Blue Island resident Marvin Weatherspoon thought it would help him financially when he decided to take advantage of a 4.25 percent credit card interest rate offer by consolidating $12,000 of home repair bills on a new Bank of America credit card in 2000.
He was wrong. Since then, the rate has skyrocketed, he said, first to 19.99 percent and now to 24.99 percent, while his monthly payment has spiked from $130 to $342. He was told the interest rate was raised because his credit score changed and he co-signed on a loan, he said.
Read the full article at Chicago Sun-Times
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Attorney General Martha Coakley and U.S. Reps. Barney Frank and Michael Capuano got an earful yesterday from ordinary citizens fed up with a financial system they say is constantly hitting them with high bank and credit-card fees while not protecting them from identity-theft predators.
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Congressman Barney Frank took aim today at the compensation of executives atop major financial institutions across America, recommending a change in corporate structure to ensure that the leaders of big companies feel the pain of risky decisions gone awry.
"It's not just that they make too much money by any rational standard," he said, adding that when their business decisions fail, they still receive major payouts, and "if the risk pays off" they get paid even more. "It's a one-way street. So they get an incentive to take risks."
Frank, joined by U.S. Rep. Michael Capuano and Attorney General Martha Coakley at a town hall-style forum hosted by SEIU Local 615, heard tales about identity theft, credit card company bureaucracy and subprime lending from some of the consumers they are working to protect.
Read the full article at Wicked Local Somerville
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They came to the nation’s capital this week from as far away as Denver, Chicago and Niagara Falls—five people who’d had tough experiences with their credit cards and were asked to share those tales with a House panel. Instead, they ran headfirst into the buzz-saw of Washington politics when the panel’s Republicans insisted the visitors allow their lenders to discuss their financial histories publicly—in any forum, at any time.
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Rep. Mark Udall accused the credit card industry of using intimidation tactics to silence a Colorado woman and other consumers whose congressional testimony was postponed at the last minute Thursday.
A House of Representatives financial services subcommittee was scheduled to hear testimony by consumers who say credit card companies unfairly raised their interest rates without notice, despite their good payment records.
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Legislators postponed consumer testimony about credit cardholder protection in a last-minute decision Thursday, but bank representatives testifying at a congressional hearing still got an earful from some frustrated credit card users.
Waving a two-inch-high stack of credit card solicitations delivered to him during the past few months, Rep. Gary Ackerman, D-N.Y., told the bank representatives that the fine print of credit card use creates "a real mess" for consumers. Studies have shown that three in four Americans have at least one credit card.
"It strikes me that with all the fees and stipulations attached ... credit cards are becoming like the carefully fine-tuned products of the tobacco industry," Ackerman said earlier at the hearing on H.R. 5244, the Credit Cardholders' Bill of Rights. "They have just enough nicotine in them to get you hooked but not enough to kill you, at least not right away."
]]>Christy Mylar Smith and her husband paid their Citibank card bill on time for years -- but when they paid late twice in one year, their interest rate increased from 12.9 percent to 31.4 percent overnight.
Steven Strachan has a FICO score in the high 700s, has always paid on time, has never gone over the limit, yet Chase increased his rate from 10.99 percent to 24.99 percent.
Marvin Weatherspoon took advantage of a low introductory rate from Bank of America, but because he was a few days late in paying one month, his interest rate has been increased from 4.25 percent to almost 25 percent. Only $108 of his $347 monthly payment goes to the principal. He has tried to work with the bank, but felt "he had no voice."
At the 11th hour, the credit companies found a way to stop those that had traveled to Washington today to tell their story to the congressional panel on consumer credit.
The banks whose practices were about to be discussed on Capitol Hill demanded that those testifying before Congress about credit card practices sign a waiver that allowed their personal financial information be revealed to the public.
Read the article and watch the Good Morning America clip at ABC
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Beware of debt "disease." That's the message from the Service Employees International Union and the League of Young Voters. The groups are urging students to "push back" against big banks that are pushing credit cards.
SEIU and LYV are sponsoring a Web-based video contest, in which students create public service announcements warning about the adverse consequences of going into credit card debt.
Budding filmmakers are being sought to help spread the message of financial responsibility through an unorthodox campaign designed to take on the credit card industry for its practice of aggressively marketing debt to young people.
The campaign, sponsored by the Service Employees International Union in Washington and the League of Young Voters in New York, is promoting a student video contest dubbed "Keep It in Your Pants," which plays off the theme of campaigns to prevent sexually transmitted diseases.
Read the full article at Investment News
Chlamydia is not a flower, and big credit card bills can turn into a disease, critics of banks' practice of issuing youth credit cards are saying in a new campaign.
But credit card condoms?
The tongue-in-cheek campaign by the Service Employees International Union and the League of Young Voters is comparing credit card debt and venereal disease.
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As Washington’s politicians and prognosticators haggle over the cause of the nation’s recent economic wilt, a group of House Democrats have proposed to reform an institution they claim has contributed to consumers’ burdens: the credit card industry.
That industry, these policymakers say, provides an invaluable service to consumers. But companies, they add, have also adopted a slew of dubious billing and marketing practices that target vulnerable populations, disguise fees and penalize cardholders even when they pay their bills on time. Hoping to give consumers more protections under their credit agreements, the lawmakers have crafted a handful of legislative proposals designed to rein the industry in.
Read the full article at the Washington Independent here
The consumer-anger-fueled assault against so-called abusive credit card practices gained traction last week with the introduction of legislation by Rep. Carolyn Maloney (D-N.Y.).
Called the Credit Cardholders’ Bill of Rights, the bill seeks to empower consumers against powerful credit card issuers and the practices consumer advocates say they use to unfairly squeeze extra profits.
The measure, among other changes, would require companies to notify cardholders 45 days before hiking their interest rates. At that point, consumers would be able to cancel the card and pay off the balance at the existing interest rate and repayment schedule.
]]>The Federal Reserve's dramatic rate cuts were expected to make it cheaper for consumers to use credit cards. But credit card interest rates remain high and in many cases have even climbed.
Bruised by a rise in foreclosures, banks have been reluctant to lower rates for cardholders who have missed payments or had their credit scores slip, analysts and industry watchdogs said. Yet even some cardholders who pay on time have not benefited from the Federal Reserve's recent actions, as banks raise rates and fees to make up for losses in their mortgage departments, analysts said.
"Not everyone is going to get a rate decrease," said Edmund Mierzwinski, consumer program director for the U.S. Public Interest Research Group, a Washington-based consumer advocacy organization. "People presume that because the Fed lowers rates, the banks will."
Read the full article at the Washington Post here
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Credit-card issuers have drawn fire for jacking up interest rates on cardholders who aren't behind on payments, but whose credit score has fallen for another reason. Now, some consumers complain, Bank of America (BAC) is hiking rates based on no apparent deterioration in their credit scores at all.
The major credit-card lender in mid-January sent letters notifying some responsible cardholders that it would more than double their rates to as high as 28%, without giving an explanation for the increase, according to copies of five letters obtained by BusinessWeek. Fine print at the end of the letter—headed "Important Amendment to Your Credit Card Agreement"—advised calling an 800-number for the reason, but consumers who called say they were unable to get a clear answer. "No one could give me an explanation," says Eric Fresch, a Huron (Ohio) engineer who is on time with his Bank of America card payments and knows of no decline in the status of his overall credit.
]]>The idea is so disgusting that perhaps it will work: A new debt awareness campaign, sponsored by the Service Employees International Union and the League of Young Voters, compares "debt disease" to the sexually transmitted kind. The cure? Credit card condoms, of course.
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