The white envelopes from the credit card companies usually sit on my desk for a while before they eventually go to the shredder after a quick review. So on a recent afternoon, I sat back to open up all those envelopes to quickly glance through the letters, hoping as usual not to find anything in there, so that I could send them to the shredder. The recent letter started with the usual ominous words "We are making changes to your account terms....". Normally these letters would talk about policy changes to rental-cars, insurance and other such things and I would scan through the letters and not find anything disturbing. But this time there was change and by golly it felt like I had been smacked with a sauce-pan.
The letter from a major credit card company went like this.
"To continue to provide our customers with access to credit, we have had to adjust our pricing. The terms of your account will be changing. These changes include an increase in the variable APR for purchases to 29.99% and will take effect November 30, 2009. As always, you have the right to opt out........ "
Now I have always paid my credit card on time, have no credit card debt, though I use it for many many purposes. I understand that I am not the kind of customer that the credit card companies are looking for, yet they need my business because I bring them hefty revenues via transaction fees which merchants pay them. On some cards I actually pay a yearly fee because it gives me some points/miles or some benefits that I think I need.
So after I got this letter, I called one of the credit card company and their response is that their costs have increased tremendously and that doing the business of "credit" is more expensive now than it was a year ago. But going from a 10% APR to a 30% APR is not fair. But wait a minute, the Fed is literally charging these banks next to 0% APR forcing them to lend. In fact some of them are so bloated with bailout dollars. I understand that the government is trying to change credit laws early nextyear, the pretext being protecting the consumer from abuse by credit card firms. However the card companies are rushing to make changes before the end of the year to avoid any such limits on them starting next year. It's daylight robbery and the senate banking committee is asleep at the wheel, just as they have been for the last 50 years. The legislators are asleep because they are deliberately ignoring the banks who are making whatever changes they want to right now, before any enforcement begins next year. It appears that the legislator are on track to protect the consumers starting next year. Who is the government protecting?
On the other hand, you can't cancel/refuse the card because cancelling a card for any reason has it's own drawbacks. Well, it affects your credit score negatively which will only increase the APR and other credit/borrowing costs as well. The consumer is caught in the middle with having to keep the cards and risk paying a hefty fine for late payments or high interest rates on balances.
Overnight the credit card companies across the board are pulling this stunt and our Government officials just stand by and do nothing. Basically the banks are being allowed to rob the consumer and the US Senate and Congress are the co-conspirators. Many of these cards are offered by banks that have received bailout monies. The government borrowed money from the people to give to the failed banks to allow them to gouge the people. It almost seems like the very government the public put into office is now gouging the public indirectly via the banks. Why is it that the common man has to suffer and pay for the failed policies of the few greedy gecko's. All of this being facilitated by the Cons in Congress. As we speak, US banks are embarking on the greatest rip-off this nation has ever seen and we stand there and do nothing.