I really haven’t been affected by the current financial crisis other than my portfolios losing a little over 20% of their value but yesterday I received a letter in the mail in regards to a credit card that I have. I watch the markets and am a somewhat active trader. I have heard about the credit crisis and the bailout, way too many times, after all, it’s the only thing on CNBC, which I watch daily.
Back to the letter I received yesterday. The credit union that issued the card could no longer afford to give me such a low interest rate, which was a variable rate. The rate I was paying was below 6%; according to the credit union, this rate was no longer profitable for them because of the current economic conditions. It had nothing to do with members’ credit score. So they decide to change the terms to a minimum 8.9%. I thought the bailouts objective was to make money cheaper? Maybe my credit union has realized that money is getting too cheap and this is what caused the financial crisis to begin.
Today, GMAC Bank gets a $5 billion dollar bailout and decides that it can now offer 0% financing for 5 years on new vehicles and that it has lowed the acceptable credit score to 620. Is the government paying attention to any of this mess? Isn’t that what got us into the credit crisis in the first place? How is GMAC expecting to make a profit? They definitely aren’t going to make it off interest…so it has to be fees.
Why the government should take OUR money back.
Any bank right now that lowers their credit standards hasn’t learned their lesson. Why is 0% financing combined with lower credit standards not a good idea? If I give you a dollar and you pay me back a dollar, I have made $0 profit. Now, if I loan you that dollar again and you don’t pay it back, I have lost money. Could they survive on fees alone? Are they hoping that the current economy will force late payment fees? If the economy wasn’t losing jobs and was in good health this might not be a problem but how many people are there right now worried about losing their job any day?
I think the bailouts are just getting way out of hand. What do you think?
Tags: EconomyStumble it!
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