• They’ll sell your information to other lenders to make a fast buck in “marketing”, and the other lenders will make you additional offers to get in on the game of keeping you in debt.  Even the credit bureaus sell your information to lenders.  Debt is very profitable− for your lenders.

• When you’ve paid down enough of your debt to the point where the interest portion of your monthly payment isn’t as profitable to them, they’ll send you offers to refinance your loans.  They’ll sell it to you by focusing on lower monthly payments, but what they’re really doing is resetting the loan so that most of it is interest payments again.

• If you pay your credit card on time, they’ll “reward” you by increasing your limits to entice you to spend more, digging a deeper hole for yourself.  They’ll call it “increased purchasing power”.  What they really want is for you to see your credit card as an extension of your income, so they can get a bigger piece of your household cash flow in interest payments.

• If you don’t use your credit cards, they’ll punish you by lowering your credit limits or cancelling your card.  They say it’s to protect themselves.  But lowering your credit limit or cancelling your account causes your debt to available credit ratio (30% of your credit score) to increase, which results in hurting your credit rating.  Bottom line, if you don’t keep feeding your lenders, they’ll cut you off.

• When one lender or creditor lowers your limit or cancels your account, causing your credit score to drop, other lenders see you as a higher credit risk.  As a result, variable interest rates on your remaining current debt consequently increase based on your lower credit worthiness, and your remaining creditors may lower the credit limits they extended to you.  This begins an onward cycle in a downward spiral.  Before long as your household cash flow gets choked, you could find yourself with your back to the wall, strapped for cash, and with no financial resources.

• When your credit card balances get high enough, debt consolidation companies will solicit you to “eliminate your credit card debt” by taking out a loan.  Newsflash: You’re not “eliminating” your debt… you’re moving it.  And they’ll charge you an origination fee (and often closing costs) to do so.  So in actuality, you end up borrowing more than you currently owe… which is doing you no favors.  It takes simple-interest credit card debt and rolls it into a compound-interest, amortized loan where the bulk of your early payments is– you guessed it– mostly interest paid to the lender.  And you’ll be paying interest on the extra money of origination fees and closing costs.  Yes, the lender loves you.

• While the credit card and consolidation loan companies are demanding payments for your consumer debt at outrageous interest rates, your student loans stand by quietly, sucking away at your cash flow.  They may not seem as bad due to their typically lower interest rates, but don’t be fooled.  Deferred payments rack up interest quickly, and interest-only payments are a 100% expense with nothing to show for them.  In other words, even a 3.5% interest rate on a student loan is 100% interest if you’re making interest-only payments.  The banks love you for it.  These are tough times we live in, and they appreciate you helping out by giving them free money.  (Shhhh.  They don’t want you to catch on…  It might mean they’ll need another bailout, courtesy of your tax dollars.)

• When your credit utilization ratio with the credit bureaus gets even higher, you’ll start receiving offers from debt mitigation and debt settlement companies.  In addition to wrecking whatever might be left of your credit score, those companies are predatory.  They profit from your financial demise.  Oh, and at that point you may also start getting solicitation from bankruptcy attorneys.

Keep in mind, the credit bureaus aggregate your financial information which gets reported to them from each of your creditors.  In addition to computing your credit score based on your credit file, they have all of your data to analyze your financial behavior.

They know what you earn.  They know what you spend.  They know your trends and patterns.  And they can slice and dice the information to data-mine it.  Based on your credit history you may be assigned to any of several lists that they sell to lenders for advertising purposes.

• Lists of people who are good credit risks to be “pre-approved” for credit card and loan offers.
• Lists of people who have a history of paying on time but are at the upper end of credit limits, so lenders can specifically target good risks to increase credit limits.
• Lists of people who are maxed out on credit, who have debt above certain thresholds, who may have been late on a payment or two, or who otherwise show a statistical probability of imminent credit problems…   to be offered consolidation loans.
• Lists of people who are in a financially turbulent situation or who have accounts in collections, sold to debt mitigation companies, debt settlement companies, and even bankruptcy attorneys.

At the end of the day, you are on someone’s list.  Even though it may seem that you receive an offer just at the right time, it’s not good luck or by chance.  You were targeted.  Lenders spend millions of dollars each year refining their marketing efforts to keep your household’s cash flow perfectly in their crosshairs.