November 11, 2009
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How CC Companies Are Exhausting Americans, Pt.2
Changes in your account.Of course the most obvious way credit card companies are hurting Americans is by raising interest rates. Some companies, like Citibank, have doubled or tripled the rate to a near 30 percent. If you received one of those “changes in your account” email or flyers and haven't read the tedious fine print document, you will want to check your credit card statement. It is likely your interest rate may have also doubled or tripled. It is also highly likely that your lender has also converted your account interest rate from a fixed rate to a variable rate. A variable rate will allow the credit card company to raise interest rate any time the prime interest rates increases. Prime is currently at one of the lowest rates in history; therefore, you can only imagine how high that interest rate will raise when prime begins to increase.
Credit card companies have closed large numbers of accounts. Some of the account closings result from company initiatives to move out of unprofitable businesses; an example was Citibank's recent decision to close all Home Depot cards and a portion of their gas card portfolio. However, the majority of these account closings stem from the lenders' decision to cut risks and avoid further defaults. If you are concerned that your credit card account may have been closed, call your lender or check your account status online. If your lender should close your account, it is best to search for a replacement to avoid any negative marks against your credit rating.
Lenders derive huge earnings from credit card fees and penalties. These fees are attached to a number of different conditions that are once again buried in your account's terms and conditions. Some of these fees were already included in your account terms and have simply been increased. Others are new or re-inventions from previous years. Lenders are even charging fees on accounts that remain inactive for a select number of months.