After today’s credit card conference at the White House, President Obama outlined some broad strokes as to how credit card companies can help consumers.  Many of the details are similar to those outlined in the Credit Cardholders’ Bill of Rights, such as using plain language instead of complex legal jargon and putting an end to the wave of massive interest rate increases.  However, one of the more important ideas introduced by the President may have slipped under the radar.  This is the belief that consumers need to be able to easily compare credit card offers. Continue Reading »

“I just received notice from Chase Credit that they are adjusting everyone’s (Business and Consumers)interest rate by 2% regardless of credit history or balance. I love the idea that they can give out worthless loans to folks who could not afford it and then expect the customers who stayed faithful to bail them out. Chase is worthless in my humble opinion now. I am pulling out from Chase tomorrow as I am not paying their way out of the mess they created because of greed.” See comment at http://www.smartbalancetransfers.com/blog/2009/02/chasecredit-card-low-interest-rates/

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While consumers with good credit and manageable credit card debt can often utilize 0% balance transfers to quickly and inexpensively extricate themselves from credit card debt, many consumers either have too much credit card debt or lack the credit needed to qualify for a low rate balance transfer.

If you fall into the latter category, the best approach to getting out of credit card debt may be the use of a consumer credit counseling service.  Unfortunately, the web is littered with shady debt consolidation firms promising miracle debt reduction.  Continue Reading »

Overview

There has been a great deal of talk about credit card companies lately, and none of it has been positive.  On Thursday, company executives will be heading to the principle’s office, i.e. a meeting with the Obama administration  (See Policy Makers Take Aim at Credit-Card Practices from today’s Wall Street Journal).  Granted, all the negative news generated by credit card companies is well deserved.  Most of these firms have been raising interest rates on consumers with seemingly reckless abandon while simultaneously reducing credit limits, actions that not only increase the cost of being in debt, but negatively impact credit scores, effectively making it more difficult for consumers to refinance debt with 0% interest rates. Continue Reading »

On April 23rd, the Obama administration will be meeting with credit card industry executives to discuss abusive credit card practices.  While the specific abuses have yet to be outlined, there are so many abusive practices to discuss, we imagine the meeting will take quite some time.

Unfortunately, this meeting is slated to take place about 5 months after millions of consumers have been blindsided by massive interest rate increases and severe credit limit cuts.  In all likelihood, nothing will be done to help those who have already been victims of credit card abuse.  (For firsthand accounts, please see credit card complaints here.)

What, if anything, could come of this meeting?  Ideally, the Obama administration can put a stop to the seemingly random interest rate increases that have led to the doubling or tripling of interest rates for many consumers.  However, this scenario seems unlikely, as there is nothing illegal about these abusive practices.

A second outcome, which is also unlikely, would be increased lending and 0% refinancing options.  However, this too seems unlikely, as banks continue to limit access to 0% introductory rates and increase balance transfer fees.

In all likelihood, the only outcome of this meeting will be some newspaper headlines that make the administration appear to be cracking down on credit card abuses.  Unfortunately, headlines aren’t going to pay the extra 15% many consumers are paying on their credit card debt.  And, in all likelihood, unless the government provides credit card companies with the money they need to make loans, it is equally unlikely that consumers will benefit from any increase in credit availability.

So, on April 24th, you may read a headline such as, “Obama Administration Pushes Credit Card Lenders to End Abusive Practices,” and come home to find a letter from your credit card company informing you that your interest rate will be doubling next month.  As we’ve learned over and over again during this crisis (and our lives for that matter), meetings don’t always produce results.  And this meeting may be nothing more than a public relations move.

While most of the mail and comments we receive are complaints about credit card companies, every one in a while we hear from visitors who have benefited from visiting our site.  A particularly nice note came in yesterday that made us feel all warm inside.

“Thank you for this site. I just had my credit limit cut in 1/2 by Bank of America and my credit is quite good. Needless to say, I was informed verbally that this was because of changes in the company and that it would not really affect my credit score. Thanks to your site, I now understand the impact their change will have on my credit score.”

We really appreciate the feedback and are glad to be of service.  (HINT:  Send us more nice emails).

Deregulation is often blamed as a reason for the financial crisis of 2008.  However, at the risk of sounding like CNBC’s Larry Kudlow, increased regulation of credit card practices may be playing a very large role in the interest rate increase notices many Americans are receiving in the mail.  The rationale for this position is quite simple.  New credit card regulations passed in late 2008, designed to help consumers, will essentially tie the hands of credit card companies with regard to the way they price risk, particularly through rate increases. Continue Reading »