Awww, I almost feel sorry for the credit card companies...

[Greebo]

...NOT

Credit card issuers share their pain with users

Companies accelerating rate and fee hikes before they become illegal

Some little gems:

While the average interest rates charged by banks are lower than Ms. Holaday’s, [29.99% to a 91 yr old woman] her situation is not all that unusual. The higher rates and fees reflect the grim new realities of the credit card industry — the percentage of uncollectible balances has hit a record even as a new law may further limit the cards’ profitability.

I'm deeply curious how they figure bumping up the interest on a 91 yr old woman will make their accounts receivable MORE collectible??

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.

That's right - you're a good credit user - you're a good customer - and so YOU get to pay for the bad ones with your credit card balances.

In their defense, banking officials say they have no choice but to raise rates and limit credit. ...

“We sell credit; we don’t sell sweaters,” said Kenneth J. Clayton, senior vice president for card policy at the American Bankers Association.

Really? You look at the Capital 1 Build Your Own card site and I could swear they have more options than I have at Sweater Barn. I'd like a red one with a picture of my kitten on it, Please!

[nodmicks]

Grrrrrrrrrrrrrrrrrrrr!!!!!!! Grrrrrrrrrrrrrrrrrrrrr!!!!!!!!!!!

[a.nonymous]

Really? You look at the Capital 1 Build Your Own card site and I could swear they have more options than I have at Sweater Barn. I'd like a red one with a picture of my kitten on it, Please!

*sigh* Everyone knows that a kitten's cuteness is better accentuated by darkblueish hues.

[NikoSan999]

In response to voter complaints, the House of Representatives voted last week to make the law effective immediately. The bill now goes to the Senate, where a vote has not been scheduled. The Senate Banking Committee chairman, Christopher J. Dodd, Democrat of Connecticut, meanwhile, is pushing legislation that would freeze interest rates on existing credit card balances until the law takes effect

So again, they will wait and pass it a week earlier than planned and that will mean they actually tryed to help...meaning Senate.

Asked to explain its rate increases, Citibank issued a statement saying the “actions are necessary given the losses across the industry from customers not paying back their loans and regulatory changes that eliminate repricing for that risk.”

Amazingly alot of these would not have defaulted in the first place if the interest rates had not increased to the point of either pay the house or pay the card...hmmm..which one should I do?... Well, that's a no brainer, stupid asses deserve to go down.

JPMorgan has started a program that can help consumers categorize their spending and pay down their balances more quickly

Wow, I'm so impressed. I have, unfortunately 2, which now means instead of 2% of unpaid balance I get to pay 5% of unpaid balance. Yay!!! So now instead of $60 and $246 a month I get to pay $150 and $615, so instead of $306 a month that I possibly can do they will at some point raise that to $764 that I can't. So do I pay the house or the cards...hmmm...no brainer again, how mighty kind of them.

“We succeed if our customers succeed,” he said. “That’s the paradigm shift.”

What a lying bastar$

[Russ]

Well said Niko!

[Judi Dial]

Well, one of our cards tried this, they were going to raise our rates to 21.99% OVER prime. When we called them last week to CANCEL the card, thank you very much! They renegotiated our rate back down to the 9.x % it had been originally. I guess they're losing customers wholesale! We were late, as we'd missed out much we'd spent that period, once in the 7 years we've had this card. They originally hiked our rate to 12.x % with the new law they tried the other.

My guess is that if you DO pay your bills and you call them, they may give you your old rate back. We'd previously had a high rate on this card, and not used it, had indeed been paying it off a little at a time. Then they lowered our rate, the first time.

Judi

[Surilda]

I wonder sometimes if there is something in it for the banks
who have defaults by customers.

I can't think of any other reason for them to "push" good
customers into becoming default customers when they raise
their interest rates and minimum payments to a level that
they can no longer afford to pay.

I think that is warped thinking. At the rate they are
going, they will not have ANY "good" customers left, as
those who were paying will no longer be able to, and
those who can, will refuse to pay the higher interest,
pay them off, and close their accounts.

So what are they going to do then when they have lost
all of those payments coming in every month from their
previously good customers???

I am making my payments right now without a struggle,
but if they raised my minimum payments from 2 to 5
percent, I would NOT be able to do it.

The credit card legislation they passed was pretty much
worthless as it doesn't go into effect until next year, and
the CC companies are racing to screw us as much as
possible before then. The only people that will help, in
my opinion, is people that get a CC AFTER that law is
in effect.

Integrity is sorely lacking these days.

[Greebo]

I wonder sometimes if there is something in it for the banks
who have defaults by customers.

I can't think of any other reason for them to "push" good
customers into becoming default customers when they raise
their interest rates and minimum payments to a level that
they can no longer afford to pay.

It's a calculated risk. They figure they will lose a few, but most will make a concerted effort to keep their credit clean. They're net goal right now is to minimize losses - and they're bleeding HEAVILY because of the easy credit they gave out to higher risk customers who are now defaulting like it's the latest trend.

So if they increase losses a little in the better customers, but overall increase returns a lot, for them, it's a win.

[Inkstain82]

One small issue I'll disagree with in an otherwise dead-on post Greebo: Most credit card losses right now are not coming from high-risk customers. A majority of defaults at the moment are from customers who would have been considered medium risk or lower at the time the card was issued.

[NikoSan999]

One small issue I'll disagree with in an otherwise dead-on post Greebo: Most credit card losses right now are not coming from high-risk customers. A majority of defaults at the moment are from customers who would have been considered medium risk or lower at the time the card was issued.

Agreed...count us as 2 of those that were at low to no risk.

[frugalfranny]

[B]
What a lying bastar$

You are RIGHT ON Niko.....

Interesting reading......and this whole thing will be interesting to watch. Let's see, in congress, who is being giving the big bucks for donations.

[Thevail]

I wonder sometimes if there is something in it for the banks
who have defaults by customers.

Oh, but there IS something in it for them. You see AIG insures a lot of that "unsecured debt". And now that AIG has been "bailed out" the insurance that all those banks carry on your credit card debts is good.

(But AIG had to be bailed out because they also insure about half the pensions in America, as well)


So if BOA can boost your rates and you make about 2-4 payments before you give up.. well you've long since paid back the money you actually owed for whatever it is you bought. That means that BOA lost no actual money, they lost "potential interest revenue". But the insurance pays out a percentage of the remaining debt to BOA as a business loss.

So you spent X on your new whatever, then you paid X+2 back in minimum payments, leaving a balance of X+4 owing on the card due to interest payments and late fees, then you went bankrupt or whatever and AIG pays BOA 40% of X+4..

You borrowed X
BOA gets X+2+40% of X+4 back..

And gets to declare a loss of 60% of X+4 on it's taxes to boot.

I HATE CREDIT CARDS!!

[phoeny_moonstar]

I kind of think this is funny from my own standpoint. Not once since I turned 18 was I ever offered a CC. I have medical debt and SL that I am paying off. I went a bought a (new to me) car and now the offers are POURING IN! No thank you evil CC companies, I will not open up a card at this time when you are hiking rates, slashing credit limits and trying to pinch pennies from every possible human being.

[Nishu]

Can we maybe get a point and laugh smiley added to our smiley bank?

[Russ]

Can we maybe get a point and laugh smiley added to our smiley bank?

like this one??

:point: