We all know that Banks and financial institutions that issue consumer credit cards have been trying to stick it to us with late fees, higher interest rates and overage charges. And that some of their tactics have increased in recent months due to “Credit Card Act of 2009”. In fact, these abuses have racketed up so much that Congress is looking to speed up the enactment of these restraints, especially in the area of interest rate increases and penalties. Credit card holders beware. There are other dirty little tricks afoot.
Now to my Story.
Back in early 2009, just as the fall out of the financial crisis was really unfolding, I received a notice from my credit card company that beginning at the end of my yearly term they were going to double my interest rate. At this time I was carrying a small balance on the account. Needless to say I could not understand why? I had been a “member” with this issuer for over 15 years, always paid on time and very rarely carried a balance (Perhaps that’s the reason I was targeted – They were not making any money off me). I’m sure I’m not the only person that received such a noticed. So I decided to dispute it. How dare they unilaterally change “rules of engagement”, especially on a balance that was already incurred, and especially since I was a “good” customer in good standing! I later realized the reason why.
Thinking about this for a while I came to realize the banks were trying to recoup terrible losses through risky investments that were drive by pure greed and total disregard to morals or ethics. But why target me and, I’m sure, many other consumers that are in good standing? Well, it’s very easy to see their motives.
Who is the biggest economic demographic in this country? The middle class. Who is most likely to carry a balance on a credit card? The middle class. Doubt me? Ask any middle class family how much credit card debt they carry. Is there a reason why? Of course. Are they valid? Yes and No. Do I decide to probe the reasons any deeper? No. But I will say that we Americans tend to live outside our means. If you can simply agree with my hypothesis that the middle class carries a fair amount of credit card debt, then it does not take a rocket scientist to figure out that by slamming this demographic with an interest rate hike, banks could bolster their balance sheets. To me this was just one of the many ways banks were trying to fix their missteps by riding on the backs of the middle class.
My attempts to dispute this proposed interest rate hike were fruitless. After a painfully long and drawn out conversation with the issuer and after stating I was a long time customer in good standing time after time, I was given two options: 1) At the end of my yearly term I could accept the new interest rate or 2) Close the account and pay any remaining balance in full.
Fortunately, I am in a position where I could choose the latter, so I let the whole issue just sit, waiting for the end of my term to see what would happen. Before I ended my telephone conversation with the credit card representative, I was informed that I would be receiving a confirmation of the new terms (options) in the mail. I made it very clear that if my interest rate were to increase, I would be closing the account. Months passed and I have yet to receive this confirmation. My yearly term came and went, a yearly enrollment fee was posted, I paid the fee, and my interest rate did not increase. Interesting. Guess they had a change of heart? I doubt it.
So now I carry a small balance on this credit card. I figured, “Hey, I guess they deserve to make a little money off me.” Or perhaps, just maybe, I have some national pride and figured the interest I paid would help my poor banker friends, the economy and the nation recover from their self-imposed disaster (cough). Hey, you never know! I did purchase a new vehicle this year and I stuck strictly to American made (Ford, to be exact). But I digress.
As many of my friends know, I am not one to perform banking over the Internet. In fact, I am so paranoid (with good reasons) that I even hesitate to shop on line. I work in the Information Technology industry and hear about security breaches and identity theft all the time. Putting my account information out there in cyberspace scares the living hell out of me. But I do subscribe to paying my credit card online. It’s a nice feature to have. I get an e-mail notification when my statement is available, one for when my payment is close to coming due, one for when they receive my on-line payment request and one for when my on-line payment is posted to my account. There is some convenience to this electronic banking thing.
But now I have noticed an interesting trend.
With my “Credit Card” account, I have noticed the time between confirmation of receipt of my on-line payment and confirmation of when my on-line payment is posted to my account has increased. Historically, this has been anywhere between 12 to 24 hours from time of submit to time of post. However, for the past two billing cycles, the time between receipt and post has increased up to 3 days!
After another painful and fruitless inquiry to the issuer, I was informed that this delay was probably due to my financial institution not clearing the payment in a timely manner. I made an inquiry to my financial institution and was informed that the transaction took 15 seconds from the time of receipt to the time of transfer.
Think about it. What if I had waited to pay my bill just the day before it was due? The 3 day delay to clear the transaction would have put me in default. And, based on the terms and conditions of many credit cards, the issuer would have the right to penalize me with a late fee and, more importantly, would be within the law to increase my interest rate to a default rate, with some default rates as high as 27%.
Obviously, they (the Issuer) lost the battle of arbitrarily raising my interest rate for fear of losing a good customer. So now they have launched a back-door attack on me, trying to get me, in my estimation, to default.
My warning to all: Pay your credit card days before the due date, even if you only afford the minimum payment. The credit card companies are out to squeeze the middle class and they will be attempting to find any loop holes in the “Credit Card Act of 2009.” Pray that Congress accelerates the implementation of the law. It will not save you if you are delinquent, but at least the issuers can’t arbitrarily increase your rates on previous balances.
This was an article submitted by T.L. Donnelly, a resident of upstate New York.
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