Americans are generally a cheerful, friendly lot. But one thing that a growing number now share is a seething hatred of credit card companies. The quickest way to gain nods of commiseration at a party is to recount a tale of how a credit card company jacked up your interest rates for no reason, layered on fees, declared a payment late even when it was made on the first business day after the due date (which fell on a weekend) or any of dozens of similar stories of woe.
I've had my fair share of problems with these companies. One major bank hiked my interest rate from 10% to 27% after I paid my bill two days late, but notified me only in my bill's fine print that the change was happening -- no email, no phone call, no courtesy. Yes, it was the second time I'd been late that year -- on the previous bill, I was one day overdue.
In another instance, a credit card company allowed me to go over my credit limit on its card, after I'd told the company that I wanted overcharges declined. The lender hit me with over-limit charges for several days in a row until I figured out what was happening. Again, no phone call, no email, no notification.
In their rush to slap on unannounced new fees and make generally unwarranted rate hikes before the Credit Card Accountability Responsibility and Disclosure Act of 2009 went into full effect and restricted their ability to do so quite so wantonly, the credit card companies have taken these practices to new heights. (For a really good view on how the industry boosts its profits by hiding the true costs of credit cards, check out this PBS Frontline documentary).
Through the Lending Glass
Even knowing all of this, I was still left flabbergasted by a recent exchange I had with one of the largest credit card companies. I have had this company's miles card for roughly a decade. It has certainly made some money off me, because although I generally pay off the card in full at the end of each month, I was one of the suckers paying a $30 annual fee. I kept doing that in part because inertia had set in, and also because the mileage balance always seemed to be high when it came time to renew the card for another year -- and why give up perfectly good miles?
Then out of the blue, the bank raised my interest rate from 11% to nearly 20%. It gave no reason. I hadn't paid late. It was still a card with an annual fee, so a good deal for the bank. I called to find out why, and was told it was due to the economy. I calmly explained that raising my rate was not fair and that I would cancel my card. I said the same to a supervisor. I heard lots of apologies, but no one would budge. So I paid down my account to nearly zero and began prepping for a switch to another card.
It was at this point that, lo and behold, an offer from the same card company appeared in my mailbox. It was for a credit card with the same miles benefits, no annual fee and at an interest rate a full six percentage points lower than my current card. Granted, it was for a smaller credit line, but I was shocked.
Sorry, Can't Help You
I applied and got the second card. Then I picked up the phone again, called the card company and patiently explained to three levels of employees that not only was the interest rate on my first card insanely high. Even they seemed to agree with me on this point, inasmuch as the bank had offered me a card at a much better rate and on better terms. The top-level supervisor I reached concluded that I had a point, but he couldn't do anything about it. The company, he told me, was unable to make any interest rate reductions at that point on its older accounts.
I proposed that the card company could perhaps raise the credit line on my new credit card, and slash the credit line on the card with the high interest rate. This, I reasoned, would be better than losing me as a customer. Alas, I was told, the company could not raise my credit limit until I had been using the card for a while. But you're going to lose me as a paying customer, I explained. It's hard to get people to pay annual fees. This didn't faze them in the least.
Last week, I used all of my miles to pay for a plane ticket, then cut up my overpriced annual-fee miles card. I'm using the lender's new card for now, but I'll switch to another company as quickly as possible.
Voting With His Wallet
Sadly, I'm fairly certain I would have received similarly rough treatment from other credit card companies. And I'm highly doubtful that the recent reform will greatly curtail abuses by credit card companies. There are, I'm sure, other ways to hide fees from consumers that are not regulated by the new law.
Meanwhile, consumers have failed to regulate the market by voting with their wallets to shun credit card companies engaged in abusive practices. (Information about the worst offenders is pretty easy to find online.) But as more and more Americans come to understand that their credit card company views them primarily as ATMs to be milked dry, the general hatred for credit card companies will only grow.
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