LatinaLista — Credit cards. Can’t live with the interest rates and can’t live without the convenience of fast cash — what’s a person to do?
Well, too many families, especially Latinos, are finding they have no choice but to use their credit cards to survive these uneasy times. Unfortunately, usage is rising, along with debt.
From 2005 to 2008, Latino households went from having the lowest rate ($7,091) of credit card debt by race/ethnicity to having the highest rate ($10,002), an increase of 41 percent.
In addition, Latino borrowers have been targeted for costlier credit cards with high fees and interest rates, increasing their probability of accruing additional debt from late fees and penalty interest rate hikes.
When debt increases, it makes it more difficult to pay those bills on time. A National Foundation for Credit Counseling/MSN Money study found that 32 percent of Latinos reported credit scores below 700, “which often translates to less favorable loan terms on major purchases from automobiles to homes.”
It doesn’t help that credit card companies are suddenly targeting users and upping the interest rates to unbelievable levels. Just recently, I received a statement notice, from a credit card company that I’ve done business with for over 15 years and with whom I’ve had a 22% interest rate, now inform me that my interest rate will be 29% come the first of the year.
My decision – to pay off the account and use that card for extremely small purchases. Yet for low-income families, just trying to keep up with the accrued interest on those monthly bills is going to be tough.
Just like the country blamed the subprime mortgage fiasco on the backs of minority and low-income consumers, this trend of raising interest rates on those who can least afford it has the potential to be just as damaging for our economy and communities of color.
Today, Senate Banking Committee Chairman Christopher Dodd announced he was introducing legislation to call for a temporary freeze on credit card interest rates on existing balances.
It seems Sen. Dodd and his colleagues have noticed “some credit card issuers have jacked up fees to try to maximize their revenues before new rules kick in.”
This is Wall Street greed that isn’t just hitting Main Street U.S.A. but right into the heart of households everywhere. Because of what the credit card companies are doing, Congress is shedding their glacial practice of passing legislation and reacting:
Dodd’s bill arrived just days before an expected vote by the House of Representatives, possibly on Thursday, on a bill to advance by almost three months to Dec. 1 the effective date for strict new rules on credit card fees and interest rates.
The new rules can’t go into effect soon enough. It’s bad enough to have to make ends meet on less money but to have to pay increased fees and interest for nothing more than having the card, is nothing short of abuse of power and trust between that company and its consumers.
Comment(4)
cookie
Implying that cc companies jack up their interest rates for Latinos just because of skin color or race is ridiculous. They are based on income, credit ratings and employment records. It doesn’t matter what your skin color is the criteria is the same.
The fact is that those in our country illegally and other low income persons who were given adjustable rate mortgages were a contributing factor to our housing meltdown. No one is claiming that they were the only reason.
Marisa Treviño
Cookie, you are a hoot. Go back and read the post again please — without being on the defensive about Latinos.
maryelizabeth
(The fact is that those in our country illegally and other low income persons who were given adjustable rate mortgages were a contributing factor to our housing meltdown.)
Cookie, How can you blame the “undocumented” people as the contributing factor to the housing meltdown. It was cronism from wallstreet and the lack laws that allowed the banks to give these adjustable arm loans out as if they were candy. It is irresponsible to blame middle and lower class workers for trying to own a home. Everyone wants to have a roof over there head. It is when cronism exploits people using the American Dream to sell homes and re-finance homes and steal our own US citizens lifes earnings then take there homes from them and throw them on the street without any compassion. Put blame the on wallstreet and also if we had not bailed out the banks we would not have credit to help us survive from paycheck to paycheck “if you happen to be fortunate enough to have a job”. If those banks were not bailed out we would have suffered a horrible depression with people on the streets in such severe poverty they would starve. Thank our cronys who happen to dictate the system and as we now see they are not suffering like the rest of us. They are enjoying own personal definition of Capitalism. Capitalism is for them and not for us.
cookie
First off there is no such thing as undocumented persons.
Yes, I do also blame the banks and lenders for these loans but trying to claim that those who took out the loans didn’t know that down the road that their adjustable rate mortgage payment would be beyond their means to pay it is ridiculous.
Also why did these lenders give mortgage loans to those in our country illegally? I do blame them for that also.
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