Even in the best of times, carrying a balance on your credit card is a risky — and costly — proposition. These days, it can be downright foolish, at least if there’s a chance you might miss a payment or two.
Millions of cardholders have recently received letters from the likes of Citibank, Bank of America Corp., Wells Fargo & Co. and American Express Co. notifying them that their interest rates are going up, in some cases to 30% if a single payment is missed.
JPMorgan Chase & Co., the nation’s largest issuer of plastic, has begun charging hundreds of thousands of cardholders a $10 monthly fee for having carried large balances for more than a couple years.
Why? In part it’s because default rates are rising and banks are dealing with additional risk. But lawmakers and consumer advocates say the higher rates also reflect banks’ massive losses from betting wrong on the housing boom, and they’re basically sticking credit card customers with the tab.
At a Senate Banking Committee hearing last week, Sen. Christopher J. Dodd (D-Conn.), the committee chairman, said lenders are “gouging” customers to boost their bottom lines.
Here’s more information on recent government action on credit cards. Plus, compare cards and offers from everywhere.
At the beginning of Janary we recieved a bill from Chase CC. It was weeks late arriving so we called Chase CC services immediately. We always pay the entire amount and are never late. They did waive the late fee but charged us finance charges. In conversations with them they recommended automatic direct payment and wouldn’t back off with finance charges. I was unhappy with them but this is the way things are headed.
Think about how much $$ would be put in the hands of the consumer if the max rate CC companies charged was 10% or thereabouts. Delaware and states that love credit card companies would not be happy.
How big is a large balance? Just wondering how they determine you are a credit risk if you make regular payments and stay well below your credit limit.
Well, when you accept money from someone, they become boss.
Don’t use credit cards unless you KNOW you can pay it off every month. If you can’t, then don’t charge what you can’t afford.
It is so simple, it astounds me that people don’t understand that little bit of advice.
Very short sighted. The customers with high balances are likely also teetering on financial ruin. This effort to raise squeeze blood from a turnip will likely push many over the edge into bankruptcy will they will collect far less.
I have a credit card that used to engage in (they have since changed) a practice that could easily result in a late payment by someone intending to pay on time. Back then, the web form for making your payment by bank transfer would automatically default to scheduling your payment for the due date of the bill. The problem was, if this due date fell on a Sunday or holiday, your payment would not be processed until the following day, resulting in a late payment if you didn’t catch the idiosyncrasy. I considered it so obvious a pitfall that it had to be a scam.
Alternatively don’t buy using credit, actually learn how to save money first before you spend it.
I talked to a CC company, and said:
You know,
If you use LOWER rates on the poor, they will probably pay you back, no matter how long it takes..As well as HIGHER rates on the rich, WHO buy BIG TICKET items.
If you force a poor person to pay to much, they will DECIDE not to pay, and you get STUCK. Its easier to be nice, and keep getting the money.
The 2 problems I see.
1. CC corps want MONEY NOW
2. CC corps, keep giving MORE and MORE and MORE Max limits on the cards. And that POOR person see’s a chance to USE the money..HE WILL.
the credit card has made something happen in the last 20 years and its STARTING TO HURT..
Its the idea that we USe that card to make ENDS MEET. What happens is “THEY(every corp/company) wants our money. they THINK we have MORE, as we are MAKING ends meet.
Prices go up.
Its HARDEr to MAKE ends meet, and we use the card again.
Prices go up.
Between bills and food prices and RENT..
Everything has gone up OVER 20% HIGHER then they SHOULD BE..
Until EVERYONE is on the street, BECAUSE they cant MAKE ends meet, or PRICES/costs/.. come back down 20%+ NOTHINg is going to BALANCE.
#7, I guess it’s fine to CAPITALIZE a word every now and then to emphasize something, particularly if you don’t know how to italicize or embolden the text. But when you emphasize words all the time, it kinda loses its emphasis. Please use capitalized words more conservatively.
I do use a credit card on line. It is auto pay at the end of the month. If I can’t get that I don’t want a credit card.
Everyone who has credit card debt should just file bankruptcy. It’s mostly unsecured debt so it gets washed away. If credit card companies can’t play nice with consumers, then consumers should just dump the debt in court. Since most folks have credit scores that are toast anyway and they can’t get any additional credit, you may as well dump it all and switch to a savings and cash purchase economy.
Yeah, all my cards support on-line payment, and it shows up the next day. Way to go.
Discover is best at 1% cashback on all purchases, and 5% on selected.
If you shop buy.com, their card will save you 3%, and many things have free shipping.
The smartest way to use credit cards is to NOT use them at all. Reward Points and (pityfull) cash back rewards are scams the credit card companies marketing departments created to make suckers think they getting some kind of “deal”.
If you are using credit cards to make ends meet, YOU are dooming yourself to a life of financial servitude that you will never escape. Do yourself a favor and close those accounts, get a second and if necessary, a third job and pay those leeches off then start living within your means.
Most banks in the last 20 years have turned their credit card business into defacto predator lending institutions preying on college kids.
A few years ago, I remember some guy from a bank with a table setup and he was walking around putting applications in people’s hands in …
… in exactly the same manner that happens in Las Vegas on the strip where people keep trying to put flyers right in your hand.
They like to target college kids because among the other obvious reasons (inexperience, lack of discipline, etc.) is that since student loans can’t be discharged in bankruptcy it is far less likely that a college student will file bankruptcy in the next several years.
Once upon a time, I think someone like Ralph Nader or other social activists would have combatted this in the media.
What a shame there is no modern day Ralph Nader …
🙁
And thats the problem..
companies and corps have increased prices because it LOOKS like we have MORE money to spend, and THEY want it all.
the CC corp wants US to default, so they can raise the rate, or hit us with charges.
So even if you are Paying off every month. As prices/costs increase, it will eventually ADD UP, and then DEFAULT.
AS to dumping the card..how many of you know that IF you dump it, its converted to a STANDARD LOAN, with HIGH interest. Which isnt easy to kill, as they will swap it from company to company, when you file it as Bankruptcy.
If we could get 1/2 the USA to DUMP on the cards, it would force then to RETHINK the cards, and FEWER would ever be released, and prices would DROP in about 1 year. Corps would go NUTS trying to sell goods, as NO ONE would be able to buy much.
“The new rules prohibit raising the annual percentage rate on existing balances except under certain circumstances and give consumers 45 days notice before a rate increase and 21 days to pay.”
.. If the above quote from the article actually happens, for me it would restore some faith that we have a government that actually governs.
By definition, a “free market” only works in an environment with infinite consumers and infinite suppliers with *perfect knowledge*.
Since that isn’t what we have, government oversight is important to prevent abuse.
My Wells Fargo sponsored Master Card credit card was terminated because I was late making a payment. I called up to confirm this and pointed out this happened after 15 years of card use and just after I had switched to their new payment on line service where for 1-2 weeks I could not navigate past their self promotion advertising for the service I had just signed up for. So, with big bucks in savings and CD’s and a debit card, they terminated a “good customer.”
I don’t really care, just think they can’t tell shit from shinola. They bounce me and sign up college kids?
Hah,hah.
#15–HMyers==how is it ever fair to raise the interest rate charged on a past due account?
You’ve been a patsy for so long, you think table scraps are a feast.
There is no such thing as consumer protection in America. Only consumer gullibility.
@ Bobbo
I never said that. Please don’t quote me as saying things I didn’t say.
I don’t care what the rules are, I care that government provides some sort of oversight to prevent abuse.
I’ve never been burnt by a bank personally.
What I don’t believe is right is when banks misrepresent a loan or service and their ability to constantly send out change in terms agreements.
The details don’t concern me, but having abuse as part of a business model is wrong for the consumer and bad for the country.
Believe it or not, if you pay off your credit card in full every month your credit score goes to hell, because they don’t want you to pay in full every month. Banks don’t make any money off you that way, and that makes them cranky. The best way to handle it, credit score-wise (just in case, say, you need to get a car loan or something like that some day) is to use less than 30% of your available credit – in other words, if you have a $1000 credit limit on your card, only charge less than $300 to it – and pay off all but about $25 every month.
By law, they can jack up your rate regardless of your payment history or credit rating, anytime they decide they want some extra bucks, so check your rate on every bill and call to yell at them and get your rate back down if it suddenly spikes without provocation. Keep in mind that paying late on any one credit card gives all your other cards the right to jack your rate up regardless of your history with them. Also keep in mind that, legally, sending a bill is viewed by your bank as a convenience, not a requirement, and it’s up to you to keep track of how much is due and when, so calling them to say your payment is late because you never got a bill is no defense. It’s all very stupid, I know, but thank your Senators and Representatives who gave the banks a walk on everything and put all the onus on you.
Prior to 1994, credit cards were regulated by the states. As a result, many credit card issuers liked Delaware as a home base (Discover card, etc.)
However, most states and your local bank typically had a lot state oversight.
Maximum interest rates, maximum late fees, other restrictions …
And even issuers in states with lax laws had to compete against those banks so this kept things in balance.
In 1994, this changed everything and gave us what we now have …
http://fdic.gov/regulations/laws/rules/6500-3500.html
Bank deregulation and interstate banking …
At first, it made banks hyper-competitive with each other and was good for the consumer. Lower interest rates especially …
Then the banks bought each other up and used the power of aggregate advertising budgets to foster an anti-competitive environment.
The end result after 8-9 years was the standardization as a normal business practice of watching that 4.9% interest rate shoot up to 32.5% on a single late payment and bad customer service.
Just stop paying them if they raise the percentage. Pay your other bills on time and have Equifax or whoever to enter a comment on your credit record (as allowed by law) that, because of the huge increase in interest you refuse to pay. When they call, keep them on the phone for as long as you possibly can so they won’t be hassling other people. Ask them if they will accept a check by phone, if they answer yes tell them you will be right back and go walk the dog or wash the car. If push comes to shove, tell the person on the phone to stop by – you have a leather check wrapped around your fist. Tell them to drop the rate and you will continue making payments. If you can play the race card, that would be an added bonus.
I think with this stimulus the federal deficit is likely to go even higher. I saw an interesting article, I think, on
http://recessioninfocenter.com
#19 Believe it or not, if you pay off your credit card in full every month your credit score goes to hell, because they don’t want you to pay in full every month.
I don’t believe it. I have only failed to pay off my credit card bill every month a handful of times in my life and I have excellent credit. The only debt I have is a buttload of student loans. Maybe that makes your credit good but I doubt it.
16,
iV CHASTISED MY cc COMPANY..
Iv told them to make it Easy to Make a payment..
I shouldnt need 3 passwords and my ONLY child in subservience..to MAKE a payment.
I would think they would WANT to take your money, and the easier it is to GIVE it BACK to them with PROFIT.
Also,
this is one of the ONLY groups that can CHANGE policies on YOU, with out a written consent.
Do people not read the application forms any more?
In pretty much ALL of them its clearly stated that the lending institution can “change the terms and conditions without notification”.
Seriously, if you sign your name to anything that has that as a clause you deserve to be ass raped by the lender with extra sand in the lubricant!
The ONLY thing I’ve ever gotten into debt for was the purchase of my home (no other options really).
I only use a visa debit card so although I can’t spend more money than I have like a regular CC, I also CANNOT get into any sort of debt, and if I want something I will save for it.
Why the hell can’t people see that as soon as you buy ANYTHING on credit you are the lenders’ slave.
Just be thankful that they aren’t doing what the UK’s Barclays Bank proposed a couple of years ago. They though it might be a good idea to decrease the payment period by 3 days every time you paid off your credit card debt on time. That 28 days you normally get to pay the debt could be reduced to only 10 days in as little as 6 months unless you made sure you got charged interest.
I haven’t carried a credit card debt for over 20 years and can’t imagine the pain 30% will cause, but if the banks have made credit cards predatory we have let them. If a $10 charge or 30% is the difference that keeps banks afloat, think of the consequences otherwise. Like it or not our credit habits have caused this mess, now it’s time to pay the piper.
Here’s an idea…stop borrowing to live. I haven’t had a credit card or bought anything on credit in more than ten years. I don’t owe anyone anything, and never intend to. I have more disposable income each month than anyone I work with, and a nice tidy savings account too. Imagine that! All because I’m not paying anyone for the privilege of handling my money.
I was one of the suckers that got reeled in when I was a kid. I’ve seen 27% interest as a standard. And that is with proper payments