July 5, 2009The credit card bill’s passage may have provided some hope to consumers over the way that their credit card companies were charging and billing them but the changes are still several long months away. In the meantime, credit card companies are continuing their objectionable practices and are even making them worse.
As the credit card bill’s activation comes nearer and nearer, credit card companies are beginning to get worried that they may not be able to make a profit as well as they used to a few years ago. As a result, they are now raising their rates and fees before it gets too difficult to change them when the credit card bill becomes active.
A recent study has shown that credit has now become more and more expensive for credit card holders and credit card companies are getting more and more aggressive in collecting as much as they can from consumers. One major observation was that credit card companies are still as deceptive as ever, something which will hopefully change, once the transparency laws included in the credit card bill becomes active. One example of this is the concept of universal default. Universal default is an exploitative practice among credit companies where the credit card holder experiences higher interest rates on his debt because of debts from other credit card companies. Basically, the credit company will review the debts that their customer has, even debts from other creditors, and will adjust their rates according to their findings. Nowadays, credit card companies are avoiding the term “universal default” and will say that they do not practice it. However, they are still basically doing the same thing, though they’re referring to it by another name, usually stating “market conditions”.
Credit card companies are also getting more and more aggressive over issuing charges. A lot of them are charging fees for bill payments that involve human to human interaction, usually around $10 to $15 and rising. Fees for late payments are also getting higher, ranging from around $20 to $38 approximately. Over the limit fees are also getting higher, around $32 to $39. Cash advance charges and balance transfer charges are also getting higher and higher.
Observers are saying that these changes are the results of the credit card companies adapting itself to the upcoming credit card bill. Many credit companies are afraid that the credit card bill will stifle their ability to generate profits, though some analysts say that credit card companies will still be earning large profits even with the credit card bill in place. In the end, it is the consumers that are getting hit hard and many are moving away from credit cards to consider other options such as debit cards.
The figures get much worse when considering the current unemployment rate in the U.S, which is, according to Fitch Ratings, at 8.9%. It is the highest unemployment rate of the country since 1983. With little in the way of available cash, consumers are turning to credit cards. Unfortunately, many are not keeping up with their bills and the credit card crisis just gets worse and worse.