June 23,2009
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Who are you kidding?, Pt.4
Decide who to believe.5) Another favorite trick card played by some less-reputable credit card lenders is called 'universal default'. This is the justification of a credit card lender discovering something totally unrelated to credit and declaring a consumer in default 'universally'. It could be an unsolicited medical bill resulting from car wreck where a person was involuntarily taken to a trauma center then slammed with a $50,000 bill they couldn't possible pay. (This is a very common problem due to the republican stance that 46,000,000 Americans without health insurance is not a big deal.) Major credit card issuers like Chase and and HSBC can take this information and justify jacking that person’s credit card interest for 'perceived risk'. This tactic have been abused by "a few bad apples" but will soon be regulated for fairness.
6) Another despicable practice by many large credit card lenders is to 'bait' their customers with handy 'cash-advance checks'. They look innocent enough and even convenient. The 'dark magic' is the way an unsuspecting consumer will be snared into paying triple-interest on those transactions forever. The only way to not pay triple interest forever is to completely pay off all balances for one cycle. Soon, this will be changed. Credit card accounts having multiple interest rates, will have to provide for paying on the higher interest portions without having to pay the lower-rate balances in full before being allowed to pay on the higher rates.
7) There are many ills within the current system and only the more glaring for unfairness have been mentioned here. One last one is called "Double-cycle billing". This is where finance charges are imposed, based on balances from a previous period. In the near future, 'double-cycle billing' will also be banned.
As Ryan Bubb and Alex Kaufman point out in their fine article posted on NYTimes.com, nearly all of this is unjustified. This team has performed some respectable research on the subject and is worth some further mention. For a related synopsis on their research, please refer to the news article entitled: "Who Do You believe?".