Credit Card Shenanigans
February 20, 2008
Here they go again. Some of the nation’s biggest credit cards issuers have decided to raise rates as a measure to boost their falling profit levels. The problem with this idea is that those who may be impacted by the rate hike are often the best customers on the company roll book.
Literally, hundreds of thousands of Capital One and Bank of America cardholders are being notified or have already been notified that their credit card interest rates are going up. The increase level will vary but some have seen a hike by as much as twenty-eight percent, and this is for people who have not missed payments in the past.
Experts who are looking at this tactic seem to agree that the rate hikes are being called into play because the card companies cannot raise other fees or charges. These other fees and charges have already been hiked in the past and are maxed out. The next best place to get capital is to raise the interest rates, nearly across the board.
The ability to simply decide to raise rates on customers is based on the language that many companies have slipped into their terms and conditions statements. In general terms, the companies are saying that they can increase the rates at any time and for any reason they see fit. Many lawmakers are not pleased with this vague language.
Citibank, one of the largest credit card issuers, reported just last year that it would no longer make this same vague claim. The language now, is that the company may increase rates on customers due to what they call general market conditions.
Bank of America has joined in with language that states that rates can be increased because of market conditions, business strategies, or for any reason