I hope you are still on the board. Someone said that you had left. Anyway, a question for you or anyone? Someone said that in his/her opinion, the credit card companies are raising the apr. on open accounts when the consumer has committed themselves to pay 15% of their available income on non-mortgage debt. Example Income $60,000 x .15 = $9000 / 12 =$750. Therefore, buy a luxury car and run up your cards to total $750 per month and your apr. is raised. Does anyone have an opinion?
I really need to get back to doing some work but I would like to offer an opinion on this. I would agree that your numbers look about right. If you make 60,000/year then Taxes: 12,000/yr SS Taxes: 4,000/yr Mortgage-PITI: 14,400/yr Other: 9000/yr(750x12) Utilities: 2400/yr Misc(food, vacation, medical, whatever) 12,000/yr Savings: 6,000/yr Grand Total is right around 60,000/yr These are just some really rough numbers but yes I could see where someone like this be perceived by the credit card companies or any other lender as being of greater risk than a diffrent borrower with similiar obligations but with a substatially higher income. I think the number that really should be of concern is the ratio - Total Monthy Obligations divided by Monthly Gross Income. That ratio for this example would be around 53%. That is really high and indicates a greater credit risk. Again these numbers I just pulled out of the air but I don't think they are too far off from real life. And of course there are many other things like tax mortgage interest deductions that would impact the bottom line that I haven't accounted for. John.
Thanks John GEORGE was hot to trot because the apr. on one of his accounts was being raised without explanation. I think this 15% threshold may have some relation to his problem. If my fictional example here got a credit card in 1990 when he only made 30K he could be in even bigger trouble. After all, how would the cc company even know he makes 60K now?
Re: Thanks John I have never made over $52,000/yr. I have only one card with an APR above 15% and I have that at zero balance. It helps that I have have 18 or so accounts and when they raise my APr I simply pay the card off. Chase tried it, when I paid them off, they promptly contacted me to offer 4.9% APR for 1 year. http://www.creditsense.com