The plastic ax is falling. During the economic crisis most businesses, big and small, are selling low, fighting for the same consumer dollar.
This is not the case with most credit card companies however.
According to a March article by James Surowieki in the New Yorker, credit card companies are shutting down accounts, decreasing credit limits and encouraging, with incentives for customers to pay off balances and close accounts.
I spoke with one man whose position at work was eliminated nearly a year ago. He wasn”t terribly concerned about his credit card bills because he had been paying that extra bit for years to insure that if he became unemployed his payments would be made for up to 18 months.
Imagine his shock and dismay when he received a call that he was in arrears for almost a full year of payments. He explained to the representative that he already took the steps, filled out the paperwork and signed a contract with the insurer. He didn”t receive bills from the credit card company during that time. There were late charges, over-the-limit charges and numerous fines associated with the account.
Two months later, hours have turned into days on the phone. He”s still trying to straighten out the mess.
In 2007 5.2 billion credit card offers landed in mailboxes all over the country. And in 2006 there were almost 1.5 billion charge cards in circulation.
As unemployment rates soar and back-up savings run dry, credit card companies scramble to lose the majority of high-risk of default customers. It turns out that high-risk customers are not the ones who pay full balances off at the end of each month, a practice that is often recommended by accountants and financial advisors.
The prime card carrier in the eyes of the credit card industry is one who carries a high balance and makes minimum payments, therefore stockpiling interest and late fees. This is a real catch-22, because these are usually the same folks who are defaulting. Surowieki refers to this group as “captive customers.” Interest rates increase leaving those customers with unmanageable debt.
For so many years Americans have been living beyond their means, on money they haven”t made yet and may never make in a lifetime.
It has become a common practice for numerous companies to drop the credit line and immediately tack on an over-the-limit fee.
The average cost of credit protection services runs about $20 to $25 per month, which may not be worthwhile after seeing the treachery that one man still endures. His credit is seriously blemished, his heart races each time he picks up the phone to muddle through the mess and mire. His blood pressure spikes. It has disrupted his life and suffocated hours, days and now months. He”s often told to refer to “the small print on the last page of the bill, speak to another department, or set up an appointment with a supervisor.”
I had a question about a charge that appeared on a bill a couple of weeks ago. Roadside protection was being charged to my account. I explained to the woman on the other end of the line that I never requested that service and I”m already covered by another entity. I was transferred an overseas operator who kept me on hold, left to listen to a crackling recording of elevator music for more than an hour. I was greeted by a another recording saying the business office was now closed and instructed to call back during regular business hours, which incidentally had ended three minutes before the recording played.
I took a deep breathe, hung up the phone and settled on calling the next day. From 8 a.m. to 1 p.m. I spoke with six different people before I finally emerged victorious. The charge would be dropped from my account, in a mere two to three business cycles (months).
I was told I should call back if the charge still appeared on my next my bill.
An opt-out service is offered by three major credit bureaus: Equifax Inc., Experian and TransUnion. By calling toll free (888) 567-8688, it is possible to have pre-approved credit offers halted for two years.
Indeed these are trying times, not just for the wallet, but also in terms of patience, logic, health and sanity.
Mandy Feder is News Editor for the Lake County Record-Bee. She can be reached at mandyfeder@yahoo.com or call her directly at 263-5636 ext.32.
