Credit card rates and fees increase—STOP paying the credit cards!
Credit card rates hustle higher
By Kathy Chu, USA TODAYEven as the Federal Reserve has cut interest rates, financial institutions have sharply raised rates for credit card customers — even those who pay on time — as they grapple with losses from other bad consumer loans.
This month, Washington Mutual (WM) told some credit card customers that it was raising their rates by as much as 100%. Discover (DFS) is lifting its penalty rate to 31%, effective May 1, and may apply that maximum to consumers who exceed their credit limit twice in a rolling 12 months.
Bank of America (BAC) raised rates for some customers in March — triple, in some cases, though spokeswoman Betty Riess says, “It would be very rare.”
All three institutions say they reserve the right to adjust rates when customers become higher risks. Keith Givens, a spokesman for Washington Mutual, also notes that the decision to raise some rates is “an indicator of overall deterioration in the economy.”
As banks deal with tough business conditions, their definition of risk is evolving: “It’s a lot like beauty; it’s in the eye of the beholder,” says Greg McBride, senior financial analyst at Bankrate.com.
That’s why even responsible consumers whose credit scores haven’t changed are being hit, says Joseph Ridout, a spokesman for Consumer Action, an advocacy group.
Bill Hardekopf, CEO of LowCards.com, says the card comparison site is “seeing more aggressive fees come out, and issuers are quicker to change interest rates.”
He notes that as banks lose money on mortgage loans, it’s logical they would try to boost credit card profits. “If one end of your business is suffering, you look to the other end to pick up the slack.”
To boost profits, some banks have also imposed higher fees on consumers for paying late, transferring credit card balances and withdrawing money from an ATM.
The danger for card holders is that as some struggle to pay bills, steep rate or fee increases could nudge them toward default. Credit card delinquencies — a precursor to defaults — have been climbing, and overall consumer loan delinquencies are at their highest since 1992.
“If every (card company) raises your rate, you might have to write the debt off or go into bankruptcy,” says Dan Blanton, of Pevely, Mo. He was notified this month that his Washington Mutual credit card rate would nearly double, to 24%.
Blanton calls the rate increase “totally unfair.” He pays his credit card bills on time and generally pays more than the minimum due. He also has a solid credit score of nearly 700, he says. (Washington Mutual says it doesn’t comment on individual accounts.)
Discover’s new penalty rate applies to all new customers. About 10% of existing customers could also be hit with the 31% rate if they miss a payment or exceed their credit limit twice in a year. Bank of America and Washington Mutual declined to say what percentage of their existing customer base would be hit with higher interest rates.
I noticed that my BofA MBNA statement had a $49 late fee! Can you believe that? That’s the card I stopped paying after they closed my account despite my perfect payment history.
Obviously, they’ll never get a dime of that $49 late fee. But way too many people are still struggling to keep up with their credit card payments.
If you’re one of the many millions of consumers one paycheck from not being able to pay the rent or mortgage and with no major assets:
Max out the cards with food and fuel purchases, get your car fixed and take care of medical problems and then STOP paying!
Yes, the banks CAN legally raise their fees and rates and YOU can legally NOT pay them.
I’m sure you’ve all seen the WSJ article on food shortages and stocking up the pantry. It doesn’t matter whether the increasing prices and shortages are caused by vile speculators or insufficient supplies, it’s a FACT that food prices are going up just like fuel.
It’s also a fact that the SEC refuses to stop the speculators. You can continue to expect dollar devaluation as the Fed (the privately owned Federal Reserve) and other banks and investors are creating trillions of dollars out of NOTHING—for the benefit of bankers and speculators.
SEC took bribe from criminals involved in TWTN - AHFI - CNDD fraud - NC AG sues
This is just one example documenting the extent of the corruption of the American government. The SEC is happy to take an about 10% cut of the fraud money, you could think they’re the Mafia, openly accepting protection money.
I posted my research as these stock frauds were happening. Many people could have saved $20k, $50k and as I recently posted, somebody lost $500k —why didn’t they read my posts? Amazingly, some people read my posts and STILL invested.
So, you can follow my advice or not, I really don’t care. Just don’t whine at me when you’re homeless because you’ve been giving all your money to the banks.
My Open Letter to WaMu: My refusal to pay my $8,000 WaMu (Providian) VISA card due to the 26% interest rate
Posted by Christine on 04/29/2008 at 11:42 AM
Credit - Collection - Economic News • WaMu 26% interest rate • (0) Comments • Permalink
