WEDDING FINANCING
FINANCING YOUR WEDDING USING CREDIT

For just a moment, imagine this situation...
The wedding was unbelievable, the honeymoon was unforgettable - you used 33% of the $12,000 in available credit from Bank of America to finance some of the wedding and honeymoon.  You return home from your honeymoon and find a notice from Bank of America that says your interest rate just doubled and your credit limit has been reduced by 50%.

Guess what?  Your credit score has just been trashed by Bank of America and you will be paying for it for years!

In part, here is how credit scores work…
A higher percentage of used available credit = a lower credit score.
A lower credit score = more difficulty getting credit and higher interest rates if you are able to obtain credit.

Using the example above, if you have a $12,000 credit line and you have a $4,000 balance you are using only 33% of your available credit.  However, if someone like Bank of America decides to reduce your credit line by 50% from $12,000 to $6,000 you suddenly have used 66% of your available credit making it look like you are a higher credit risk!

Recently, there have also been many reports that Bank of America has unexpectedly increased interest rates (many times more than doubled and up to 28%) significantly reduced credit limits and closed accounts without any valid reason.  These are not isolated incidents.  The growing problem is widespread and is damaging more consumers each day.

When interest rates are increased significantly, the required monthly minimum payment also increases significantly.  This type of action puts unnecessary financial strain on the consumer.  It also negatively impacts the debt to income ratio - another factor that is considered when determining a credit profile and credit score - which determines if you will be able to qualify for credit and what interest rate you will be charged for credit.

Unfortunately, decreased credit limits or increased interest rates have a cascading effect.  Once one credit provider reduces your credit limit or increases your interest rate others will likely follow because the action taken by the first creditor will change your credit profile and credit score for the worse.

These types of actions can be devastating to your credit score and your ability to obtain affordable credit in the future.   In fact, numerous publications are bringing attention to  Bank of America's questionable actions. Business Week recently brought attention to the problem in an article entitled "A Credit Card You Want To Toss" and MSN Money Central also published an article entitled "Bank of America blindsiding cardholders".   If you value your credit rating or your ability to obtain future credit, this is not a situation to ignore.

It is estimated that 1 in 5 credit cards used are now controlled by Bank of America. Since Bank of America began acquiring other major banks which also issue credit cards it is not uncommon for consumers to now have more than one Bank of America Credit Card.  This becomes very problematic when Bank of America feels the need to compensate for losses they have incurred in another financial market (sub prime mortgages) or when they need to raise cash.  It is estimated that over 40 million credit card accounts are controlled by Bank of America which gives them a ton of leverage because they are able to dramatically change your credit terms, increase your interest rate and reduce your credit limit at-will and without reason or justification.  Unfortunately, any of these changes will likely have a negative impact on your finances and your financial future.

There are many instances reported where, once a balance is carried on a Bank of America account, the available credit limit above the balance has been all but wiped out by an "adjustment" by Bank of America.  Although interest or credit limit adjustments could be expected if a credit score changed significantly, we are not referencing situations of problem credit or declining credit scores.  We are talking about people who have never had a late payment and who maintained mid 700 credit scores.

As a real life example, a 52% usage of available credit (the customer had taken advantage of Prime Rate for the life of the balance transfer offers) suddenly became a 93% usage of available credit after the credit limit was reduced by Bank of America.  Although there was no credit problem previously, after Bank of America reduced their credit limit it made it appear that they do have major credit problems and have used - or abused almost all of their available credit.

That drastic reduction in available credit will make it appear that the consumer has maxed out their credit cards and is a credit risk.  It will negatively affect their credit profile, their credit score, and will ultimately hinder their ability to obtain financing -  or at least financing at a fair interest rate.  With the mortgage and finance industry now being overly cautious, this type of unscrupulous activity by Bank of America could be financially disastrous to anyone who is planning to finance a home or other major purchase because this type of action could impact a credit profile and credit score for years to come -
and can cost thousands of dollars extra each year due to increased interest rates.

 NOTE: A damaged credit score will also likely increase car and home insurance premiums since many insurance companies now use credit scores when determining risk.  It will also likely have a negative affect on other areas where a credit score is used (including employment).

Unfortunately, Bank of America's sheer size and their ability to unfairly manipulate factors that are used to determine credit risk puts everyone at risk who has any type of financing through them.

J.P. Morgan Chase has come forth with equally sleazy tactics.  Recently they targeted customers who previously took advantage of 3.99% and 4.99% for the life of the balance transfer offers and slapped them with a $10.00 A MONTH SERVICE "FEE".  Chase also increased minimum monthly payments from 2% of the outstanding balance to 5% of the balance.  Additionally, Chase modified the account terms so that a customer CAN'T OPT OUT or close their account to avoid the charges.  As long as you have a balance with Chase you will have to pay the $10.00 a month fee. Chase has become a financial parasite!

Although low rate convenience checks and intro offers from Bank of America or Chase may seem very tempting when it comes to financing part of your wedding expenses, you would be very wise to avoid financing anything with Bank of America or Chase.  Considering the apparent predatory nature of Bank of America and Chase, if you currently carry a balance on one of their credit cards, it would also probably be wise to move that balance elsewhere before Bank of America or Chase puts you in a position that could be damaging to you for years to come.

Although it is best not to take on additional debt, if you need to finance part of your wedding expenses, a much better - and safer - alternative to financing your wedding or honeymoon by using credit cards is to obtain a personal installment loan from the bank that you normally do your banking with.  Installment loans are viewed much differently than credit cards when your credit score is calculated and YOU WILL NOT HAVE TO WORRY ABOUT INCREASED INTEREST RATES OR REDUCED CREDIT LIMITS that may damage your credit score.