Credit Card Companies are Shylocks

Dear Mr. Smith, thank you for your response to my offer. You are approved and here is your money! Oh yah, here is what you agreed to by accepting such a generous offer made by me and my distinguished associates.

1. You can’t sue me or be included in any class action law suit against me.

2. If you miss a payment to someone else that you owe money to, even if you’ve made all of your payments to me on time, I can charge you a higher interest rate for that.

3. I can change the terms of our agreement, anytime that I want to.

4. If you pay back all the money that you owe me, I can charge you an additional fee for that.

5. If you pay me back and you continue to not owe me money anymore, I can charge you a fee for that.

Being a “Shylock” with these terms and conditions….Illegal

Being a Credit Card company with these terms and conditions and having Congress in your back pocket….Priceless

Plain and simple. Over the past 15 years that I have been in the debt and credit industry, I have read countless articles and have met with thousands of people effected by the credit card industry that I am litterally sick and tired it. The credit card industry has been set up to take advantage of uneducated people who have been barraged day after day with ads and offers telling them that without credit, they can’t live like they should be. “Life takes Visa. You live life, we’ll help you” or some moronic statement like that I keep seeing while watching this year’s Olympics. Actually, I get to watch about 10 minutes of Olympic coverage and get to spend the next 5 minutes watching stupid pitches like this.

In this article, I am going to go over some real facts that are in these credit card company contracts and hopefully someone out there will see that this is one of the most underhanded, unregulated, profit mongering businesses out there today.

Here is some “did you know” that hopefully get’s you as angry as I am. Now on a positive note, so we don’t hurt some people’s feelings out there, credit cards are a tool that if used correctly can give you some advantages. Yah, about 5% of the American population falls into that category.

1. Chase Manhattan Bank’s cardholder agreement plainly and clearly makes you agree to give up your right to sue them: “the cardholder cannot take the issuer to court or be included in a class-action suit against the company.”

Wow, the tobacco companies should have had these lawyers on their team…Hmm, let’s see. Sorry Mr. Jones, it clearly states on the underside of the cigarette pack that you purchased, in size 3 font: “By purchasing these cigarettes, you agree that you cannot take the manufacturer of these cigarettes to court or be included in a class-action suit against the company.” I guess that was their big mistake. The warning label only states that you could die, it didn’t say anything about not being able to sue them….

2. Banks and credit card issuers spent millions, yes millions, of dollars lobbying Congress in favor of the 2005 bankruptcy bill. I will give you some interesting facts from a study that was just published in another article about how much of a joke the reform act is and who it is really hurting.

It’s too bad that the common people that Congress is supposed to represent (you and me) didn’t have that type of spending power to tell them that this was a bad idea. I guess we could have all pooled our credit cards together and taken out cash advances to lobby equally the other way. Wouldn’t that have been a hoot….

3. Credit card companies charge you a fee if you don’t use them. Believe it or not, there are some companies out there that charge you a $15 monthly fee if your card remains inactive for more than six months.

4. If you pay off your credit card debt, you can be charged a fee. Some credit card agreements include a no-balance fee. That’s right. If your balance reaches zero, you get hit with an additional charge.

5. Credit card companies can charge you whatever they feel like. This is great. The Visa card contract provided by Bank One reads: “We reserve the right to change the terms at any time for any reason.” I can just picture “Mr. Burns” sitting at the head of the board right now, profits are low for the quarter (most likely from the major losses they just took because of the new bankruptcy law going into effect that forced millions of people to file under the wire last quarter). “Smithers, I thought that this BK Bill would bring us in more money?” “Well sir, we can simply raise the rates for all the other card holders, it’s in the contract.” …. “Excellent.”

6. The credit card industry sends out 5 billion solicitations a year, just in the United States alone (according to cardweb.com). 5 billion. Say it with me. OK so, if they got a great “bulk mail” rate for sending out these solicitations, let’s go with a 3 cent fee per, they spend $150,000,000 just in mailing out their offers. Not any other form of advertising. Not the big fancy commercials. Not the sponsoring of sporting events or buying stadiums. Not sponsoring race cars, giving trips away…blah, blah, blah. How much money do you think these guys make each year off of you? Many of these solicitations even go to people who don’t have jobs. Credit card companies simply purchase lists from credit bureaus (oh believe me, I have something to say about these folks to in another article) and send the offers out. I bet that you get at least 3 offers a week. E-mail me and I will show you how to stop these solicitations.

7. If you are late on paying a bill to another creditor, a credit card company can raise your interest rates. There was an ABC News report that concluded; about 44% of all credit card agreements have what they call a “universal default penalty”. Basically this means that the issuer of the card can increase the borrower’s rate if a payment to another creditor is missed or late. How do they get this information? From your friendly credit reporting agency (Equifax, Experian and Trans Union – there are others but theses are the big three). Chase Manhattan Bank’s agreement indicates that: “The highest rate (28.49 percent – are you kidding me) may be charged if the cardholder is late making a payment to any creditor; this can include phone and utility bills, insurance payments, car payments, etc. – even if credit card payments are made on time.” So you have a credit card with a 7% interest rate and you’ve always made your payments on time, you are a couple of days late in paying your water bill (a total of $35 that was due), suddenly, next month your rate for Chase Manhattan jumps from 7% to 28.49%. Heck, let’s say that you didn’t even get one of your bills. It’s been known to happen. What? Now I have to straighten that out with the utility company and then go to Chase and get them the evidence that it was a mistake and still pay the additional interest while it was being worked out? Oh, that’s right. They come back and tell me about the other “clause” that they can raise the rate for any reason, at any time.