Ravengate
Partners - Stock market, economic and political commentary by Patricia Chadwick

Credit card horror stories have been pouring in to me since my Monday blog.One man said his experience with Capital One was so bad that he got the last laugh by shorting the stock at $45.It is now $10, so he is certainly the winner.As he put it, “jokes on them now – and as we say in the south, ‘it aint so funny when the rabbit has the gun.’ ”Good for him.

Another told of his rate going to 26.99% – with a Citibank card that handles both his Sears and Home Depot accounts – when he has paid every month far more than the minimum required. There was not even any written notice; the new usurious rate simply showed up on his most recent statement. His response has been to go to his credit union where he can borrow at 11%.

A woman wrote to say that her LLBean card – managed by Bank of America – had shortened the time period to pay so that by the time the bill arrived, there were only three or four days left before being hit with a penalty.They deliberately took out the card because LLBean offered free shipping.So by cancelling their card, they lose the free shipping and LLBean loses the business – all because of the bank’s policy.

Another man wrote in that he received the very same Capital One letter I had highlighted in my blog and he pointed out that if he closes his account, which he has had for nine years, it will hurt his FICO credit score.He then went on to castigate HSBC which, he notes, (and I am quoting him) ‘routinely make due dates for credit cards on non-business days, and then claim they need two business days to process an online payment, unless you agree to pay $15 for an express payment.Of course, there is no actually different handling involved, this is a computer program that just counts your card as paid, and charges you the $15.”He then notes, “Funny, if I call American Express and key in my checking account number, I have seen a pending deduction at my bank sometimes as little as two hours after entry because once they have the routing number and checking account number nothing is being done manually.”

That same man noted that there are other credit card scams including one “where a mailed payment must be received by 9A.M. on the due date (meaning a typically 9:30 mail delivery on the due date results in a late payment.”

A couple with a Citibank credit card for over 15 years and a credit score in the mid 700s recently received a letter from the bank telling them that their rate will go from 9.86% to 18%.And they say “And there is nothing we can do about it…….They have been robbingpeople blind for decades, as the government sits idle and does NOTHING!!!!!!!”

A small victory was expressed by one writer who has been a Capital One cardholder for over 10 years.When she received the same notice of increase in the rate from 6.9% to 15.99%, she actually called them and (in her words) “accused them of penalizing me, a loyal and responsible customer, with their errors in judgment by extending credit to those who cannot pay them back.”They actually came back and agreed to keep the current rate until next January, at which time they will review the account again.She goes on, “Lesson learned:None of us should take their antics without putting up a fuss.”How right you are!!

This crisis is of monumental proportion and needs to be addressed by both the Federal Government and the State Governments.The crime here is that the banks are transferring the pain of their own bad management on their best clients.They are trying to blame it on the economy and the cost of capital.Well in recessions, good businesses cut prices to grow their business and we all know that interest rates have been falling precipitously for the last two years.

The best advice I can offer is to suggest you fight back – wrestle with the banks and see if you can stave off the rate increases, and then take the time to send your horror story to your State and Federal representatives.If enough people do that, maybe, just maybe, Government will listen, will investigate and will come to your aid.

Tags: Banking, finance

This entry was posted on Thursday, March 12th, 2009 at 5:53 am. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.