame. The consumers were punished for their decisions, by having to pay interest and getting into the mess (it’s hardly getting off “easy” when you reach that point), and now credit card companies have to accept that they might not get as much as they hoped. Of course, in most cases, the credit card company still comes out ahead.

  • Pingback: The week’s blog reading » JoeTaxpayer

  • Lizabel

    Clearly Joe Taxpayer is someone you would not want as a juror. It is easy to judge from the outside looking in. Like everything else, the good (people who haven’t made the mistake of over extended themselves on credit card charges) would, and should have an opportunity to benefit from a compromised settlement payment from the credit card companies. They ‘make’ their money, it doesn’t hurt to give a little during these tough times. But unfortunately, there may be some undeserving ‘repeat’ performers who constantly live beyond their means that will benefit. Such is life, what are we going to do – I say help the ‘first time/one time mistakers’; that’s what the real human beings do! Believe me the repeaters or less than deservers will eventually suffer the consequences of their bad habits.

  • Jacob Marta

    It seems logical to think that making consumers go through some pain for poor financial decisions is prudent and correct. However, one of the reasons our country has been so successful is because of how open we are with people in debt. Our bankruptcy code is the most effective in the world. It doesnt seem fair, but in the bigger economic picture when you allow a person or company to get off the matt when they have lost everything, they tend to come back and contribute to the economy. Business people take risks, open small businesses, hire employees, purchase goods and services. If they linger in debt indefinately, they will not take these risks, and will unlikely be able to be a contributor rather a user of social welfare.

    In the case of credit cards, sure many over extended far beyond their means. Believe me they are suffering. Even so, a large number of people were solid, on-time payers, however credit card companies triggered all sorts of rules to double and triple interest rates in just a few weeks time. They also shortened billing cycles, cut credit limits and then when a consumer could no longer pay their monthly min payment, they jacked up the over the limit and late fees. This has resulted in good consumers finding themselves in a DEEP debt trap. Can you imagine your easy payment of $300/month going up to $900?

    I am biased for sure because of the company I work for. However, I work here because I feel strongly that NOW is the time for consumers in trouble to get out of this debt trap intentionally set by credit card companies. They have a limited time opportunity during this down economy to take advantage of the settlement offers being made by credit card companies. It is true, people are reducing their debts by up to 60% or more!

    I invite one and all to go to to see what your settlement offer could be. They have a free calculator that will show you your debt reduction. If you’re late on you bills and are struggling, then a settlement may be a great one time opportunity for you to break free of the debt trap.

    Hopefully we have all learned our lesson. Live within our means and in the next decade America will become a nation of wealth generators, not a nation of debtors.

  • Tom Seay

    Credit card companies were not always like this. I’m sure that back when their services covered nothing more than clothing purchases, dining or the like, especially before the 1980s, no one thought there would be this influx of madness exhibited by these crooked banking giants.
    Too many people, especially those who are under employed and underpaid, have relied on the credit card for far too long. Now, the botton has fallen out on many, and they can’t even make their minimum payments every month.
    We still have house, car, utilitiy, food, college loan (payments) and the like to re-pay, so although I intend to pay my credit cards as best I can, I’m not going to forsake my other financial obligations, and I don’t think those millions of others who have more going out every month than they do coming in, whether or not you throw in the credit card bill(s), should do so either.
    I suggest that even if you can’t make your minimum monthly payment(s), pay something, but do not live outside your means a second time by forking it all over to the credit card company, thus leaving very little for you and your family to live off of. No one ever made a credit card payment living on the street or in the dark.
    And remember, some of those who work for credit card companies or their collective services probably have credit card obligations they can’t pay either. Let’s hope anyway.

  • Trying to make ends meet

    Some of us were not originally living beyond our means and ran into bad luck do to an economy driven down by a republician president with no thought to the people. With people getting laid off with no extra income and families to feed while trying to get another job and get back on your feet. Do you really think someone experience a lay off isn’t already going through a terrible process of worrying how am i going to feed my family and now have more debt to try and dig through? My husband lost his job right at xmas where we have a plan to use our credit cards for flying and gifts and pay it off at the end of the holiday season, while with the sudden loss of his job that was not possible and then the factor that we have to pay rent, utilities, get food and drive we had to use credit where we normally would not. Now we are using the debt considation to help get back on our feet while both of us are working much lower paying jobs then we had before not to mention mulitple jobs when it was needed before and take care of a family. This “Bail out” helps us try and move out debt that we did not want or mean to have due to situations out of our hands. I appreciate the help the credit card companies are offering and it should not be painful process since we don’t know the reason that people are in this situation and could be more painful then the credit company losing on more high interest pay.

    • Jacob Marta

      Trying to make ends meet. I really wish people would stop blaming political parties for the entire economy. At least do some research to understand who is behind the financial foundations of this country and the world. It’s a long long story, but if you read it, you will learn that politicians are simply pawns in a far larger game of financial chess. Blaming GW or Barack is purley niave. At least blame congress who are the ones who write laws, regulate industries, tax us and appropriate funds. The President does NOT do any of these things. I do hope you have made it out of the situation you are in, and that opportunities have opened up for you and your husband. Best – Jacob.