Wednesday, June 10, 2009

And A Credit To Your Pockets


Noticed anything different about your credit card accounts lately? Did you read the fine print? I mean REALLY read it? Chances are the interest rates have crept upward, fees have increased, or reward rates have been diluted, even if you pay your bills on time. The sneaky buzzards! And, that's why I rarely use my credit cards and pay the balances in full every month, not that it matters.

Many of these changes in account terms have already taken effect. Still others, such as the return of routine annual fees, may be on the horizon. Changes have come quickly in interest rates, fees, minimum payments, credit limits, and rewards and none of these favor us.
(These guys make Tony Soprano seem like Father Divine!)

Although the banks behind these credit cards are scooping up billions in bailout money and borrowing money from the Federal Reserve (at an interest rate of as low as 0%), they aren't passing on those savings to us. Credit card interest rates have increased for many major card consumers... even doubled or tripled for some who pay their bills on time (like me). Bank of America is raising interest rates on about 4 million customers with balances. Citigroup and Capital One have also jacked up their rates. So, the next time one of those commercials comes on your TV screen, toss your tortilla chips at the screen... just clean the salsa off first.

Reward programs (what a joke) have become... well, less rewarding. Citigroup's "Thank You" rewards program "thanked" its customers by adding a $39.00 fee for all tickets redeemed through its CitiMiles program. American Express' Delta SkyMiles "Always Double Miles" program on everyday purchases became "never double miles." It seems to me that this country's entire economic system was designed to exploit and disenfranchise poor, desperate people like myself... which is why I've always been a rebel without a pause.

What's behind the upheaval and why so many changes? Why now, especially after the federal government has pumped billions of dollars into struggling banks to help bolster lending? Glad you asked and here it is...

Banking and credit industry observers say a tsunami of financial, regulatory, and economic forces is leading issuers to drive up the cost of borrowing on credit cards. The recession, financial market turmoil, frozen credit card securities market, job losses, and growing credit card payment defaults are fueling some of the changes. (Don't they always say that?)

Credit card issuers are also gearing up for 2010, when sweeping changes in federal credit card regulations will go into effect and significantly limit how and when interest rates can be increased. Recently passed federal legislation to curb practices in the card industry will fast-track consumer protections (i.e. GREED and GOUGING).

Profitability problems: Moody's, a New York credit rating agency, used a stress analysis to evaluate the strength of the six biggest credit card issuers -- Bank of America, Chase, Citi, American Express, Capital One, and Discover. They found that maintaining profitability this year will be a struggle for some. Capital One and Citi posted losses in the first quarter and American Express eked out only a small gain. The six collectively hold 80% of the nation's nearly $1 trillion in outstanding credit card balances. Whoooeeeee!!!

So, what are you to do? Wellllllll... you can do as I do. I limit my credit card purchases to what I can pay off "in full" each month. I read the fine print in detail ever so often and, most of the time, I try to pay in cash and live within my means. If I really can't afford it, chances are I don't need it. But, that's just me.

Most Americans like to have what they want to have when they want to have it and will not be denied. This kind of thinking is why we are in the financial mess we are in today. It's time for a new kind of thinking when it comes to money. I started about ten years ago before the current crisis. I didn't even know it was coming but when it came, I was already in a new mode of thinking.

Damn it, Ronald Reagan... this is all your fault!!!

A public service announcement from the Maverick of All Bloggers!

23 comments:

Sean said...

Man,you preaching this week!!

Toni said...

As always..Right on point Keith!

Angie B. said...

You're on the money with this Keith
,No pun intended!

Sunflower said...

What a title, what a timely message.

James Perkins said...

Good stuff!

Simon Bastion said...

Good Post...Credit cards are the bane of my existence!

Grover Tha Playboy said...

Comparing Credit Card issuers to Tony Soprano was right on the money
man...No pun intended! :)

Halo said...

It's all a big racket just like you said Keith!

Lisa said...

I'm like you..I try to use my cards as little as possible.

Vanessa said...

I've gotten rid of a lot of my cards. I'm down to about five now.

Jazzy said...

Another insightful outing fam!

Cheryl said...

Credit Cards? I use them to rent cars or when I'm on a business trip, but I mostly use my debit card for day to day transactions.

Swaggie said...

Keep droppin that science boy!

TATE2 said...

It's like the song..."For the love of money..."

Brenda said...

LMBAO at two commentors who said that this was "On the money" when
you're actually talking about credit.Good post as is to be expected.

Captain Jack said...

I expect you to have a newspaper column someday Keith..This was a very informative and good post.

A Free Spirit Butterfly said...

I just recently read the fine print when I went to the store and was denied. Imagine that. My credit score is in the 700, (not to brag) but I found it embrassing. They stopped my limit until I paid a balance of $2300. The limit was $10,000. Dag on, I pay on time and I am very responsible. Go figure.

Love and hugs
China!

Thoughts of a Southern gal said...

I have one card and only use it for extreme emergencies.

Arlene said...

Very well expressed points, Keith. It seems to me that America's major "industry" is credit. That's how America makes her money, by charging folks who need access to money "loan shark" rates. (Even Paulie Walnuts wouldn't put the points on people the way Citibank does.) If you've ever heard Bill Maher, he calls Citibank - Sh_ttybank and Bank of America - Skank of America. And you're right, it links back to Ronald Reagan and his belief that people are poor because they like it and deserve whatever happens. You'll note that sentiment in the words of Barbara Bush after Hurricane Katrina. Remember she said how some people were benefiting from the storm and living better than before? That's the kind of thinking that Republicans have put forth since reconstruction.

Mizrepresent said...

Keith,

U must have been reading my mind...because i was just discussing this credit card mess, abuse, mafiaoso with my co-workers. Thanks for the links because it allowed me to read more and share in the abuse with other fellow americans across the nation. I'm done with credit, well have been done with it for the last year, while i work to pay off the remaining 2 and vow to never again indulge. I don't need to be robbed of my money by this corporate Mafia. Cash is the only way...and i don't have it, then i don't need it! Great post!

LadyLee said...

Dude! They pissing me off with the "Dear John" letters and the limit increases! Ugh!!

They can kiss my grits!

Ok... I have composed myself now.

Thanks for eloquently explaining the madness...

Oyin said...

thats the reason I love to spend my cash.....only rental car companies see my cards....


Just so you know who I am..."shar"...lol

Aaron said...

Very useful piece of writing, much thanks for your post.
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