Banks Screwing Customers Before New Laws Take Effect
Credit Card Rates: Banks Plan To RAISE Rates, Annual Fees
Banks expect to tighten terms on credit cards in response to a new law that aims to protect consumers from sudden rate hikes, the Federal Reserve said Monday.
A quarterly survey by the Fed found that many banks expect to increase rates, reduce credit limits and raise annual fees for both prime borrowers – those with sound credit histories _as well as more risky "non-prime" borrowers, who have tarnished credit. Banks also expected to raise minimum credit scores for non-prime borrowers, the Fed said.
Banks already have been pushing through rate increases in anticipation of the new rules.
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Most of the new credit card provisions are slated to take effect on Feb. 22.
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They want banks to boost lending, but no one wants a return to the lax standards that many blame for contributing to the worst financial crisis since the 1930s.
Credit-card countdown: Higher rates abound
If you're one of the millions of Americans holding a credit card, this isn't necessarily news: Credit-card issuers are hiking interest rates, penalties and fees in full force ahead of stringent new laws that take effect in February.
In fact, some 400 credit cards from the nation's 12 largest bank issuers -- accounting for 90% of the $89.8 billion in outstanding consumer credit -- are still using most of the same tactics that the Federal Reserve has called "unfair or deceptive" and that will be outlawed in fewer than four months, according to a new report from the Pew Health Group's Safe Credit Cards Project.
"Until the law takes effect we're seeing that all the major credit-card issuers on the bank side are continuing to engage in these unfair and deceptive practices," said Nick Bourke, project manager of the Safe Credit Card Project.
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"Some of (those interest-rate and fee hikes) occurred because of the economic environment we're in," Bourke admitted. "But the timing is pegged at getting a lot of changes in before the bill takes effect."
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(Losses)
J.P. Morgan Chase - credit-card division lost $700 million in the third quarter and expects losses to be higher next year
Bank of America - loss $1.04 billion in the third quarter
Citi Holdings - which includes the private-label cards, mortgages and other consumer loans, showed a $1.9 billion quarterly loss.
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Credit-card companies recognize the pain they are inflicting on many consumers. "We understand that customers don't like price increases, especially in difficult economic times," Citi said in a statement. "However, these actions are necessary given the doubling of credit card losses across the industry from customers not paying back their loans and regulatory changes that eliminate repricing for that risk."
It goes on to say that annual fees are going up too.
You could say the banks are losing butt loads of money on credit cards and that the only way to maintain a business is for them to earn more. Is it really fair to screw customers for their own relaxed standards that got them into this mess? Hell no. The banks got themselves into this mess, and I'm not about to help them get out of it. Just because a bunch of people can't or don't pay their credit card bills doesn't mean I need to be stuck with their bill. No way. No how.
I checked my APR this evening and they increased it by 30% from where it was a few months ago. I called and ripped them a new one. They claim that corporate made the changes and customer service has no control over it. I'm not making any more purchases on that card any more!
I may only marginally affect their bottom line, but I'm going to do my part to enhance their losses by not using their card. Screw those corrupt fuckers. They don't have a problem screwing you.