A reader sounds off about credit card companies
In Monday's Sun Times on page 24, there was an AP report of how unpaid credit card bills are rising. When I hear things like this it really angers me, because greed is the reason most people default on credit card debt and declare bankrupcy. The greed is on the part of the credit card companies, they shoot themselves in the foot, and their practices are not even smart business!
A few years ago I had a credit card opened in my own name, my very first one, I was middle-aged and any credit cards were always in my husband's name. I do freelance writing and sold A von, and not once did I make one payment late nor was it short, they were paid in full. . . . Yet, catching a whiff that we were facing financial difficulties, and how they did this I don't know, we never missed one mortgage payment or paying any bills, a few may have been paid a little late for the first time - suddenly they doubled my interest on the card I had!!
Foolishly I assumed that the rate I got was locked in. I found out later if you read all the little teeny tiny print some where it says they can change the rate at any time! Why does the government not put an end to this practice, because it was just plain usury! I wrote to the company, spoke to someone on the phone and said,"when have I ever missed a payment or did not pay in full?" The answer was I never did. BUT now that they doubled the rate in the middle of the game, and pretty much punished me for no reason, now I could not pay that bill in full at double the percentage!
So where they would have had that account paid in full, now they would either get nothing and people will be forced to declare bankruptcy, or they would now have to setttle for a portion of what I owed. Which is what we chose to do, the long hard way, work with a debt consolidation service, a non profit one that was there to truly help hard working people out. If these credit card companies had not raised our percentage, they all would have been paid back IN FULL. Now they had to settle for a portion. So if they suffer loss from people declaring bankruptcy, which most people do not want to ever do, it isoften their own fault.
And it would be one thing if they had raised it from 11% to 15%, but to raise it from 11% to 28% is usury plain and simple! The government should not allow that practice, and when someone applies for a credit card they should have it printed at the beginning in bold print....WE CAN CHANGE THIS RATE WHENEVER WE FEEL LIKE IT. I
So as I said, in the end, when the credit card company does this, IT LOSES MONEY. If I ran the company I'd say, "lets let them keep paying at this percentage, we are getting all our money that way, or even work with them so they aren't forced to declare bankruptcy, because then, in the long run we will get all the money owed us, not just a part of it. But I guess credit card companies are not required by law to be run morally, only the people paying and paying are required to have morals.
The bottom line is...when you make it impossible for someone to repay you...you won't get repaid. And why they are not required to let it be known they can and will, raise that rate, I do not understand, everyone else has to disclose up front vital information....except them. Thank you for listening!
I'm posting your letter because you make an important point. Actually, the "disclosure" is right there in the very fine, and very complicated, print in your credit card statement. It's called "universal default" -- and it means that if you are late on one card, other issuers can raise the rates.
But recently, many card issuers have been using computerized programs to search the credit bureau files to find borrowers who are making only minimum monthly payments on multiple cards. Then they use their power to raise rates at any time -- as disclosed in their agreements -- even without late payments or over-limit purchases. And it does push people over the brink. I agree that this is immoral -- and bad business. Recently, one of the largest card issuers - Chase Card Services -- agreed to stop the practice of raising rates just because you were late on another card. And Congress has spoken up about this issue, too.
But let this be a warning to everyone who receives a credit card bill in January. Pay promptly, or you could trigger an increase in rates on ALL your accounts!
Terry
