Nationwide, and probably on your street as well, credit card issuers are making life tough for consumers by raising rates and adding fees on otherwise good customers.
The recently passed Credit CARD Act of 2009 is meant to protect non-risky customers from arbitrary rate hikes, among other things.
Now, Senator Chris Dodd of Connecticut is asking Federal Regulators to review recent actions taken by credit companies and possibly force them to undo these punishing moves. Since the law doesn’t go into effect until 2010, he wants Bernanke and company to start regulating retroactively to the beginning of 2009. Specifically, he wants:
credit card companies to review every six months any account where the interest rate has been raised since January 1, 2009. It also directs the companies to reduce the rate if the customer has become less of a credit risk or the circumstances that warranted the increase are no longer present.
It’s basically taking the spirit of the law recently passed and helping out non-risky customers now instead of later. Of course, in light of what we recently learned about how credit issuers decide what makes a person risky, I’m sure there are still plenty of loopholes available.
Sen Dodd seeks review of credit card rate hikes, Karey Wutkowski, Reuters, July 9, 2009
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Unfortunately, us “non-risky” customers became risky when they hiked our rates for no good reason. I’ve fallen farther and farther behind. Now, there’s notice that Chase Bank is increasing minimum payouts doubling or tripling the amount of money due each month with still 30% or more interest rates. These are the same people who took Federal bailout money.
I posted a potential solution to this problem using California’s new IOU system and outstanding credit card debt: http://spiritwealth.wordpress.com/2009/07/09/dear-arnold/ Yeah, it was tongue-in-cheek, but I really don’t think the banks want to get people to pay or to clear their ledgers. I think they are milking the US taxpayer and then heading to China after we’re all bankrupt.
My Chase Bank credit card also had a big rate hike. It went from 9.5% to 21%. Though I carried a balance only on infrequent larger purchases, paying off the balance most other times well within the grace period, they still upped the rate big time. I would really like to close the account, but it seems that this move is not the best one to take as it can damage one’s credit score. I say don’t give them any more “bailout” money; let the succors fail, then maybe, just maybe, we can start with a fresh and hopefully more equitable financial system.
You know it’s bad when a financial adviser is telling me to “bail” on my credit card debt to force them to settle. Sound familiar? When was the last time you had financial advisers telling their clients to “just turn in your keys” and bail? If everyone does this, say “bye, bye” to the U.S. dollar.
As I recall, ex post facto (retroactive) laws are illegal under the Constitution. Heck, imagine a world where you can be punished for breaking laws that don’t even exist yet.
Dodd is probably just trying to distract from the alleged sweetheart treatment he received on his Countrywide mortgage. I wouldn’t look to him for ethics when it comes to finance.
Let’s face it: despite many people’s protestations to the contrary, too many folks have an automatic trust of government. When there is a problem, many of us don’t like to think of government as the problem but as the solution. Add to that the near phobia that many have about economics as business and what do we get? Pretty much what we have now: a government going billions of dollars IN debt in attempts to get the economy OUT of debt, We get a government doing such idiotic things as bailing out companies for whom bankruptcy is imminent and buying up banks.