If you haven’t taken a good look at your credit card statement lately, I suggest you get out your magnifying glass. You might find hidden fees, hiked up interest rates and even reduced lines of credit in the wake of America’s financial crisis
If you haven’t taken a good look at your credit card statement lately, I suggest you get out your magnifying glass. You might find hidden fees, hiked up interest rates and even reduced lines of credit in the wake of America’s financial crisis – and not necessarily through any fault of your own.
Even consumers who pay their bills on time are being asked to pay for the fallout following years of shady lending practices and corporate malfeasance at financial institutions. Some of the same banks that received government bailout money are now sticking it to consumers by arbitrarily raising interest rates by as much as 50 percent and imposing credit limits so that cardholders can’t run up high balances.
Well, last week, President Barack Obama called credit card companies on the carpet, saying that the days of “any time, any reason rate hikes and late fee traps have to end.” He proposed a federal crackdown on credit card companies that take advantage of overburdened consumers.
My first reaction was, “hallelujah.” People are already being squeezed. They don’t need hidden fees and punitive penalties being imposed on them, too. Then I thought: “Can the government really do that?”
For sure, a crackdown would be long overdue. Americans have been somewhat complacent about the abuses heaped on us by the credit card industry. Maybe we have become so romanticized by the notion of credit that we ignore the harm it can do. To that extent, credit is like any other addiction.
But here’s the rub: These days, credit cards are necessities. In 1970, just over half of families had a credit card. Today, three-quarters of them do. Just try getting through life without one. You can’t even pull your car into some garages in the city without a credit card.
But check this out: Did you know that a credit card company can dump you as a customer for any reason at any time? That’s right. Irvin Bennett, CEO of Chicago-based Credit Utopia, a credit building and restoration company, tells me that credit card companies are randomly selecting clients to ax and are cutting even those with good credit.
Can they do that? “Credit card companies can pretty much do anything they want,” Bennett said, who added a flip side. “On the other hand, if they wanted to, they could help people cut their payments in half, and help them save money and maintain their credit.”
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