"News:" Credit Cards screw their customers with help from the government

[henktermaat]

Consumer groups blast banks' card 'tricks' - The Red Tape Chronicles - MSNBC.com

Consumer groups blast banks' card 'tricks'
Posted: Tuesday, September 29 2009 at 06:00 am CT by Bob Sullivan

If credit cardholders feel worse off since the passage of the law designed to protect them from banks, that's because they are. An avalanche of new fees, interest rate hikes and other costly changes since the law was signed in May suggest the Credit Card Accountability, Responsibility and Disclosure Act, or the CARD Act, has backfired.

The consumer advocacy group Consumer Action on Monday released a list of such changes since passage of the CARD Act.

Call them CARD tricks, but most consumers aren’t amused.

Consumer Action says since spring, banks have engaged in arbitrary interest rate hikes, increased fees on balance transfers, added annual membership fees and dramatically raised minimum payment requirements.

"The ink was barely dry on President Obama’s signature of the CARD Act when banks started hitting consumers with higher fees and charges,” said Travis Plunkett, legislative director of the Consumer Federation of America. “Congress can’t write laws fast enough to keep up with these tricks and traps."

Consumer Action published on its Web site a gallery of what it said were the worst offenders. Here's some that made the list:

* Bank of America’s Platinum Plus Visa, which increased interest rates by up to 46 percent.
* Capital One, which increased its penalty interest rate by 6.25 percent.
* Citigroup, which began collecting annual fees ranging from $30 to $90.
* JP Morgan Chase, which increased its balance transfer fee to 5 percent.
* JP Morgan Chase, which increased minimum payments from 2 percent to 5 percent. When consumers call asking for relief, they are told the only way to reduce their monthly payment is to accept a higher interest rate.
* HSBC, Chase, American Express and Bank of America, all of which have all closed accounts without warning.

Many issuers also have lowered consumers' credit limits without warning. This limits their purchasing power and hurts their credit score.
When it passed the law, Congress gave the banking industry nearly a year to implement the changes mandated by the CARD Act. Some in Congress now feel that was a mistake. Rep. Barney Frank, D.-Mass., has introduced legislation that would move up the effective date of the remaining provisions to Dec. 1.

Linda Sherry, a spokeswoman for Consumer Action, said the bank changes have turned the CARD Act on its head.
"Unfortunately, people are in a worse place than they were before because of the time period, the window of opportunity the banks had before the law takes effect," she said.

The consumer group released the research this week to lobby for creation of the Consumer Financial Safety Commission, a new federal regulatory agency that has been proposed by Democrats in Congress. The proposal gets a hearing in the House Financial Services Committee on Wednesday.
"This is an example of why we need the (new agency)," she said. "Congress felt it was doing a good thing in giving banks time to get their ducks in a row before the changes, and look what happened." A new agency could step in more quickly than Congress and address allegations of unfair changes in credit card terms, she said.

 

[henktermaat]

Reason #1,000,987 to stop using credit cards and get your *** out of debt.

 

[jeremy]

As henkter pointed out, Cash is still an option.

 

[hornadylnl]

Really, is anyone surprised by this? These companies are used to making a certain amount of profit. Our robinhood goverment comes along and says they are making too much profit so they raise taxes or make new laws to cut in to their profits. The companies just pass the costs on to the consumer. This isn't rocket science. Who is John Galt?

 

[Lucas156]

not surprising I thought they have been ripping people off for a long time. lol

 

[mrjarrell]

My credit card company raised their rate modestly and left everything alone. Of course they did this prior to the Obama credit bill, so other forces were at work. Of course I have a USAA card, and they like their customers.

 

[hornadylnl]

I hope the government passes more regulation punishing credit companies. Hopefully MasterCard, visa, etc will shut down their companies for a few weeks and watch this country grind to a screaching halt.

 

[rambone]

​

Many issuers also have lowered consumers' credit limits without warning. This limits their purchasing power and hurts their credit score.

When it passed the law, Congress gave the banking industry nearly a year to implement the changes mandated by the CARD Act. Some in Congress now feel that was a mistake. Rep. Barney Frank, D.-Mass., has introduced legislation that would move up the effective date of the remaining provisions to Dec. 1.

Linda Sherry, a spokeswoman for Consumer Action, said the bank changes have turned the CARD Act on its head.

"Unfortunately, people are in a worse place than they were before because of the time period, the window of opportunity the banks had before the law takes effect," she said.

The consumer group released the research this week to lobby for creation of the Consumer Financial Safety Commission, a new federal regulatory agency that has been proposed by Democrats in Congress. The proposal gets a hearing in the House Financial Services Committee on Wednesday.

"This is an example of why we need the (new agency)," she said. "Congress felt it was doing a good thing in giving banks time to get their ducks in a row before the changes, and look what happened." A new agency could step in more quickly than Congress and address allegations of unfair changes in credit card terms, she said.

What did they expect?? They want to create a new oversight agency because they are mad that credit card companies adjusted to the fact that Government is stepping in and imposing further restrictions on their services?? Well of course they had to drop rewards programs. Of course they had to raise interest rates. Of course they have to drop their worst customers. They are a business. To cut profit is to cut jobs and services rendered.

Anyone who supports this obviously doesn't understand Free-Market economics, or capitalism for that matter. This wasn't done in the interests of consumers as they would have you believe. This is a purely socialist maneuver to hurt banks and drive their customers away. Then when they are in a weakened state the Government will come in and save the day by Nationalizing them.

 

[techres]

Reason #1,000,987 to stop using credit cards and get your *** out of debt.

Many are working on it. Funny thing - they notice when your spending habits shift. They adapt to it. And not in a nice way...

 

[jeremy]

Actually there has been no changes on my card from the bank I use... Got to love those small town farmer's banks!

 

[techres]

Actually there has been no changes on my card from the bank I use... Got to love those small town farmer's banks!

Yeah, my small town farmer's bank was just forcibly taken over by the FDIC and sold to an out of state bank. It's been a fun month.

 

[LEaSH]

plastic can be pretty handy if you use the right one at the right time.

And when I say use, I mean both ends: purchase and payment.

I've been told that CC companies refer to their clients as bad customers when they pay the balance every month. Screw them.

 

[jeremy]

Sorry, Techres was not trying to brag...

 

[rambone]

I've gotten rewards checks many times for my consistent on-time payment every month. I earned 3% on many of my normal purchases. I just got an announcement that it will be canceled, undoubtedly due to the upcoming legislation. It hurts banks and good customers. Thanks Obama.

 

[LEaSH]

Good heads up Rambone. And if anyone has accumulated points/rewards they better use them soon. They can and have taken mine away for no specified reason.

 

[Jay]

+1 for USAA.... we use the cards only for convenience, and rarely carry any balance over 30 days.......

 

[techres]

Sorry, Techres was not trying to brag...

No problem. Some times you're up, and sometimes you are less so. Deal with the devil and you cannot complain he is the devil. On the other hand, you can't say he's an angel either.

He is what he is.

 

[Blue Tile Spook]

This was several years ago but my mother had a discover card at the time. They raised her rates without informing her ahead of time (she discovered it on her monthly bill), so she called them to inquire what had changed with her credit rating or her account that forced the change. My mother pays her card off each month. The Customer Service Rep (CSR) told her that nothing had changed to force a higher interest rate just "someone" made a decision to raise customers' rates. My mother asked that her be lowered. They did for one month and then raised it back up the following month. My mother cut her card into small pieces, inserted it in the envelope with her payment and sent it in.

She started to get a blister of calls from Discover begging to find out "what is wrong?" and offering her incentives to come back to them. My mother refused, told them several times why she was refusing and finally, tired of all the calls, informed them that she would be calling the Attorneys General if they persisted in calling her after she had asked them verbally and in writing to stop calling.

They finally stopped.

Flash forward to the present time and she and my step-father are having the same troubles with Chase. I am not sure what they will do at this point but they are negotiating with Chase to get the rate lowered.

 

[hornadylnl]

We all predicted this would happen on this forum when the new credit card bill was being discussed. The credit companies are not going to take the full brunt of income loss due to new taxes or regulations. They pass it on to the consumer. These "good intentioned" laws are "supposed" to help the consumer but they never do.

Imagine you own a small business that nets you $80k. You're happy and so are your customers. You know, the free market at work. Now some robinhood democrat comes along and says you are profiting too much so they raise your taxes and increase regulation. These new increases are now costing you $10k a year. Will you eat that loss totally, partially, or pass on that cost totally to your consumer? If the market will bear it, you will pass it on 100%. I'd say most businesses pass on at least 90% so who really loses?

 

[henktermaat]

What did they expect?? They want to create a new oversight agency because they are mad that credit card companies adjusted to the fact that Government is stepping in and imposing further restrictions on their services?? Well of course they had to drop rewards programs. Of course they had to raise interest rates. Of course they have to drop their worst customers. They are a business. To cut profit is to cut jobs and services rendered.

Anyone who supports this obviously doesn't understand Free-Market economics, or capitalism for that matter. This wasn't done in the interests of consumers as they would have you believe. This is a purely socialist maneuver to hurt banks and drive their customers away. Then when they are in a weakened state the Government will come in and save the day by Nationalizing them.

^^^ THIS... I'm sure there's a lot of "buyer's remorse" about now