credit card industry

I Can See Russia and Lots of Credit Card Debt

Alaska, where you can allegedly see Russia from, has more consumer credit card debt per person than any other state in the nation, according to a new study.

On average, every American citizen has $5,165 in debt. Alaska is well above that number—the average Alaskan owes $7,135.

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Colleges Sell Student Info to Credit Card Companies

Colleges are selling databases containing the personal information of students and alumni to credit card companies. Under these arrangements, called “affinity” contracts, schools can earn bonuses for every card a student opens, and can earn additional bonuses when students carry a balance.

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Attorney Refuses to Pay Bank of America Credit Card Debt

California attorney Ben Pavone refuses to pay his credit card debt until Bank of America lowers his interest rate. Pavone has also threatened to sue Bank of America if they try and ruin his credit because of his non-payment.

Pavone asked BOA for an increased credit limit a few months ago, when he needed the extra cash. BOA replied by lowering his credit limit.

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Credit Card Companies Make it Hurt Before New Laws

Despite the new credit card laws go into effect in February, credit card companies are putting the financial hurt on customers.

According to a report from Safe Credit Card Project:

  • 99.7% of bank cards allowed card issuers to boost rates on outstanding balances.
  • 90% of bank cards increased their penalty rates.
  • Interest rates jumped an average of 20% from December 2008. Keep Reading »

Credit-card defaults bedevil Target

Banks keep credit card interest rates high despite low Fed rates

Even though the interest rates banks pay are dropping, credit card interest rates are holding steady. Joseph Ridout of Consumer Action thinks the banks are trying to make up for their losses on subprime mortgages.

At the same time, banks are cracking down on existing customers by raising rates, dropping limits, and taking other draconian measures.

But if banks keep squeezing consumers with high credit card interest rates, they will see default rates skyrocket as people stop making payments they cannot afford, sending the credit card market down the drain right behind the subprime market.

Not smart.

Interest rate cuts? Not on credit cards | USA Today
Banks pull the squeeze play | Star Tribune

Credit card companies’ data mining tricks

The credit card industry makes big bucks off of fees, and they carefully mine data to target consumers who are likely to rack up those fees. They mine court data, public records, and buy profiles from companies like Equifax who collect data on their own customers.

Some of the most gullible consumers apparently include those who have just emerged from bankruptcy. (Hey, get into debt again!)

“They get people who they know are in trouble, they know are desperate, and they aggressively market a product to them which is not in their best interest,” said Jim Campen, executive director of the Americans for Fairness in Lending, an advocacy group that fights abusive credit and lending practices. “It’s the wrong product at the wrong time.”

They even look for people more likely to respond to a mailed offer versus those who will simply throw it in the trash. I suppose this is a good thing for consumers who do throw away credit mailings. It might reduce our junk mail.

Banks Mine Data and Woo Troubled Borrowers | NY Times

Crisis rooted in bankruptcy law

“Agreeing with House Financial Services Committee Chairman Barney Frank that the current financial turmoil “was brought on by mortgage foreclosures,” Kentucky’s senior federal bankruptcy judge, Joe Lee of Lexington, also blames a greedy credit industry for selling Congress “a bill of goods” three years ago.” Crisis rooted in bankruptcy law | Lexington Herald-Leader

Research Reveals Credit Cards Encourage Spending