Word: card
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...card habits are finally taking a toll. With more than a billion cards in our wallets, we floated some $937 billion in outstanding credit-card debt as of last November, according to the Federal Reserve. The average card-holding household has $9,659 in credit card debt, up from $2,966 in 1990. Seduced by 0% interest rates on balances transferred from other cards and blanketed with "convenience checks" that let us pay off other bills while card debt mounts, it is more tempting than ever to say yes. But whereas even a year ago, folks could tap their home...
...profits have been achieved by applying mathematical formulas to decide who gets credit, how much, and at what rate. And by jacking up fees and interest rates for being late, overspending, or overborrowing. The convenience user, one who pays off her balance every month, is a loser. "The credit card industry doesn't really want you to pay off your debt," says Adam J. Levitin, a law professor at Georgetown University and expert in credit card regulatory and competition issues. "It's like a sweat box. They want you in there as long as possible...
...with politicians angry with the bankers over the subprime fiasco, the heat is rising on the industry's credit-card segment. One of the strongest proposed changes is Levin's provision to limit interest rate increases to no more than seven percentage points above the initial rate. "Too many card issuers engage in very, very severe abuses and outrageous practices. It?s indefensible," says Levin, who arrived at seven, because it is about 50% above many cards' initial interest rate of around...
That could have helped avert Janet Hard's nightmare. The 42-year-old nurse from Freeland, Mich., says Discover raised the rate on her card from 7.9% in 2000 to 24.4% in February 2007, a period when she was charging her family of four's dentist bills to the card since they have no dental insurance. "When I look at the money that we have paid to Discover during just the last two years, I feel sick. Of the $5,618 made in payments to Discover, $3478.39 went to interest," Hard testified at a Senate hearing in December. "My husband...
...reason the card industry is free to raise prices on existing customers at any time and for any reason is tied to deregulation, which began in banking in the 1970s and effectively eliminated caps both on interest and fees. Thanks to mergers and consolidation, the top six card issuers?Bank of America, JPMorgan Chase, Citigroup, American Express, Capital One and Discover?now float about 75% of all outstanding credit-card debt, according to The Nilson Report. Consolidation allows competitors to be less competitive: from 1995 to 2005 the average late fee soared 162% from $12.83 to $33.64, according to CardTrak.com...