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I see a new advertising campaign in our future.
When Banks Panic
Even though the Federal Reserve has lowered its rate to 1%, banks are raising your interest rates in hopes of making a bigger profit. Oh yes, they are raising your fees or charging news ones as well.
At a time when the government is pleading for consumers to return to consuming, the banks are instead dissuading people from doing this by punishing consumers with higher fees and charges. And at the same time the banks are getting billions of dollars in bailout money to help get this economy moving again. It almost sounds damn near unpatriotic.
And let’s be clear about why the banks and credit card companies are scrambling to make these new revenue streams and profits. It is because the brightest and most financial savvy banking minds of our time swindled themselves by buying and insuring crap loans that inflated housing values and now result in record numbers of foreclosures. That’s some damn smart banking.
So the banks losses are the direct result of their own ineptitude and you are going to pay for it with higher credit card fees and charges.
What Credit Card Companies Are Doing
Bank of America
I would not be surprised at all to see monthly payments for cardholders to increase significantly as more creditors take the Chase lead to increase monthly minimum payments from where they are now. It is a quick win to increase their cash flow and will likely result in higher losses, but more cash now, when they need it.
Here is an example of what it can mean to you:
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$10,000 Card Balance
Old Minimum Payment: $200/mo
New Minimum Payment: $500/mo
Imagine if all your cards did that to you, which they legally can. Many monthly budgets would be torpedoed leading to missed or late payments, but wait, that generates more fees to the credit card companies. Me sees a plan.
The banks will claim that by raising the monthly minimum payments that it is in the interest of the debtor since it will help the consumer to pay their bills off faster and get out of debt sooner. Truly this is nothing more than raising the hurdles higher and then saying it is better for runners who now have to jump higher.
Credit Cards Still Available
You should not get the impression that credit card accounts are not still plentiful and available. Just look here to see what is being offered.
While credit card companies are going to punish and raise revenue on its current crop of hostages, ah, customers, they are not going to stop extending credit. It’s what they do.
That is a good news, bad news situation. If you are stuck with a bad card with horrible rates and terms, it is still possible to switch. Granted, with credit standards toughening it is harder to switch of you have bad credit.
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