I thought that there was recent legislation passed that forbid banks for jacking up rates as they had been doing from late 2008 into the first half of 2009. All of my credit cards have seen increases into the 25% range AND, at the same time, they have slashed my credit limit down to just above the debt level.
I used to have a 740 FICO score with debt ratios of 25% (debt to credit level). Since the rates have been jacked up and the credit levels dropped to just above each card's respective amount of debt owed - it LOOKS LIKE I have gone on a spending spree. I have not, however. My FICO score is now 530, my credit rating destroyed by this artificial "maxing out" of my credit that these banks have done.
I have never missed one payment (yet) and I can not afford to pay off my balances (in full) at this time. I must make minimum payments, even though the rates have nearly tripled those minimum payments now. As a small business, with this recession, I cant even get a banker to speak to me about the situation - let alone get a loan to help me continue working so that I can earn the money to pay these cards off. I do not own a home, I have no major assets to back a loan - even if the banks would offer such an instrument.
Why are banks putting people deeper into debt like this? Are they wanting to bankrupt even more people - via these artificial means? I cant stress enough that I have not increased spending. If anything, my spending came to a halt in late 2008. Food, gas, insurance - thats about it. I have no employees - I am a sole proprietor.
I thought they (banks) received bailout monies to assist them in easing the frozen lending? Lending seems to have frozen over 5 times since Henry Paulson first warned us all about this problem. I also thought the stimulus bill was supposed to assist banks and people. Then I thought I remember hearing, back in Spring 2009, that some legislation was to have prevented banks from raising interest rates and slashing credit limits. Nothing seems to be working.
Can anyone explain this credit disaster that is slowly unfolding?