Make no mistake about it. This is war, what’s going on between credit card companies and their customers. If you’re not paying attention, you could take some serious shrapnel.
Last year, Congress seized on the public’s anger and passed new regulations for credit card issuers. Some of them are already in effect. Others, like limits on rate increases, start next month.
Well, guess what? The banks have reconvened in the war room and come up with a new battle plan. The LA Times has this explanation:
In response, many banks have been lowering the credit limits of millions of customers and raising rates. They’ve also been switching fixed-rate cards to variable rates that won’t be subject to the new rules and imposing “dormancy fees” for plastic that doesn’t get a regular workout.
But that’s not all. Talbott said consumers could look forward to even higher fees, revamped rewards programs and an end to some traditionally free services.
“The number of institutions offering free checking will decrease,” he said. “The market is responding to the regulatory changes.”
But customers aren’t waving the white flag. They’re fighting back. A buddy of mine says Citibank doubled his interest rate from 15% to 30%, thanks to “a change in the terms of the account.” He says he dug through the Consumerist website to find the number for Citibank Executive Customer Service. A few phone calls later, he got his rate returned to 14.99%.
The lawyer in the video below isn’t using such diplomacy over his jacked-up rate. Ben Pavone is refusing to pay Bank of America unless the bank drops his rate from 28% to something more reasonable. And since he’s an attorney, he’s threatening to sue if his credit score is lowered for not paying. More:
(Pavone) says he’s been a good customer, and has paid his credit card bill on-time for 13 years. The bank, he claims, raised his interest rate and lowered his spending limit without warning or explanation.
“I think that’s what a lot of people are frustrated about,” Pavone said… “”A lot of feedback coming into my office is these are people with good payment records… there’s really no cause for it. The spread from 28 percent to what (the credit card companies are) paying, which is maybe a half percent to 1 percent, is simply opportunism.”
I feel you, dog, but I’m thinking the courts are going to chuck you out on your ear. Maybe I’m wrong. Watch the interview and tell me what you think.
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In other news, a House committee has scheduled a hearing for January 27th on a bill that would cap credit card interest rates, not just limit rate increases. Banks couldn’t charge rates above 16% on any card, and fees would be limited to $15.
A similar bill was shot down last year, most likely by the banking industry’s lobbyist snipers. That lobby is still full of excellent marksmen, so I’m thinking this new bill might get shot down too.
Then again, customers are starting to get a certain Mel Gibson in Braveheart look in their eyes.
Last but not least, customers fighting this battle need to gather as much intel as possible on certain covert operations:
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