Credit cards are the next issue.
When Americans start defaulting the credit crisis will only get worse.
Let’s say Mary Jane has a $10,000 credit card balance. She does not pay the principle every month; instead, she pays the 28% interest charge. Credit card companies log the 28% gain on the $10,000 outstanding, which looks quite impressive. However, when they realize they will never get the $10,000 principle back… a loss will be recorded. The $10,000 is an unsecured, or uncollateralized loan - the company can’t touch her car or any of her possessions. In contrast, a mortgage is collateralized - banks can seize your house.
on May 5th, 2008 at 1:36 pm
0% introductory APR, 0% on balance transfers. When your 12 months is up, just switch to another credit card carrier. That’s how I finance most of my “large” purchases and have been doing so for 3+ years. The only trick is to control your spending and not make so many purchases that your credit limit can’t keep up. Nor should you borrow more than 50% of your total credit limit.