How to Survive the New Credit Crunch
If you breathed a deep sigh of relief, believing you escaped financial fireworks set off by the mortgage madness, that relaxing exhale may have been premature. Chances are you will soon be receiving fat envelopes from your credit-card companies containing important changes to interest rates, fees, grace periods, and limits.
Why? The same banks that issue the most credit cards rank among the highest volume lenders of adjustable-rate mortgages, also called ARMs. These loans typically start with low monthly payments and then reset higher—sometimes much higher—between two and five years later. As you’ve probably read, a growing number of borrowers are finding it impossible to pay the reset cost of these mortgages. Banks are experiencing an increase in delinquent accounts and foreclosures. They are beginning to lose money and are taking some of the following actions…
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