Credit card changes getting media attention
December 16, 2008 | USA Today, alternatives, industry, media coverage, personal finance | Comments (1)From today’s USA Today:
Across the nation, a growing number of consumers and financial experts are complaining that sudden credit card limit reductions and sharp interest rate increases are triggering a domino effect that makes it harder for consumers to juggle bills, stay in homes and avoid going broke. No official data are available on how many people are being pushed into financial distress by credit cards rather than mortgages. But credit counselors, bankruptcy lawyers and legislators say banks increasingly are pummeling consumers for making the smallest payment error — or making no error at all.
The shift comes as regulators and legislators have spent the last year pointing to toxic mortgages and overextended home buyers as the culprits behind the financial crisis. Credit cards, by encouraging a society of spenders rather than savers, have played a significant role in loading up consumers with unaffordable debt whose rates and terms can change at any time.
“If people get charged 30% interest, that is going to push them over the edge,” says Sen. Carl Levin, D-Mich., who has co-sponsored a bill to crack down on credit card fees and rates.
The Federal Reserve is expected to release a rule shortly aimed at cracking down on hair-trigger jumps in card rates and fees, but consumer advocates worry it won’t go far enough in reforming credit card practices.
The Payday Pundit can’t criticize banks and card companies from reassessing their risks and changing terms, but the lack of transparency is appalling. Banks need to catch up to the standards of payday lenders in disclosing terms, fees, and other practices.
Comments»
Maybe the Payday Pundit can’t criticize banks and card companies from reassessing their risks and changing terms, but I can.
There is no reason to raise the cost of borrowing to someone who has been a good customer for many years. The banks are exacerbating the economic situation and showing just how ruthless they really are. They should be penalized for what they are doing to the public. I didn’t ask for all those credit line increases and I didn’t complain about the 1/2 percent rate increases. Increasing 7-10 percent is outright criminal, especially when rates are still falling.
This ideology is the true weakness in our economy. This kind of greed shows a complete disregard for customers is not good business.
I hope the banks that did this (CITIBANK) never recover the business they are chasing away.