Credit card rates can go up ... well, just because

Credit card rates can go up ... well, just because

www.msnbc.msn.com

Consumer Action, a nonprofit education and advocacy organization based in San Francisco, released its 2008 Credit Card Survey today. Of the 22 major financial institutions contacted, 17 (that’s 77 percent) said they reserve the right to increase a cardholder’s interest rates — even on existing balances — at any time and for any reason.

(visit the link for the full news article)

These credit card companies are shady individuals. What good is a contract if one side can change it at any point? Its interesting if you read the fine print of most credit card agreements, it actually says that they hold the right to change whatever they want in the contract.

Walk around any college campus and you will see booths set up with signs for "free t-shirt" or "free _____", all you have to do is sign up for a credit card. Most college students have no idea what they are getting into when they use these credit cards.

I also find it funny/sad that the solution for someone not being able to pay there credit card bill is to charge them more. Credit card companies make money from interest and the people who can’t pay their bills. If you pay the minimum payment on just about any card, it is usually below the monthly finance charge, so you can never pay it off with min payments.

These companies have very little regulation and can get away with just about any business practice they want.

Many times they will arbitrarily add some "convenience fee", because they realize most people won’t even notice the charge and if you do notice and call they will remove it but if 70% never notice it that’s just extra cash for them. $4 convenience fee X 100 million customers = 400 million profit.

Most people don’t want to fight with these people but I have found if you yell a lot and ask for a manager and threaten legal action, you can get these crooks to remove most fees and make things right. But it will raise your blood pressure and probably take about 3 hours of phone time.

They are scam artists


www.msnbc.msn.com
(visit the link for the full news article)

[edit on 24-7-2008 by iamcamouflage]

I probably have 20 credit cards (yes 20), an almost perfect credit score, and have never paid 1 cent in fees or interest from a credit card. You see, when you sign up federal law requires in HUGE font for the bank to display any fees and APRs, as well as the highest percent the APR can go to. Then when you sign up and are approved, you get yet another mini-book that goes into precise detail on all the interest rates.

Of course, I pay off all my bills every month and actually read things I sign up for, so I'm in the minority. Its all about personal responsibility.

Anyone who doesn't know what they are getting into when signing up for a card shouldn't sign up for one. It doesn't take a genius to know that nothing is free, credit cards exist to make someone a profit, and that you can't take some else's money and not be charged for the privilege of doing so.

In fact if you know what your doing, you can make money off the banks. I've made several thousand dollars off them over the years from credit card arbitrage.

[edit on 24-7-2008 by ALightinDarkness]

I'm sorry, but when you mail your payment to your power company and the mail takes 9 days to get 75 miles away and your credit card compnay uses the excuse that you where late for a payment to raise your normaly 7% rate up to 23% and they tell you basicaly too freekin bad when you call to ask why. I can see how folks might want to visit the local branch with pitch forks and torches!!!! Reasons for credit rate hikes have absolutly no basis in logic. Only profits, PERIOD!!!


Zindo

reply to post by ALightinDarkness


Well, ALightinDarkness, you are certaintly in the minority. Many people are not able to understand the terms and conditions for credit cards. I agree personal responsibilty is a very important part of making decisions, but it works both ways corporations have a responsibility to practice ethically in business. Many of the tactics used by credit card companies would be considered fraud if smaller businesses or individuals attempted the same.

Anyone who doesn't know what they are getting into when signing up for a card shouldn't sign up for one.

If they dont know what they are getting into what makes you think they have the sense to not sign up.

I'm sure you are aware that there are many people in this country who are not very educated. And I feel like these companies play on the short-comings of those individuals. Not everyone is able to understand the full extent of what they are getting into, and many companies are purposefully misleading in order to take advantage of them.

People need to educate themselves on money. This is why our nation is in this position. No one saves and everyone wants to put it on the charge card. The fact is the government wants us to do this. Its the only way to keep our fractional reserve system afloat. New money has to be created constantly to cover the interest on old loans. I urge people to read up on the scam it will change your lives. Its called being a slave and 90% of the people are in one way or another and the sad thing is they sign up to be a slave not understanding what they are signing up for. This is what you call the advantages of a dumb society. Im glad they teach you about money and credit in middle or high school....not....

Take a guy like Lightindarkness. He does everything perfect. He states it in every thread. I think he needs to start a forum of his own called "How to Live the Perfect Life" and then teach everyone his wise perfect ways of working 3 jobs in college never paying interest or credit cards or having them scam you for being late when you mailed it out 9 days early or all the other crap. I NOW am like him but it took me to take a hard fall to understand and research how money works.

Originally posted by ALightinDarkness
I probably have 20 credit cards (yes 20)

I'm just curious -- why do you have 20 credit cards? Isn't one or two enough?

I've made several thousand dollars off them over the years from credit card arbitrage.

Is this why? Sounds interesting, can you go into more detail?

(No need to answer if you don't want to, of course -- personal finances are, of course, personal)

Originally posted by Ian McLean
I'm just curious -- why do you have 20 credit cards? Isn't one or two enough?

You need four to five to maintain the strongest possible score, although you might able to do that with three or four. Besides the reasons I'll explain below, I use about 7 or 8 credit cards routinely that offer rewards for certain purchase categories. One card gives 5% cashback on gas, another 5% cashback on resturants, etc. Since all of my purchases go on credit cards and are paid off every month, this results in anywhere from several hundred to a thousand dollars in free money from the credit card companies yearly.

Is this why? Sounds interesting, can you go into more detail?

Basically, you take out balance transfer loans from credit cards at X percent and put that money in a savings account earning Y percent, where Y is higher than X. The difference between X and Y is free money. Its pretty easy to do although it takes some planning and personal restraint, but as long as you build up huge credit lines (thus the 20 credit cards) and know that that money is not yours and pay everything back by the time the balance transfer is over, its an easy way to make money off the credit card companies.

And then you get to "stick it to the man" It won't make you rich, but if your like me a few thousand dollars a year for about 20 hours of work is a welcome addition to my monthly paycheck.

(No need to answer if you don't want to, of course -- personal finances are, of course, personal)

It's way too easy for anyone to get credit these days. Credit lenders are like drug dealers with money and toys being the drugs. I don't think most people read/understand the fine print, nor should they be expected to. It should be a lot simpler and lenders should not be giving out large credit lines to people without a record of responsibly making payments.

At least the lenders are not allowed to come at your knees with a baseball bat when you can't pay up

reply to post by iamcamouflage


I don't see why credit cards are hard to understand. Pay back your bills every month and you pay nothing, or pay the APR on the amount of balance you revolve plus finance fees. The annual fees and other fees are even easier to understand. I've said it before, my even my grandmother who was old enough to have lived through the Great Depression and has no high school diploma understands how an APR works. Surely a 20 year old who has just had math in high school should be capable of doing so. If not, then they shouldn't be signing up for things they do not understand.

If someone is so helpless that they cannot have enough sense to not sign up for something they don't understand, then they should probably stay at home and never go outside. Life involves lots of decisions that you probably don't want to make if you can't stop yourself for signing on the dotting line of a contract you cannot comprehend.

Credit card companies are heavily regulated. Congress routinely calls then CEOs up so they can act self-righteously indignant in front of them and hold political circus hearings. They are required to explain in detail what their APRS and fees are, in huge font, on a credit card application.

There are simple truths in life. One of these is that nothing is free. Another is that when you use OPM (other peoples money), you will pay for doing so. If people do not understand this, then they cannot be helped.

[edit on 24-7-2008 by ALightinDarkness]

reply to post by ALightinDarkness


I'm not saying you, your grandmother, or I dont understand but there are many who do not. And credit card companies prey upon people who already have bad credit and have a very clear history of poor finacial decisions.
I think you are underestimating the amount of seriously stupid people in this country. There will always be stupid people and one way or another others end up paying the price for stupid people. I'm not saying this is right but if we try to prevent stupid people from doing stupid things, we can prevent having to pick up the tab.

CC companies should not be giving cards to people who have bad credit and a history of not paying bills on time. Same with all these home mortgages. I'm not saying the lender is the only one at fault here but, there used to be regulation that prevented lenders from selling the debt, thus defering responsibility for a bad loan. What is the point of a credit score, or debt to income ratio, if banks and CC companies dont even bother to look at these numbers when issuing loans.

You have a good credit score and thats great and you have worked hard, read the fine print and done everything right to maintain that score. So doesnt if piss you off a little to know that the banks were giving loans to people who didnt do the things you did to maintain a good score. Now because the banks failed to take responsibility and because the consumer failed do their homework, everyone else is left paying the bill.

The free market is great but without some regulation, corporations and CEO will only look at the short term bottom line. You are correct people should take the responsibiltiy to not take on debt they cant afford but not everyone has the knowledge to make those decisions and that is where regulation can prevent the types of situation we are faced with now. And if you have good credit and make good decisions, then the regulation does not hurt those people.

Universal default is so wrong.
They'll raise your rate even if you are late in paying aother credit card.

More than one-third of major credit card issuers now say they act on these clauses regularly." A recent survey found that a staggering 39 percent of credit card issuers said they apply the rule to customers, even if they had no late payments on their own card.

Originally posted by iamcamouflage
And credit card companies prey upon people who already have bad credit and have a very clear history of poor finacial decisions.

Actually I think they tend to spin the wheel and hope someone messes up, because it is difficult to get a good credit card with bad credit. Prime credit card issuers - which constitute all the major banks except Capital One - will not give out credit to those with bad financial histories. They are taking the chance and hoping someone will screw up. Its a good business model, because if you sign up enough people someone will eventually.

Originally posted by iamcamouflage
I think you are underestimating the amount of seriously stupid people in this country. There will always be stupid people and one way or another others end up paying the price for stupid people. I'm not saying this is right but if we try to prevent stupid people from doing stupid things, we can prevent having to pick up the tab.

I believe we are in agreement that this country is populated by vast amounts of stupid people. But this is a case where the smart people benefit off the stupid people. Because the stupid people make bad decisions and pay money to the banks, people like you and I can profit off the banks. In other words this is not a zero sum game. The stupidity of one person allows the intelligence of another to profit. We do not pick up the tab for those who make bad credit card decisions, we profit.

I agree that in cases where do have to end up paying for someone elses stupidity, they need to be stopped. But that is the case with things like mortgage loans, not credit cards - which was the point of your OP.

Rates go up because you dont pay on time or have bad credit or both.I never liked credit cards but i got two of them.Why?its easier to pay for things online and for emergencies.Im eligible for a 20 k credit limit.But i dont have it on my cards.Why?I dont need it.what the hell do i need 20 k for?I live off 25k a year so wtf?
What it boils down to is PERSONAL responsibility.Nothing is free even when someone says so.Dont be so gullible when it comes to credit card companies or big corporations.The banks are constantly trying to set me up with even more cards!LOL!I get a call ,letter or email about once every 3 months or so about it.
Also that terms of agreement?People have got to start actually READING these documents.
Its not my fault someone doesnt read it then charges 20k on a card within a month or two then whines about how evil the banks are because they dont want to pay up?WTF?Nor do i pay for it when someone defaults or declares bankrupcy since my credit is good.
Yes there are many pitfalls for the dumb and stupid who dont read the fine print before they enter an agreement.You take responsibility as soon as you sign your name.That enters you into a binding contract,just like the phone,cable and internet bills.The interest on late payments is to encourage you to pay off sooner not later otherwise everyone would say"oh ill pay you fellas next month sorry.."And since banks dont go house to house to bust your knees up for a no payment that month,its the only deterrant they have.

So pay your bills on time all the time.Take responsibility for your finances.You dont understand?Learn it.You dont need to learn the whole banking system ,just your end of the bargain and life will be much easier.