Banks Are Increasing Credit Card Rates & Fees and Pushing Lousy Products to Make Up for Mortgage Related Losses

In an interview on NPR’s Fresh Air with Terry Gross, Prof. Elizabeth Warren warns consumers that banks are increasing interest rates and fees on credit cards for no other reason other than that they need revenue to make up for losses in other lines of their business. The banks reason that in a climate in which credit is harder to obtain, consumers are less likely to close their accounts when hit with these increases and switch to different credit cards. Banks are also adding such “trips and traps” as double cycle billing (you pay interest on recent charges). Banks are...

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Fee-Harvester Cards: Credit Cards That Are Really Just Fee-Generating Scams

Study after study show how expensive it is in the United States to be poor. A new report by The National Consumer Law Center about so-called fee harvester cards brilliantly illustrates that principle. These fee-harvester cards look like credit cards, but they have little or nothing to do with issuing credit. They are “subprime” cards designed to maximize profit by targeting consumers with poor credit. They look too good to be true, and are: these cards come with extremely high fees that eat up most of a low credit limit, meaning the cards are virtually useless. A typical card will...

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Credit Card Industry Targets College Students to be “Credit Pushers”

Credit card companies love to market cards to college students. That point was eloquently and tragically made in the superb recent film Maxed Out. In the film, two mothers of college students describe how their bright and high-achieving children applied for credit cards as college freshmen. But they soon found themselves in serious credit card debt. Feeling profoundly depressed and overwhelmed, each of them committed suicide. These two moms have since made it their mission to stop credit card solicitation at college campuses. A new BusinessWeek article tells the tragedy from a student’s perspective. Ryan Rhoades, a freshman at the...

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New Credit Card Rules Proposed by Federal Reserve

Credit card companies are endorsing the Federal Reserve Board’s proposal to mandate better disclosure of credit card terms to consumers, apparently hoping that more disclosure will head off Congressional attempts to outlaw some of the practices consumers complain about the most. Kathleen Day of the Washington Post has been following the dynamic between some lawmakers’ attempts to prohibit some of the worst industry practices and the Federal Reserve’s proposal to disclose those practices but keep them legal. As Kathleen Day’s article (discussed above in Mark Anderson’s May 27 post) points out, some of the worst industry practices include “universal default,”...

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Consumers Love Hate Relationship with Credit Cards

The Sunday May 27, 2007, edition of the Washington Post contains an article entitled “A Highly Charged Relationship” about Americans’ love hate relationship with credit cards. What what we all love is the convenience, but we hate are the practices hidden in the fine print such as unfairly high interest rates and penalty fees; confusing policies that constantly change, almost always in the lender’s favor; and near-insurmountable hurdles to getting help when a consumer falls into trouble or when a company makes a billing mistake. The article states that most complaints involve “over limit” fees and penalties; interest charges on...

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