By Tony Evans
Checked your credit card statement that came in the mail lately? If you’re like many credit card holders you haven’t unless you’ve heard the news. Wait a minute. Look closely. Hold it! Let me get my magnifying glass .. Ah ha There it is. The rate increase nobody told us about in mice print hidden in a paragraph they hope you’ll never read. Clever people these credit card companies.
Washington Mutual said it was raising rates by as much as 100%. Discover is bumping up its penalty card rate to 31% if you exceed your credit limit twice in 12 months. Bank of America has raised rates for some “marginal” customers triple in some cases.
Why? I made a call (I have a WaMu card) and a polite young lady in India on the other end of the line, with a hard to understand dialect who sounded like she was 14 years old, said financial institutions like WaMu “have sharply raised rates” even for those who pay on time because they are grappling with losses from their bad mortgage loans.” Don’t you love these companies that outsource everything? What the hell are they thinking???
She also told me that “all banks reserve the right to raise rates arbitrarily when customers become higher risks.” Hey, sister, I never had a loan with you guys, so why nail me?
Bill Hardekopf, CEO of LowCards.com, says a card comparison Consumer Action advocacy group, which recently did some investigating is seeing more aggressive fees come out and companies are quicker to change interest rates. He says that as “banks lose money on bad mortgages it’s logical they would try to boost credit card profits.” Sounded simple to me, but I put it another way: “If one end of your business is suffering, you look to the other end to pick up the slack. Bankers have been spoiled with huge profits until the credit crunch hit.”
Good heavens, who are these thoughtful pencil pushers? I want to put them on my personal tax team next year. Of course, the danger for credit card holders is that as some struggle to pay bills, steeper rates or fee increases could nudge them towards default. Credit card delinquencies a precursor to going “belly up” have been climbing, and overall consumer loan delinquencies are now at their highest level since 1992 and rising. Gasp!
If you have a ton of credit cards and every one raises your rate you might have to write the debt off or file bankruptcy. And WaMu notified me last week that come June, 2008 my interest rate might balloon to 24%. Yikes! And me being a wonderful CC holder for years with a WaMu sister bank, Providian, and a FICO credit score over 700. When I called to bitch and moan and threaten to cut my card in half and send it back I got another 14 year old this time in New Delhi who whined in her nasally voice, “Sorry, Mr. Evans, we don’t comment on individual accounts.” Whew ..glad to hear that!
All this horrible credit card news is about to drive me to drink. Wild Turkey bartender please no ice.
Fed Chairman Uncle Ben may be doing something right for a change. He is moving toward placing new regulations on the credit card industry making it more difficult to raise interest rates and give consumers more time to pay bills.
Just in case you still want to get a credit card or transfer your account balance to lower interest rate cards here’s the list of the Top 10 credit card companies and their rates:
1. Capital One Platinum Prestige – 7.9% No fees
2. Discover More – 10.99% – No fees
3. Simmons First Visa Platinum – 7.25% – No fees
4. Bank of America Accelerated Rewards American Express- 9.99% No fees
5. Blue from American Express – 10.24% – No fees
6. Merrill Plus – 9.99% – No fees
7. Discover Motiva – 10.99% – No fees
8. CITI Platinum Select – 8.74% – No fees
9. Iberia Bank Platinum Visa – 6.24% – No fees
10. Clear American Express – 11.24% – No fees
To read Tony’s other columns click here.