This Economic Environment is Great for Banks Issuing Bad Credit Cards
The credit cards in our life have gone haywire - they hit us with inexplicable fees, the interest rates are going through the roof, they are cutting our spending limits, and there no rewards either. Even if you haven’t looked closely at your credit card bills these past few months, you can be sure that your credit card deal just got quite grim. If it isn’t obvious yet, this is no longer a buyer’s market. All of this may not really put you in the mood to count your blessings; but whatever raw deal your bank just handed to you, you can be sure that there are people out there with bad credit cards and contracts that make your bank look like Santa Claus. Let’s look at some of these winners.
Let’s start with subprime cards; First Premier Bank’s Centennial Gold card gives bad credit cards a bad name. They charge you nearly $30 to set up an account, they slap on nearly $100 for what they call a program fee, there is an annual fee, and you need to pay a servicing fee that’s about $100 a year too. You actually owe more in all these startups fees than the average credit limit the first month. All this changes with the new credit card law though, starting February. They won’t be able to charge you fees higher than 25% of your credit limit.
Debt collectors are a real PITA. If you don’t believe me, ask anyone; no one can think of a profession that could be worse than being a debt collector. But that was before the economic slowdown and everyone’s business went belly up. Debt collectors are a whole new animal now, and they engage in practices that would make a hatchet guy blush. Of all the complaints that the Federal Trade Commission answers, a good part now is from people who are being chased by debt collectors and having their credit scores wrecked, for loans they never owed, or have paid back already. If that is what the debt-free get to experience, you might well imagine what is in store for you if you actually owe something. The banks and other financial institutions are so short of money, that they feel decency and a little thing called the law are temporarily expendable. So how is it that they go after the wrong people?
The country has a huge backlog of old debts that barely anyone seems to remember much about. The financial institutions just collect them all together, and sell them over to the highest bidder. There isn’t enough documentation or anything for these loans; the buyers just do some intelligent (or not so intelligent) guessing to find the people they think they are after. It is kind of like in the first Terminator movie; the Terminator goes after anyone named Sarah Connor.
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