Faced with imminent new regulations controlling their interest rates and pretty despicable practices, credit card companies are jacking in every single dollar they can prior to the new regs going into force:
It appears that credit card issuers are insisting upon exercising their right to abuse their customers in the name of higher profits. A survey of recent activities by the top eight credit card issuers reveals that since the Federal Reserve announced rule changes designed to curb unfair credit card industry practices last December, the companies have implemented even more onerous practices, raised interest rates more aggressively and increased the number of fees that they can impose on their customers.
The Center For Responsible Lending (CRL) released its findings on Monday and according to the report, Citigroup (C), Bank of America (BAC), J.P. Morgan Chase (JPM), Capital One (COF), HSBC (HBC), Discover (DFS), American Express (AXP) and Well Fargo (WFC) have each increased interest rates on existing balances for many of their account holders on an "any time, any reason" basis within the last six months. This practice will be illegal under the new Fed rules which take affect in July 2010. The CRL estimates that at least 10 million card holders have been affected, and some have seen increases of 10 percentage points or more on their existing rate at a time when many consumers are having trouble staying afloat.
"This shows that they are trying to get as much money as possible before the rules change," said Kathleen Day, a spokesperson for the center....
The CRL report highlighted several changes that top credit card issuers have made that are adversely affecting consumers. Perhaps the most onerous practice was put in place by American Express, which Day said has started charging some cardholders three percent of their balance as a late penalty instead of a fixed fee. With this change, a consumer with a balance of $5,000 would be subject to a $150 late charge instead of the $39 most companies impose. "Going to a percentage of available balance is pretty steep," said Day.
OK: are you really surprised?
Here's the thing: I have only limited sympathy for the people caught in this trap, because many--although by no means all--have had ample warning and plenty of opportunities to get the hell out of this situation for the past two years.
You had to swallow some pride, cut up the cards, sign up with a credit counseling agency, and re-orient your life to live within your means.
Let me be clear: I am not talking about people is special situations where there was no other option, and there are such people.
But there are millions of Americans out there who, even after the Great Meltdown hit last fall have continued to use the plastic to live beyond their means, and somewhere along the line the State is going to expect you and me to help pay for it.
So the news for today is... banks are avaricious and millions of Americans want a free ride.
Nothing to see here. Move along.