CHESSNOID

The credit card companies are at war with consumers.  They have taken preemptive action to keep its profits from turning to losses.  The credit card companies have rushed to change all fixed rate cards to variable rates to basically expose a loophole in the new laws passed.

The Latest Credit-Card Tricks

Under the new rules, companies will find it difficult to jack up fixed-interest rates at will. That’s why issuers are moving consumers into variable-rate cards, which are tied to an interest-rate index. But borrowers may not benefit when the index drops since companies are limiting how low card rates can go. In October consumer advocate attorney Lauren Bowne saw the 5.9% promotional rate on her Wells Fargo (WFC) card switched to a variable one with a minimum rate of 19.1%. As of July, 5 of the 12 largest banks that issue cards, including Wells, had floors under rates, says Pew Charitable Trusts, a nonprofit. Wells says floors under variable rates have been standard practice for at least three years.

What can consumers really do?  Everything the banks are doing is legal even if it is not fair.  All the credit card companies can increase your rate, decrease your credit limit, or cancel the card altogether.  I guess depending on your personal situation is will determine what options will be most beneficial to you.  I think this article in the Denver Post is a good example of consumers getting fed up.

Denver Post:

To see how it is playing out in millions of homes across America in advance of the act’s Feb. 22 effective date, you need only to sit across the breakfast table of Lawrence Rickman in the modest Louisville ranch home he built four decades ago, where he and Margie Mae raised five children.

He is 81 now, seven years his wife’s senior. They have had a Bank of America credit card for 20 years. They never once in all that time, both say in near unison, missed a payment.

Rickman slides his December bill across the table, with instructions to read it. No, not all of that, he spits, a Pall Mall cigarette hanging on one side of his mouth. Look at the interest rate, he says.

Sixteen-point-nine percent, it reads.

“I was paying 5.9 percent, which is what I have paid for years,” he says. “I always paid them $500 a month without complaint. Now, they want $1,074 this month. I can’t pay it. I won’t pay it.”

A Bank of America spokeswoman declined to comment, saying the company does not comment on clients’ credit dealings.

The couple survives almost exclusively now on Social Security payments. Until his retirement more than 20 years ago, Lawrence Rickman was the streets superintendent for the city of Louisville.

“I laid the first blacktop in this city,” he says.

The credit card is the only one they hold. He’d wanted to simplify his retirement years, which is why he and Margie Mae reverse-mortgaged their home in Old Town. In recent years, all they used the card for was gasoline, some groceries and the occasional doctor bill.

“When I got this month’s bill,” Lawrence Rickman recalls, “I got on the line and told them they were getting out of hand on this interest rate, that I wanted to negotiate.”

The conversation, he says, went something like this:

“Lower my rate, or I’ll file bankruptcy,” he told them.

“But sir, if you do, it will destroy your credit rating.”

“So what? I’m almost 82 years old, and you’ve already ruined my credit.”

The bank, he says, called back days later with a proposal: If he makes five payments at the current rate and does not use the card during that time, maybe a lower rate can be negotiated.

“I told them to shove it,” Lawrence Rickman says. “What difference does five payments make? I’ve never once missed a payment, and now they don’t trust me? They had no answer to my question.”

He and Margie Mae have retained a lawyer to assist them.

“I am at the point of saying to hell with it,” he says. “They can’t file a lien against my wages; I don’t have any. They can’t come against my house, which is owned now by the federal government.”

The December payment was due Tuesday. He looks at Margie Mae and softly says it will be the first payment they will miss.

She is going to miss having the card, she tells him. He slides the card out of his wallet, telling me to take a good look because he’s set up the shredder in a back room. “Member since 1989,” it reads.

“They can squeeze, but they’ll never get blood out of me,” Lawrence Rickman says, fingering the card wistfully.

“What the hell,” he says, looking up from the card. “Maybe I’ll go get one more tank of gas with it.”