November 11, 2009
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How CC Companies Are Exhausting Americans, Pt.1
Where do those profits come from?Barely an American has not heard by now about the new credit card reform bill that was signed into law by President Obama in May. A better assumption might be that with all the hype and media coverage, many individuals are just plain tired of hearing about the new legislation. However, it's difficult to ignore as you wait in anticipation to find out if your card interest rate will be the next to go up. Sadly, the very activities that this new law was designed to prohibit are those which credit card companies have accelerated over the past few months in order to beat the consumer to the bank. Even sadder is that credit card companies have blatantly participated in these activities with no attempt to soften the blow leaving Americans confused and overwhelmed.
As credit card companies stepped up their unfair and near criminal activities, lawmakers have rallied to move up the enactment date of the new legislation to December 1, 2009. However, the current legislation has yet to be passed by the Senate. Meanwhile, credit card companies justify their actions by saying they have not broken any laws and have only reacted to the changing economic environment. However, as they continue to beat Americans further and further down, some of the nation's top lenders have reported increased profits for third quarter. In view of the fact that these same companies have reported record high defaults, you can't help but wonder where those profits came from.
There are a number of ways that credit card companies have raised profits. The most obvious are those that come from some of the lenders other consumer and commercial businesses. Some of these include interest earnings from mortgage and other collateral based loans. In fact the mortgage lending business has become so profitable for JPMorgan & Chase that on Tuesday the lender announced plans to hire 1,200 mortgage loan officers as the bank moves to expand its home loan business. And, of course, lenders are making a bundle from cardholder's fees and penalties. If you want to know what you're contributing to these profits, take at look at how your lender might be hurting you.