I usually throw stuff from the credit card companies away without reading it. But since the econolypse I’ve had my rates raised for almost nothing: three days late was one excuse for raising my 0% promotional rate to 29.99%. (If I pay “on time” for the next six months it can come down again at their discretion, but by that time the promotion for which I opened it will be over). And I don’t mean three days past 30 days, I mean three days past the billing date on the statement. Not to mention the fact that Wells Fargo, my bank, taking advantage of the float, took its own precious time to auto-pay my bill.
Good thing I can pay this one off in full. But I can’t cut it up or close it, or it will hit my credit score. Although leaving it open and paid off also hits my credit score, because I have all that credit “available.” From the time I got my first card in the early 70s, things have become remarkably more complex. And more expensive.
So I’ve begun to take more notice of the incredible hubris of these banks and credit card companies, which goes unnoticed by a society largely without newspapers and focused by cable news on swine flu. No way you can tell someone who is busy with a family, or studying for a degree, or working two jobs that they MUST read the fine print. Fact is, they don’t. They rely on trusted institutions to deal fairly with them. (Insert rant here.)
Read the mail from your credit card company! You may get an unpleasant surprise as these companies race to do everything they can before regulation takes hold. I bet that at the end of the day, they will negotiate to have existing rules grandfathered in, because wait until you hear this, which greeted me at the mailbox today from my buddy Ken Lewis at Bank of America:
What is happening:
We are increasing certain transaction fees on your account.
Amendment to Your Credit Card Agreement:
Effective on June 1, 2009, the transaction fee (FINANCE CHARGE) we assess on each of the transactions identified below will be equal to 4% of each such transaction (Fee: Min. $10):
ATM Cash Advances
Bank Cash Advances
Check Cash Advances
Direct Deposit Cash Advances
Wire Transfer Purchases
In addition, they are expanding the definition of foreign transactions to include transactions in U.S. dollars if they are made or processed outside of the United States. Each transaction posting on or after June 1 will be subject to the Foreign Transaction Fee, currently 3% of the U.S. dollar amount of each such Foreign Transaction.
Doesn’t seem too threatening, does it? Unless you order your business cards from a U.K. company, as I do, or buy stuff online at places like EBay. Truthfully, how often do you know where some of the things you buy are coming from, or whether you are engaging in a foreign transaction? I’m sure Bank of America is depending on that.
I can’t believe there isn’t more outrage at the way all this transpires. Because there is a mailed announcement, and because parts of it are bolded, the banks can say they have disclosed. But is this what we thought we were doing when we opened a credit card account? We have woven plastic currency so deeply through the warp and woof of American society that most of us can’t untangle fast enough from these usurious practices.
Come on, American people, become outraged. Yes, you can stop spending, but of course that works against the very economy we are trying to save. As a society, we are in a Catch-22 that can only be resolved if the banks and credit card companies agree to act honestly and transparently, and unless we change our education system to provide our kids basic financial literacy skills. Ethics on the part of the banks would do less damage than if we all decided to rise up in the streets and tear up our plastic.