Credit Card Contortions
With Congress in the process of making it more difficult for credit card companies to totally fleece cardholders, the credit card companies are shifting their profit model slightly. Where it has been “find a smaller percentage of people to take for everything you can because they’re vulnerable,” now that that’s becoming less legal (and a PR nightmare), the model is going to be “put the screws to more people because you can’t squeeze as much out of the unfortunate few.” And of course, they’re trying to do it ahead of the law changes going into effect:
On Monday, the Federal Reserve provided new evidence of the banks’ actions. About 50 percent of the banks responding to the Fed’s survey said they were increasing interest rates and reducing credit lines on borrowers with good credit scores. About 40 percent said they were imposing higher fees.
The banks also said they were demanding higher minimum credit scores and tightening other requirements.
A study by the Pew Charitable Trusts, released late last month, concluded that the 12 largest banks, issuing more than 80 percent of the credit cards, were continuing to use practices that the Fed concluded were “unfair or deceptive” and that in many instances had been outlawed by Congress.
The House of Representatives has voted to make the new laws effective immediately, but of course the Senate is lagging behind.
In the “good move, but where were you before” category, banks are also making it more difficult to get new credit cards, and are even taking away the accounts of risky customers. That is, customers who really shouldn’t have gotten credit in the first place because they couldn’t afford it. But that was when banks were all about risky credit—for themselves, for customers, for your neighbor’s dog—and now that that strategy has turned around and bit them, the person who was only recently a fine candidate for an ever-increasing line of credit is now someone to ditch as quickly as possible. So that part is a decent move made for all the wrong reasons.
Once the new law goes into effect (sooner or later, depending on whether the Senate can get it together to vote), look for the credit card companies to try to outdo each other showing who’s changed the most and is the nicest and cuddliest. But remember, without the threat of legislation and massive bad publicity, they only change for the worse.
Tags: predatory economy
Boy, you’ve got that right. Got a call a while back asking why we weren’t using our cards. Hubby told them – your interest rates are too high. Get ‘em down below double-digits and we’ll consider it.
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The entire banking and financial industry needs to be reigned in NOW.
The reason all of this continues to take place, is because our representatives continue to pass legislation with an effective date somewhere in the future.
Why do they allow this? Because, unfortunately, financial ties run strong between wealthy corporations, banks, securitity companies etc.
Enact legislation effective NOW on passage. If this doesn’t happen, the status quo will remain of worsen.
Sorr folks I have no reason to believe ‘promises’ of government, banks, insurance companies, etc, without legislation,regulation, and independent over-sight.
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I have been working diligently to pay down all credit card debt since getting laid off 3 years ago. I paid off 6 cards and my credit score went down 15 points. I couldn’t figure out why until a friend asked if they were at 0 balance and I said yes. He said most likely the score went down due to inactivity. I was also asked to close out an account with a 20 dollar balance. I asked if that would affect my score adversely, they said yes and I said H_ll no, paid the $20.00 and now that is at a 0 balance. They’ve got us coming and going.
Also don’t forget the Mortgage companies that took the bailout money. They hold a lions share of property and on the East Coast prices really haven’t come down much. They are sitting on a lot of property some as much as 3 years. I believe they are trying to control the housing inventory to keep prices high even after they got compensated through bail out money. This is double dipping. They got money through the Feds (on the backs of the taxpayers) and now they want consumers (taxpayers) to continue paying high prices for real estate. I’ve read in the past that one of the NWO goals is to do away with private property, it seems the plan is right on schedule.
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