Banks

[mudpuppy]

Ok, you guys don't seem to be fazed by banks' predatory lending practices on mortgages. "Blame the consumer, they're stupid!" you say. "Businesses should be allowed to make a profit any way they want!"

Well, how about this:

A credit score of more than 800 wasn't enough to save Lee Frizzell of Farmington Hills, Mich., from Chase's new policy, which took effect in January. Chase is tacking on a $10 monthly service charge to many low-rate accounts with big debts held for more than two years. The fee is added to the balance, where it earns interest just like any other charge. Chase also raised the minimum monthly payment from 2% of the balance to 5% for affected cardholders. Frizzell has $12,000 in debt on his $35,000-limit card from three years ago, when he consolidated his bills to take advantage of an offer promising a rate of 3.99% for the life of the balance. "It was the cheapest rate around," he says. "Now they're trying to renege on the deal."

Quoted from Yahoo Finance.

So essentially, after the fact, the credit card company is unilaterally changing the contract terms to include an extra fee, because the bank made a bad decision on the terms of these cards in the first place, and God forbid a business actually lose money due to a bad decision. And of course the consumer has absolutely no leverage in this situation. In the old days, a person's word meant something. Apparently this doesn't apply to businesses. They can change their contracts willy-nilly, and that's just fine. Let's hold consumers responsible for their bad decisions, but not corporations.

On top of this article, I got home today to find a letter from Capital One telling me the fixed rate 7.9% card I have had for 5 years is now going to be a variable rate card at 14.65% + prime (17.9% right now). This is the same card they cut my limit on from $10,000 to $4,100 a while back. And I don't have bad credit; my score is 805. My only recourse is to close my account and lose my rewards points. It's not a big deal since I never carry a balance, but it still pisses me off.

So what say you? I know Flyer's response already. "In a free market, people will leave these banks and demand something better, and a competitive market will provide," but guess what--there aren't really any alternatives. Although I am seriously consdering getting a credit card with my credit union. At least they work for me rather than some CEO raking in billions per year.

 

[maryannette]

Another instance of greed driving the system to corruption.

 

[BluSkyy]

they couldn't change the rates on you if you didn't agree to allow them to do it in the contract. we take this credit/credit card stuff way too lightly, as have they.

 

[mudpuppy]

they couldn't change the rates on you if you didn't agree to allow them to do it in the contract.

That's the thing. . . as far as I'm aware you cannot find a card that doesn't have weasel words in the contract that lets the issuer do whatever they want.

 

[MGX]

This is why I quit doing business with credit card companies.

 

[wilheldp_PE]

While I think your premise is a straw man, I will respond to the content of your post.

If Mr. Frizzell has a contract that says that his 3.99% rate is guaranteed for the life of the card, then not only do I think that Chase is in the wrong, but I also believe that Mr. Frizzell would win a lawsuit against them. The way the free market fixes this is that people respond to shitty business practices by the banks by switching their accounts to other banks. "Vote with your dollars". In the immediate future, I would think that Chase has to be breaking some sort of rule or law by applying fees and changing interest rates on existing balances. I'm sure that their ability to do so is written into those massive disclosure documents, but not even my "personal responsibility" ass would expect anybody to read and understand those things.

 

[IlPadrino]

So what say you? I know Flyer's response already. "In a free market, people will leave these banks and demand something better, and a competitive market will provide," but guess what--there aren't really any alternatives. Although I am seriously consdering getting a credit card with my credit union. At least they work for me rather than some CEO raking in billions per year.

There are still good banks out there... granted, the two that I personally recommend aren't open to the general public: USAA and Pentagon Federal Credit Union.

There are *ALWAYS* alternatives.

 

[benbo]

Ok, you guys don't seem to be fazed by banks' predatory lending practices on mortgages. "Blame the consumer, they're stupid!" you say. "Businesses should be allowed to make a profit any way they want!"
Well, how about this:

Quoted from Yahoo Finance.

So essentially, after the fact, the credit card company is unilaterally changing the contract terms to include an extra fee, because the bank made a bad decision on the terms of these cards in the first place, and God forbid a business actually lose money due to a bad decision. And of course the consumer has absolutely no leverage in this situation. In the old days, a person's word meant something. On top of this article, I got home today to find a letter from Capital One telling me the fixed rate 7.9% card I have had for 5 years is now going to be a variable rate card at 14.65% + prime (17.9% right now). This is the same card they cut my limit on from $10,000 to $4,100 a while back. And I don't have bad credit; my score is 805. My only recourse is to close my account and lose my rewards points. It's not a big deal since I never carry a balance, but it still pisses me off.

First of all, this is not a person, this is a company, that has responsibilities to it's shareholders as well as it's customers. The only "word" they give is what's written in the contract. Nobody has to have a credit card. I didn't have one until I was 35, I paid cash.

And I don't know what makes you think banks never lose money on customers. There are record high bankruptcies right now.

THere's no place you can transfer those points? All my points are transferable to lot's of places. I can even cash out.

 

[roadwreck]

Here's a novel idea. How about we, as consumers, don't carry balances on our credit cards? I think that would fix an awful lot of the messes many people find themselves in.

 

[wilheldp_PE]

Here's a novel idea. How about we, as consumers, don't carry balances on our credit cards? I think that would fix an awful lot of the messes many people find themselves in.

BLASPHEMY! The only way for our economy to grow is for us to spend more money than we take in. Just look at the precedent that the government is setting for us.

[/sarcasm]

 

[Chucktown PE]

If it sucks so bad then go start your own credit card without all of these fees and "unfair practices." If you think you could make a profit loaning poor Lee Frizzell $12,000 at 3.99% there's nothing stopping you but opressive federal regulations.

 

[mudpuppy]

While I think your premise is a straw man, I will respond to the content of your post.

Which part? The article I linked too, or the letter I received? I would be happy to scan and post the letter. Obviously I cannot prove the veracity of Smartmoney.com's articles, but it is owned by WSJ/Rupert Murdoch, so it must be reliable.

There are still good banks out there... granted, the two that I personally recommend aren't open to the general public: USAA and Pentagon Federal Credit Union.
There are *ALWAYS* alternatives.

I suppose joining the military to get access to those financial institutions would be an alternative. Probably not worth it unless I had other reasons to join, though.

First of all, this is not a person, this is a company, that has responsibilities to it's shareholders as well as it's customers. The only "word" they give is what's written in the contract. Nobody has to have a credit card. I didn't have one until I was 35, I paid cash.
And I don't know what makes you think banks never lose money on customers. There are record high bankruptcies right now.

THere's no place you can transfer those points? All my points are transferable to lot's of places. I can even cash out.

How do you rent a car without a credit card?

The only thing I could do with my points is cash them out, at a value less than what I would have gotten to buy plane tickets with them (about half).

 

[wilheldp_PE]

Which part? The article I linked too, or the letter I received? I would be happy to scan and post the letter. Obviously I cannot prove the veracity of Smartmoney.com's articles, but it is owned by WSJ/Rupert Murdoch, so it must be reliable.

The straw man was taking my argument about people not taking responsibility for their own failures at obtaining a mortgage they could afford and applying it directly to a completely unrelated topic, credit card interest rates.

 

[mudpuppy]

^I guess I don't see it that way. You were saying consumers should be responsible in their borrowing practices. I think banks should be responsible in their lending practices. Two sides of the same coin.

 

[roadwreck]

^I guess I don't see it that way. You were saying consumers should be responsible in their borrowing practices. I think banks should be responsible in their lending practices. Two sides of the same coin.

And if both sides would be a little more responsibility with there borrowing/lending then we would all endure fewer headaches.

 

[SSmith]

I suppose joining the military to get access to those financial institutions would be an alternative. Probably not worth it unless I had other reasons to join, though.

There are ways to join PENFED without being in the military (PM for details if you are interested). And I agree, they have some of the best financial products available in terms of mortgages and credit cards.

 

[MGX]

How do you rent a car without a credit card?

You can rent a car with a debit card. I've been able to use a debit card for everything ie plane tickets, car rentals etc except borrowing money.

 

[mudpuppy]

If it sucks so bad then go start your own credit card without all of these fees and "unfair practices." If you think you could make a profit loaning poor Lee Frizzell $12,000 at 3.99% there's nothing stopping you but opressive federal regulations.

That's a great idea! I'll just pull a couple billion dollars out from under my matress and do that.

But I don't have a couple billion dollars. That's the problem here--there are tremendously high barriers to entry into this market, so there isn't much competition becuase not just anybody can jump in (though I hear peer-to-peer lending is making an effort to catch on). So we end up with the people with all the money making all the rules--and of course those rules are designed to extract the maximum amount of money from us with the least amount of risk to them.

And if both sides would be a little more responsibility with there borrowing/lending then we would all endure fewer headaches.

Agreed. I don't deny the consumer should be responsible. But I think we need to hold business to the same standard, if not somewhat higher--they are teh professionals & experts in their fields, after all.

You can rent a car with a debit card. I've been able to use a debit card for everything ie plane tickets, car rentals etc except borrowing money.

Really? Do they charge a deposit in that case?

 

[MGX]

Really? Do they charge a deposit in that case?

There may be a deposit if you're under 24 years of age, but I've never paid one. IIRC the company holds $100 in your account until the car is returned or something similar.

 

[Capt Worley PE]

If the dolt hadn't run up a lot of debt, he wouldn't be in this fix.

Gosh, how hard is it to live within your means?