Wile, guile keep usurers wealthy
American Express was kindly informing me in writing that my credit cards were each seeing a nice jump in APR, that late fees were increasing, that my fixed rates were now variable ones and they would send someone by to kick my dogs later. (OK, maybe not the last one. Probably.) I can see why American Express would feel the need to raise my APR. After all, both cards have had a zero balance and therefore have had zero late payments. (Note: sarcasm.) They also were nice enough to make the notifications easy to read and accessible, using as little fine print as possible. (If I need to point out that’s sarcasm, you’ve never had a credit card before.) Thankfully, these sweeping, sudden changes to my cards didn’t matter much, since I haven’t used them since college. The sigh of relief that I had a zero balance was the third happiest credit-card-related moment of my life. (The first was when we finally paid them off in the first place. The second I can’t share in a family paper.)
As it turns out, I’m not alone in seemingly random alternations to credit card terms. With the economic depression squeezing revenue and new laws about to go into effect, credit card companies are rushing to raise rates on cards – in good and bad standing alike. (And ironically, my sister-in-law just opened the notification that her APR was raised while I was writing this.)
What’s the rush, you say? (First of all, stop talking to newspapers, that’s just weird.) Well, starting next week credit card companies will be required to give 45 days notification before making any significant changes in card terms, so naturally credit card companies are issuing a glut of major changes while they still can do so with little to no notice.
(It’s like every Major League team shooting up their players with steroids the day before they’re banned. Well, not all teams: the Pirates, I’m sure, would trade their steroids for prospects.)
Credit card companies are rushing these changes out because, in addition to increased notice on changes, companies will also have to mail statements earlier (at least three weeks before the due date) and give customers the option to decline a rate increase and pay off balance at original rate instead. These new rules, as well as others that will go into effect by February 2010, are going to force credit card companies to rewrite the way they do business, according to the Wall Street Journal. (And by “the way they do business,” I mean the way they make it harder for you to avoid paying fees and penalties.)
Customers of nearly every major card issuer have seen increased interest rates and fees and fixed rates become variable ones. Others have been outright dropped by their card issuers.
But won’t all those increased rates and variable rates make it harder for customers to actually make their payments? That’s what card issuers are hoping, since they make their money when you screw up.
And it’s not just credit cards. Banks are hitting harder on those who overdraw their checking accounts. Last week, the Financial Times of London reported that U.S. banks are set to collect a record $38.5 billion (with a “b”) in fees from customer overdrafts, nearly double the amount collected in 2000.
According to the Times’ research, much of that revenue is from the pockets of “the most financially stretched consumers amid the deepest recession since the 1930s.” The Times reports that 90 percent of the overdraft revenue comes from 10 percent of the 130 million checking accounts in the U.S.
According to the Times, the largest banks carry the biggest stick for whacking those that overdraw. At Bank of America, for example, a customer who doesn’t realize they’ve overdrawn can ring up 10 overdraft fees (for $350) in one day. (I guess that’s one argument for using the check register.)
And after all this, I get an e-mail forward warning about cashiers at Walmarts and other retailers sneaking “cash back” onto your purchases and pocketing the money.
It’s enough to make me consider moving back to the barter system.
Now where did I store my “Will Write for Food” sign…?
If you’d like to raise his APR, Brandon Szuminsky can be reached by e-mail at bszuminsky@heraldstandard.com.