Chalk one up for the little guy, I suppose. Last week I posted a video of a Bank of America customer who was refusing to pay her credit card bill because of a rate hike she considered unwarranted. You can see the video HERE.
Once the video went viral, she was contacted by Jeff Crawford, Senior VP of existing credit card accounts for Bank of America. He offered to lower her rate to 16.99% and she told him to get bent. BofA backpedaled further, and they settled on a rate of 12.99%.
Here is her latest video explaining what happened:
Is this a sign of things to come? Is the credit card business so precarious at this point that the banks will do anything to avoid defaults?
Credit scores are quantitative and qualitative. It is the most prevalent example of grading on the curve in human existence.
Meaning, if everyone defaulted on their credit cards in concert, there would be no net negative effect on individual credit scores. Everyone's credit score would drop a similar amount and establish a new baseline for what is considered "good" credit. I know the banks are keenly aware of this.
A massive debtors' revolt would be catastrophic to the banks because they'd have to write off all the debt and fees and they couldn't afford not to issue new debt to the defaulters.
The WSO Guide to Understanding TARP
You are theoretically correct. However, the odds of a massive voluntary debtors' (coordinated) default are infinitesimal. Trying to convince millions of people to stop paying back their debts, a good chunk of these people being risk-averse, is just not possible.
Also, if this were to happen, there would be a huge collapse in the credit market. Banks would not be able to afford to issue new debt. (Like you said)
Where does this leave us (the people)? Fucked. Sure, we would have a new baseline credit score but it would be meaningless. No bank will be able to offer credit, no need for a credit score.
Americans finance their lives on credit, I don't agree with it, but I sure as hell do not want to go through ANOTHER (and more disastrous) credit crisis because of AGAIN the lack of common sense spending and financial sense of the American people.
Not only is the next credit crisis a foregone conclusion, it's going to make this downturn look like a day at the beach.
The WSO Guide to Understanding TARP
But there won't be anything "for the people". There will be the illusion of "for the people", but it will just be another naked corporate money grab.
The WSO Guide to Understanding TARP
Election 2012: the ascension of his Majesty, the Devil:
Doloremque quo ut perspiciatis cum. Recusandae id id voluptate natus quia quis. Ut provident consectetur aut sit dolor non odio est. Nihil sapiente sapiente beatae dolor aliquid sed. Aut molestiae ut accusantium quia porro repellendus.
Sequi magni sed vel amet dignissimos dignissimos accusantium. Blanditiis ipsam iure rerum dolorum tempora vitae amet. Repellendus deserunt repudiandae qui sit in aspernatur dolor. Ut ullam cumque natus amet repellat placeat.
Dolor velit nulla est ipsum. Debitis ipsa et reprehenderit qui optio. Nostrum dolor culpa dolores. Adipisci incidunt quis iusto reprehenderit porro eveniet. Qui ut magnam quis nemo et.
Qui soluta explicabo est ipsa incidunt. Quidem quam nobis consequatur quia voluptatum modi molestiae. Et totam quis accusamus in nemo aliquid. Et ipsa consequuntur nobis aliquid consectetur.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...