I have noticed a somewhat new trend in business purchases during the past 6 to 12 months.
I am a stone importer specializing in supplying commercial and upscale residential projects worldwide.Our projects are mainly new construction, including restaurants and hotels.
The scope of this type work is usually handled by a G C or Construction manager, with a fairly reputable stone installation sub contractor.
Many of these projects are now being handled by the owner acting as their own GC, with a noticable increase in the use of credit card purchases.
This is a troubling trend. Credit cards indicate a lack of bank financing, and produces an exorbitant interest rate on the purchase of materials.
In addition, the banks are raising the interest charges on their card holders in response to the sub prime lending mess. I know I recieved a letter on 2 Citi Bank Credit cards I have, raising my interst charges from 16.5% to 22, or 23%.
There was no explanation for this, except for a vague reference to a reporting agency triggering a review.
My credit card payments have been on time , and in fact I am current on all personal bills. There was no report.I believe this is an attempt to cover some of the losses Citi Bank suffered due to their subprime lending practices .
The American public doubling the amount of credit card debt they incur by switching to plastic purchases in an attempt to cover the higher cost of gas and food, is playing a very dangerous game..
Paying 20 -30% interest on purchases, is putting the consumer into deeper debt, with high interest rates attached.
Wait until all these new debts and high interest charges become a struggle to pay. The poor choices and frivolous use of credit by banks and financial institutions is just the tip of the iceberg. The worst is yet to come.
BEWARE