Fed's Rate Cuts Bring No Relief For Consumers' Credit Card Bills

Source: Washington Post

The Federal Reserve's dramatic rate cuts were expected to make it cheaper for consumers to use credit cards. But credit card interest rates remain high and in many cases have even climbed. Bruised by a rise in foreclosures, banks have been reluctant to lower rates for cardholders who have missed payments or had their credit scores slip, analysts and industry watchdogs said. Yet even some cardholders who pay on time have not benefited from the Federal Reserve's recent actions, as banks raise rates and fees to make up for losses in their mortgage departments, analysts said.

"Not everyone is going to get a rate decrease," said Edmund Mierzwinski, consumer program director for the U.S. Public Interest Research Group, a Washington-based consumer advocacy organization. "People presume that because the Fed lowers rates, the banks will."

The increases have perplexed customers such as Richard Davis, an insurance agent who lives in Fairfax County who said the annual percentage rate on his Chase Business Visa card went from 8 percent to 24 percent in December, three months after the Fed's first rate cut. "That just floored me," he said.

Card companies say they are exercising their right to protect themselves from risky borrowers and market conditions. But their actions have attracted the attention of Congress, which is considering several bills that would crack down on lending practices.

Read more: http://www.washingtonpost.com/wp-dyn/content/article/2008/02/10/AR2008021002537.html

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How high is too high for an interest rate? Candidates?

and our government fucks the working class and it will be a double screwing with worsening inflation.

A 30% interest rate is absolutely ridiculous. Also, these insanely high credit limits are out of control. On one of my cards, the limit has now increased to $12,500! There is no way that I would ever charge that much on a credit card! However, if I were in different circumstances and really needed that money, I could see the temptation to use it. Yes, people are responsible for their own debts, but the credit card companies are like those people in cartoons who stand in the alley and whisper "Psssst, hey kid, come 'ere!"

Call your card company and ask them to return you to your previous limit, or whatever. If you're going to try to take out another kind of loan, this will make your rating better as you will look less likely to overextend yourself (to those loan officers who are still making rational decisions).

One of the biggest components of your credit score is the percentage of available debt you are using (30% of your credit score):

http://en.wikipedia.org/wiki/Credit_score_%28United_States%29#Makeup_of_the_credit_score

The banks should roll the rates back automatically when the fed cuts them. Most consumers were not ASKED if they wanted their rates increased - but they were.

They are talking about credit LIMITS.

Since the government has essentially legalized usury and gambling, what's the problem with marijuana? Too easy to process for the home grower?

The banking laws need to be changed to provide some protection for the consumer. I receive at least 20 offers a week for more credit cards in the mail, not to mention the constant battering people get from television and print ads. Everytime I go to Target, I am offered a discount if I sign up for their card. Children are just plain brainwashed and programmed by the time they get out of high school. To my son, there is little difference between my debit card and Visa.

People used to have savings. Now savings accounts not only do not pay hardly any interest, but you receive bank fees if there isn't a high enough balance! The banks don't want you to save (which is really incongruous). Why would anyone in their right mind put $100 to start a savings account if it will cost them $15 a month for "maintenance"?

:sarcasm: <-- was this necessary?

to pay the balance on the only credit card I carry. Then I will cancel it. I hope others will do the same. It's time to bend these greedy bastards over like they've been doing to us. Wouldn't it be nice if our government actually did something? Like, I don't know, impose a limit on credit card interest that can legally be charged. It's legalized extortion, and the powers that be don't give a shit.

And all the people who refuse to live within their *actual* means use credit cards to maintain their illusory lifestyles.

There used to be ceilings on charges. Anything over 20% interest used to be considered usury, and our government would file racketeering charges against the loan sharks charging those high prices.

But the banks decided they wanted to get into loansharking. And the consumer was screwed.

...Wall Street investment bankers and hedge fund and real estate speculators.

Let's get Hillary's Homeowner and Bank Foreclosure Protection bill approved and in place now before 30 million or more families loose their homes.
:wtf:

decided to say "SCREW *ALL* of you!!" and simply stopped paying?

Given that banks are now raising rates on people who don't make late payments and who don't have huge amounts of outstanding credit card bills to pay off, perhaps a national credit revolt is just what the doctor ordered. As a group, we could sink these companies like the Titanic if we all got together, all the cardholders in the US, and collectively said, "fuck off!"

The bottom line is, what these banks have done, are doing now, and will continue to do, is far worse, more immoral, and more unethical than anything we can do as individuals. I'll not hear any pap about how it's "immoral" to stop payment, because there's simply no comparison at all.

Perhaps it's time cardholders started using words like "escrow" and "default", in mass numbers.

and cut up my cards 4 years ago. Created a 1K emergency account (which helped me wean myself off). Slowly but surely I have been paying them down and paying them off. I will never pick up a credit card again-ever. I get lots of offers and so does my 17 yr old daughter. We pitch em the minute we get them.

Might level the socio-economic playing field too, especially if it financially wiped out the old money fascists.

In the olden days interest on credit cards was usually in the single digits. It went up during the economic downtown of the late 1970s-early 1980s, as the Federal Reserve raised all its interest rates, supposedly to "combat inflation."

The Fed later lowered its interest rates, but the credit card rates stayed right where they were and have remained high ever since, except for the occasional special offer.

It never has, and unless usury laws return, it never will.

I won't take a card that doesn't offer a truly fixed rate anymore. my cards all have a fixed rate that stays fixed unless I screw up and go over my limit or miss 2 payments in a 6 month period. I've left the other accounts active (for credit rating purposes) but with "0" balances (which I watch closely for fraudulent activity).

Banks need to be held accountable for soliciting/granting credit to poor credit risks and for gouging people on rates.

Bring back the usury laws!

She is 22, is still working on her degree, and is being BLASTED.

and then they wonder why there are no more golden eggs

in since mid-january, in my neck of the woods, 3 large employers have laid off close to 500 people

in good old fashioned savings accounts. Looks like once again - help is for the corps, the wealthy, at the expense of everyone else.

It's a BIG shoe..with shit all over the sole..