Capital One Credit Card Dog

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If you have a credit card you may want to take a look at this and pay close attention. I know yuo have probably notice the rising interest rates long before the banks fell bottomless now a couple of years age.

The banks say they need the revenue to offset record credit card delinquency rates, but those higher rates and additional fees are squeezing cash-strapped consumers, kicking them when they’re already down and out of money. Many of the banks that are raising fees are also the recipients of taxpayer money via the TARP bailout program, including American Express, Bank of America, Wells Fargo and Citigroup.

That raises a sticky issue: Are banks who received TARP money gouging some of the very same customers that gave them billions of dollars in taxpayer bailout money? That’s a question that the TARP oversight board, headed by Elizabeth Warren is trying to answer.

According to the Wall Street Journal, Warren’s committee is investigating the lending practices of institutions that received billions in public funds, following a rash of complaints about increases in interest rates and fees. The TARP money is supposed to be used to boost consumer borrowing, not crack down on people already struggling to pay their bills.

What do you think? Let us know. And you can also send your comments to Congress, which is weighing several pieces of legislation that would limit card issuers’ ability to hike fees.

Default rates for credit cards usually track the jobless rate during tough economic times, but analysts say they are seeing a worsening of defaults as unemployment rates jump. The government reported last week that the unemployment rate shot up to 8.5 percent in March, a 25-year high. Nearly all lenders, including Bank of America Corp., JPMorgan Chase & Co. and Discover Financial Services, are seeing more customers stop making monthly payments.

"I think what the numbers tell you is that we're not out of the woods yet. We are still seeing deterioration in consumer credit," Keefe, Bruyette & Woods analyst Sanjay Sakhrani said. "That's largely predicated on where unemployment trends are."

Have you read the fine print that comes with your credit card bill lately? If not, you should -- and the chances are you're not going to like what you see.

Despite record foreclosures, defaults and recession-related hardship, credit card companies are boosting interest rates, changing account terms and cutting credit lines for both good and bad customers.

It's a push, experts say, to make up for bank losses in other areas, particularly the mortgage market, and a way to squeeze more fees from consumers before new federal rules prohibiting such sharp interest rate increases and other credit card company abuses go into effect next year.

The banks say they need the revenue to offset record credit card delinquency rates, but those higher rates and additional fees are squeezing cash-strapped consumers, kicking them when they’re already down and out of money. Many of the banks that are raising fees are also the recipients of taxpayer money via the TARP bailout program, including American Express, Bank of America, Wells Fargo and Citigroup.

That raises a sticky issue: Are banks who received TARP money gouging some of the very same customers that gave them billions of dollars in taxpayer bailout money? That’s a question that the TARP oversight board, headed by Elizabeth Warren is trying to answer.

According to the Wall Street Journal, Warren’s committee is investigating the lending practices of institutions that received billions in public funds, following a rash of complaints about increases in interest rates and fees. The TARP money is supposed to be used to boost consumer borrowing, not crack down on people already struggling to pay their bills.

What do you think? Let us know. And you can also send your comments to Congress, which is weighing several pieces of legislation that would limit card issuers’ ability to hike fees.

References:
http://www.silive.com/news/index.ssf/2009/04/credit_card_companies_get_reve.html

http://moneyfeatures.blogs.money.cnn.com/2009/04/13/credit-card-fee-frenzy/

http://www.huffingtonpost.com/huff-wires/20090415/credit-cards-defaults/