Your Credit Card Just Isn't That Into You
Are your creditors trying to get rid of you? According to American Banking News, that could explain why they've been hiking interest rates to unbelievably high levels. After all, if your credit card companies wanted to keep you as a customer, they wouldn't hike your interest rates and slash your credit card limits, would they?
American Banking News credits Dave Ramsey with the idea that credit card companies are trying to get rid of certain types of debts. It's certainly one possibility. Of course, the impending credit card rules and profit losses might have something to do with it too.
When credit card companies raise your interest rates, they're required to give you the opportunity to opt-out of the new rate and pay your credit card at your lower rate. In exchange, you have to close your credit card account. If you opt-out of the increased interest rate, your card issuer can double your minimum payment or request that you pay off your balance in five years.
Credit card news roundup:
- Chase lowers an Ohio couples minimum payment after it more than doubled last June. (CNN) Some credit.about.com readers have also been able to go back to their previous minimum payment by converting their balance to a five-year fixed-rate loan.
- I guess I'm the only one who has my credit card number memorized. Amazon has started using a new service called PayPhrase that lets you make purchases using a two-word phrase along with a PIN. PayPhrase stores your credit card information - your card number, expiration date, and security code - and retrieves it when you enter your phrase and PIN. -GadgetCraze
- WalletPop's roundup of the best credit cards and the worst credit cards.
- Curtis Arnold, founder of CardRatings.com, will answer Baltmore Sun reader questions on November 3. You can post your questions on their blog. -Baltimore Sun
- Small business credit card offerings grow as loans for business start-ups are less common. Terms on small business credit cards are often better than terms for consumer credit cards. -CNN Money
- Bank of America cancels a cardholder's credit card after she complained about her credit limit being lowered. Days later, the bank called, apologized, and reopened her account.-Huffington Post
I think we have to decide, as a society, where we stand with credit. Is it okay for the banks to take on high risks or is it better for them to become responsible lenders. They cannot do/be both.
If it’s okay to take on risks, then we can’t complain when we have to bail them out with our hard-earned tax dollars. And if it’s okay to take on risks, then yes we should complain when they shut us down (credit-wise).
But if it’s really a social responsibility that lenders be responsible and never let people get in over their head, then they should adopt risk-adjusted pricing when it comes to credit cards. They should shut down higher risks. At the extreme, they should never lend on unsecured credit unless it is impeccably underwritten, meaning most of us wouldn’t qualify for a $1,000 credit card.
I would err on the side of responsible lending practices. This way, we don’t have such big losses, people don’t get in way over their head (and they have), and we don’t have all of the other fallout associated with it. IMHO anyway…
How can they not care about us if they make money from us?
John DeFlumeri Jr
Great post, and comment on the quicken blog, which is how I arrived here. I’ve been researching home business loans and creative ways to finance business start ups. Business can be started for little money, sometimes hundreds of dollars, month to month expenses can often times be covered via credit cards. It wasn’t so much like that ten years ago when I started my first business, thanks for the great info!
Joe @ Home Business Ideas