For too long a few credit card issuers have gotten away with deceptive practices. It seems the current administration and congress is finally determined to do something about it. Barack Obama talked about looking out for the middle class during the presidential campaign, and it seems he is ready to follow up with his promise. Here is what Robert Gibbs had to say about Barack Obama’s take on deceptive practices in this industry:
The president believes that we can increase the transparency involved and cut down on these deceptive practices and ensure that any system involving fees is done in a way that is fair.
Some companies in the financial sector have gained profit by increasing rates on their customers while using the tax-payer’s money to stay afloat. That is really what’s wrong with the industry. You can’t help the financial institutions and expect them not to look for profits. In reality, these companies won’t be able to pay their debt back unless they raise more profits. Is it fair? Absolutely not! That is why I was personally skeptical about the bailouts. But what’s more disturbing than the recent rate increases is how credit card companies are going about doing it. Deceptive practices have been used in the financial industry for too long, but there is now hope that some of these practices will stop in the near future. It would be great if we could close the loopholes as well.
Your take: should the taxpayer money be used to bailout deceptive financial institutions?
Talk about biting the hands that feed you. Many banks and credit card companies have been in trouble due to the recession that has been going on in the U.S. We have all heard how we can’t move forward if these companies fail. That’s great that our government is thinking about the good of people. But rewarding companies that have raised interest rates on customers is simply unacceptable. A few banks are starting to turn their businesses around and generate profit, but where is all this money coming from? If it is coming from those higher interest rates that poor customers have to shoulder, that’s what you can call theft of epic proportions.
Regardless of whether you are for this president or against his policies, you’ve got to admit that he has had a lot of issues to work on. But bailing out the banks just leaves a bad taste in my mouth. I have no trouble with the bailouts but how the money has been used, and how these financial companies have turned their backs on their customers. How are customers supposed to pay all these large fees when they themselves are struggling in these tough economic conditions. What has corporate America done in these tough times? They have borrowed the taxpayers’ money and charged the taxpayers much more to give the money back. If that’s not unfair, I don’t know what is. And don’t think for a second that rate hikes are over. We haven’t even begun.
Your take: are credit card companies’ actions justified here? How would you fix this mess?
Credit card companies have been in trouble for a while. A lot of these companies have had to increase their rates on their poor customers, and a lot of them have had to cut employees to save costs. The Congress hasn’t been kind to the credit companies either. These companies will now have to deal with customers in a more appropriate fashion when the consumer-friendly laws go into effect in 2010. But consumers are not the only ones who are fed up with credit card companies tactics and misc fees.
Merchants are also feeling the heat. There is no question that credit card companies make a lot of money off of their merchant services. Now merchants are fighting back by lobbying th Congress to allow them to negotiate their fees with the card issuer.
There is no question that the Congress has been very friendly to banks and financial institutions in the past, and these measures have failed to gain traction before. But with the current state of the economy and with small businesses hurting, it wouldn’t be out of the realm of possibility to see Congress take some action here. Let’s hope we will see those changes happen for the sake of small businesses and consumers alike.
If you have owned a credit card for a while, you are probably familiar with the concept of debt/credit ratio. Credit card companies use that as one of the factors to determine your credit worthiness. Think about it. If you are one of those people who like to max out their credit cards, you pose a bigger risk to credit card companies. But what happens when your credit card company reduces your credit limit by half? Let’s say you have a credit like of $1000. You put $450 on it. You are not even close to maxing it out, right? But what if your credit card company reduces your limit to $500? More than a reduction in your credit limit, wouldn’t you say?
Credit card companies are in control. When you sign their agreement and sign up for their credit cards, you essentially give them the ability to increae your rates as they wish. The new credit card rule which will go into effect in 2010 is a great win for consumers. But what do you do till then? What if you are being victimized by greedy credit card companies?
You should always avoid spending the money you don’t have. People have been saying that for years, but nobody really follows it. Credit cards are not ATM machines. You are not getting free money. Your credit card account is like a loan account but it’s even more risky these days. Your rates can jump up fast if you are not too careful. Credit card issuers are feeling the squeeze and in order to stay profitable they are cutting limits and employees and increasing their rates. If you keep spending like you have in the past few years, you only invite card issuers to increase your rates and steal your hard-earned money. The credit card industry is full of companies with deceptive practices. Don’t be a victim.
I had a chance a couple of days go to watch credit card companies testimony to the house of representatives on TV. It was truly astonishing to see these companies complain about how they were the victims in this economy. What was more surprising? The fact that these guys could keep a straight face while testifying that they had raised interest in folks who had paid their bills on time all the time. Credit cards are powerful tools and can help individuals and business get more done with the help of their credit. But if you raise interest on your loyal customers, what message are you sending to your card holders?
I am no big fan of Senator Dodd, but the guy really cares about consumers and should be complimented for taking our side against credit card companies:
These practices are wrong, and they’re unfair…Mark my words: in the coming months, they will end.
These words coming from such a Senator is really encouraging. Credit card companies have truly pushed deceptive practices to the next level. Think about it. You sign up for a credit card with 9% APR, and the next thing you know your APR has risen to 24%. You haven’t missed a payment, but you are treated like a second-rate citizen by credit card companies. For too long credit card companies have gotten away with these actions. Their actions are lawful but unethical and unfair. You can’t put your customers through hell to stay afloat. A business which doesn’t care about its customers and providing value to them does not deserve to go on.
Experian has announced that they will not be renewing their contract to provide FICO credit score to consumers. Experian is one of the top three sources of FICO score for consumers but that will all end on Feb 14. Experian will continue to provide information to lenders, and consumers can gain access to their credit information through Experian’s website, but those numbers won’t be your FICO score.
While Experian’s decision to pull out of its contract with Fair Isaac is a blow for consumers, myFiCO will continue to provide consumers with their FICO score but it won’t include the numbers from Experian after Feb 14th. If you are still interested to get your latest Experian scores, you have about 9 days to order it through myFiCO.
Credit card companies are hurting. Some analysts are predicting doom and gloom for many card issuers. Even strong companies such as Advanta may go out of business due to the amount of bad loans that they have on their portfolio. These companies are not going to bow out easily however. I have heard numerous accounts from folks who work for these companies. Interest rate hikes are coming. Sure. The introductory offer will still be something reasonable, but many consumers and small business owners have had their rates increased by 10 to 20%.
If you are in credit card debt, it is time to get out of it now. The best way to go is to stop spending the money that you don’t have. Sure. It’s tough. We all want to live great lives, but at the end of the day, dealing with creditors is just too much pain to take. By using prepaid credit cards or debit cards, you can make sure that you only spend money that you have. And it’s time to start monitoring and repairing your credit now.
The times are tough, but they’ll get even tougher if you keep spending the money you don’t have. Don’t spend money ahead of time (not many have stable jobs these days). And use prepaid credit cards when you can. It never hurts to be conservative, especially in these tough times.
Credit card companies have been hit badly by the financial crisis, and many of them are struggling to turn in profits. What do credit card companies do when they struggle to make a profit? They hike your rates. And let’s not forget that they are allowed to do so until June 2010. You should always check your statement to find out about the smallest changes. After all, you don’t want to park money on a credit card that slaps you with 26% interest rate.
These days are trying times for most Americans. But if you can afford to pay your balances in full, you definitely should. Everyone wants to have the latest gadgets, cars, and … but pay your debt down first before investing your money in a big money item. You’ll sleep better for it.
Your take: have you been hit by a credit rate hike? how badly?
The times are tough, and everyone has been hurt by the state of economy. Universities have been hit hard as less people can afford to go to school. The financial aid that used to be provided by government could be in jeopardy (even though Barack Obama has promised otherwise). But all this hasn’t kept credit card companies from marketing their cards to young students in college campuses. Michael Moore ran a piece on the very same issue on his website recently. The truth is, credit card companies want our students to pick up the cards and put large amounts they can’t afford to pay in one shot on them.
Have you wondered why is it that credit card companies are not experiencing more losses than they are these days? The answer is you and I. Folks like us pay the obscenely high interest rates to keep our credit record clean, and we are being taken advantage of by credit card companies. A whole lot of students don’t have a clear understanding about how to use credit cards. They buy things they can’t afford, and they pay their bills late. Late fees and high APR is a fact of life for many students.
Smart students understand that the money you borrow needs to be paid back. That’s why they are now using prepaid credit cards instead of regular credit cards. Prepaid credit cards allow you to spend the money that you have without going overboard. These cards are not perfect, and they do come with fees and limitations, but responsible students should stay away from attractive credit cards unless the understand the dangers of playing with fire. In these tough economic times, the last thing anyone would want to deal with is a greedy credit card issuer.
2008 is finally over, and I can’t say I am too sad. The year started with a lot of promise and ended with turmoil and uncertainty. 2009 seems to be another challenging year for both consumers and card issuers. Many card issuers have been hit hard by the state of economy, and things are expected to get worse in the upcoming months. While the credit industry hasn’t collapsed completely, it’s hanging on by a thread.
As a consumer, you can expect credit cards to get even tougher with us in the upcoming months. You can expect the rates to go up and borrowing money to get more difficult. At the end of the day, credit card issuers are out to make profit, and one way to do that is by increasing fees on poor consumers (this will change in the near future with the recent ruling).
What will the 2009 have in store for us? Nobody knows. But let’s hear your predictions…
