One of the main findings of the 2005 Multiple Choice Competition, which was sponsored by Deloitte and Sillfilm is a study of the effectiveness of credit card debt consolidation products in controlling their APR’s and APR’s. The study uses nine questions that take into account:
Does this credit card account give you a reasonable sense of your financial position? How do you pay off each month of outstanding balances? How long have you had credit and – particularly if you have been in debt for a long time – is it possible for you to effectively employ a credit card debt consolidation strategy?
The primary finding of the study is that we live in an age where credit and banking is both literally obsolete and very risky.
Creditors are still paying interest on credit card debt and are now in deep trouble. The Bank of America is running out of ways to bring the interest rate down even before they graduate to converting the huge balance of their credit lines into a common line of credit.
They have the enormous opportunity of taking a huge tax write off of everything so they can make a very wealthy, very profitable, very profitable. Why? Because here is a world where lenders will not have to pay interest on something that is long overdue.
The question that finally arises is how do we be able to work with this great opportunity. I know many Americans believe that we are the enemy of the nation, but in fact, this study looks at many ways that this is not the case.
The first question concerns the ability of the American people to keep the APR’s, at least to a reasonable level, on their entire outstanding balances. The answer may shock you, but the answer is simply this: we are a giant debt that the government cannot and will not allow us to be. Even the credit card companies, the big spenders, and the banks realize this and they were never going to allow you to be a willing patient debtor without playing by the rules of the Federal Reserve System. They are very good at this and they will gladly bail you out if you request it. They prey on the needy. But the solution for them is to take many of their resources and turn them into cash cow customers.
The second question reveals the effect of these same features on our current standing as a nation as we are now seeing in terms of interest rates. It’s an interesting one to read; indeed one that seems to suggest that the Fed may have figured some of the solutions for the problems that the Congress seems to be molding. The result may well be that interest rates are already among the high single digit numbers that banks are paying people to ensure that they get into debt and pay off everything quickly.
It is very possible that the Credit Subprime Debt Relief Association will not be able to pass any major legislation at this time, but I doubt that they would fear being sued just because they said credit cards were unclean. They would probably be subject to very high fines and possible prison time just because they said it. The good news is that some of those who are already paying interest on their credit cards may get that chance soon. The cards will be fully paid off in a very short period of time – maybe as little as 6 months – and one of the ways the banks plan to profit is to open high interest branches of the same bank.
This study is in line with many other reports that have been conducted on Americans so it is well worth reading these documents if your a bankruptcy or are hoping for a quick resolution to avoid what many are left with in an enormous hole. It is also worth getting up close and personal with this wonderful nation’s credit card debt fighter.
The Bottom Line:
So for most, the answer is not at all to get them to look for a debt consolidation solution and, thus, to save their hard-earned money. The answer is to use credit cards as a tool for debt stabilization and pay off debts quickly. Indeed, the answer to maintaining our credit cards is actually something that will be beneficial to many Americans who have substantial credit card debt these days.
The American people understand the significance of credit cards, much more will anyone’s credit history indicate people’s credit worthiness. For example, credit card debt of this kind amounts to at least 40% of the outstanding balance of the holder of the bill. This kind of debt can add up fast. With a credit line of 25% of the available line of credit, that additional credit line is the cost of the total amount borrowed in a one year period. If used wisely, credit card debt consolidation can create fantastic savings for the consumer by bringing about a reduction in interest rates and a good deal of credit line reduction as well.