cc pushing account holders into default

[IOIOIO]

[anonymuse]

I understand it's legal and that they're experts with tuning their fine print. I'm just wondering exactly what makes this practice sound business-wise. Are they maximizing the amount they extract out of you, or are they merely ensuring that their portion is the largest of all the portions all your creditors extract out of you, even if that means less for them in the long run. In other words, everybody loses. Check out the results when you google the phrase "short termism".

Some digit head runs the numbers and sees it as a way to earn extra income for the company. Realize that when someone goes BK, they have insurance to cover that and probably some nice tax relief too so they really don't "lose" when someone files BK.

[BassBoy]

It's all about lining the shareholders pockets. Get it as quickly as possible too. Best bet is to stay away from those CC offers, wait until your credit improves and go to a normal bank (i.e.; National City, Fifth Third, Key Bank and those of the like). Most convenntional banks do ot have this frivilous garbage buried in their agreements......at least from what I have read in their agreements. Besides, a CC from a conventional bank ususally have the best rates and terms anyways. These sub-prime CCC's can crash and burn for I care. I'll never get a CC from any of them. This is my way to beating their "Universal Default" garbage.

[IOIOIO]

when someone goes BK, they have insurance to cover that and probably some nice tax relief too so they really don't "lose" when someone files BK.

The plot thickens! I hadn't thought of that. I'd like to see the corporate legal maneuvers when the insurers start to believe that the cc companies they insure take on even bigger credit risks just because they have insurance. Check out http://en.wikipedia.org/wiki/Moral_hazard

[AMISLANDER]

I was thinking the same thing...

...after reviewing some cc offers I received in the mail...started reading the fine print & WOW....they can get you in so many ways already listed above...small print is always worth reading ...(not to get off subject but bf's dad just bought new car for mom....read all the papers that get pushed at you in the dealership...saved $5K by reading small print & negating certain items that were offered that those of us who've skipped small print in past, will now want to take the time to read...)

I don't know if I'm ever going to feel safe, a year or two from now, when I actually really try to get a regular cc....I think I'll just stick w/my Dillard's card that survived bk...and make sure that what ever I charge, I pay off in like 2 payments...each time...need the credit rebuilding but not this credit hassle of soaring interest rates...

[IOIOIO]

I know the fine print and could always see it was stacked against the consumer. I just always went under the assumption that they only invoked the harsh stuff to nail actual deadbeats. My long experience with cc's has always been that they reversed any charge that was unjust, as a courtesy, if I called in and asked them for it. They also want to keep you as a customer. I've had things like interest rate hikes and late fees reversed a couple of months retroactively when I hadn't noticed them (which is my fault) and when they were invoked because I missed a payment due to the statement being lost in the mail (my fault again). So this latest bit of hardball leads me to believe that at some point their digit heads, as anonymuse calls them, tell them to write you off completely, and they just do whatever because they know it's a matter of time until you default.

[SinkingFast]

It may be the "Secret Credit Score" that we, as consumers, don't see.

Innovis runs one. But FICO also lists one.

They track your debt to income and assets ratio and issue a ranking of your likelihood to file BK or otherwise Default.

Just like Insurance companies do a periodic review of clients, maybe CC's do a periodic review as well.

Maybe your risk indicator has risen since their last review and that's the reason for the interest hike.

Like Anon said, some digit head saw something that threw up a red flag and you got pegged.

[IOIOIO]

Maybe your risk indicator has risen since their last review and that's the reason for the interest hike.

That's definitely it--they told me.

The phone call was tightly managed. When I said I was inquiring about the rate change that I hadn't noticed for two statements, they put me right through to a "supervisor." They never give you a supervisor right off. The supervisor managed the phone call very closely and I could tell was a sharper sort of person than the ones who answer when you call. She said I had the option to challenge the info in the credit report (like I need their permission) and when I kept trying to put the conversation back in terms of my personal history of doing business with them, that I had no concern with the accuracy of any credit reporting they got, she'd get legal and work towards hanging up on me. They offered me the option of what she called a "soft pull" which is a through personal interrogation and review of your finances to see if you'd qualify for a lower rate. Big help there, seeing as how their estimation of me is correct. I'm just wondering how their response of "universal default" makes for sound business on their part, when I haven't defaulted anywhere.

I was checking out this article: http://en.wikipedia.org/wiki/Universal_default which says that universal default is only when every creditor zaps you as soon as one does. In my case, I haven't defaulted on anyone, but Chase still zapped me. I don't doubt that my risk factors have gone up, but legalizing raising the rates on an outstanding balance when all your accounts are in good standing seems like a tougher sell to legislatures than universal default. People might have actually found out and objected. I should edit the wikipedia article to reflect that universal default depends strictly on your risk factors and not on risk factors plus at least one true delinquency.

There's no room for any kind of moralizing to influence the specialist who handles phone calls with people in this sort of technical universal default. I realize that if you get emotional with them you only risk giving them information their bill collectors can use against you at some point, but I did indulge myself in telling them to close my account. Of course, the account has already essentially been closed for a long time since I was (and am still obligated to keep) making the minimum payments and didn't plan to charge on it and leave a record of charging when I clearly know I'd never be able to pay.

[tradewiz50]

You must realize your just part of their buisness model. So my suggestion is you can file Chapter 7 then do so. Don't try to work it out with them. They could care less. It's "Buisness as Usual" for them.

I'm sure this is an old story probably posted on these forums somewhere, but I'm so outraged that it just happened to me.

Even though this is going to change soon, I'm still up to date on all my credit card payments. Even so, Chase upped my rate from 17.74% to 29.99% for no particular reason. That raises my monthly minimum a *lot*. I called them and verified that this wasn't some sort of penalty rate for any kind of mistake I made on the account. They said the rate was changed only because of what a credit bureau reported to them as my outstanding debt ratio. So even if you manage to kill yourself paying them, they turn the screws tighter for no good reason other than that they have already turned the screws tight.

If not everyone responds to this kind of thing by filing bk, they must know that they are forcing people into earlier defaults on their accounts. Do they have a reason for that? Or is their plan to get a few more dollars ahead of the other creditors because they've calculated that you're inevitably going to default? I just don't understand their business strategy here.

[down @ out]

At the end of the day will we ever know with complete certainty why the banks do what they do. They are in business to make money and in their minds ethics and business models are two different things.

It is amazing that these folks don`t simply look at what they are doing and say it just ain`t right.

This lack of moral vision is not just a banking issue it pervades our society. Charity and decency are concepts that need to apply to each other. It is not just a business model we are talking about it is life.

In a way the banks and the people in that industry are to be pitied because the harm they do to folks is nothing compared to what they do to themselves.

They can laugh all the way to the bank but their soul is corrupt.

[SinkingFast]

That's definitely it--they told me.

The phone call was tightly managed. When I said I was inquiring about the rate change that I hadn't noticed for two statements, they put me right through to a "supervisor." They never give you a supervisor right off. The supervisor managed the phone call very closely and I could tell was a sharper sort of person than the ones who answer when you call. She said I had the option to challenge the info in the credit report (like I need their permission) and when I kept trying to put the conversation back in terms of my personal history of doing business with them, that I had no concern with the accuracy of any credit reporting they got, she'd get legal and work towards hanging up on me.

And all it takes is one CC jacking your rates, or closing your LOC with them due to "high debt ratio" or whatever the heck reason they want, and others will jump in that line.

First for us last fall was Sears MC closing our acct to new charges. Next came another CC lowering their LOC. Nobody jumped on the "jack your rates" bandwagon right away but that did come later.

All it takes is one Creditor starting it and the chain reaction begins. The Dominoes all start falling all over the place.

[JusticeForAll]

And don't you just love when they lower the LOC to exactly what you owe, so the next month when they add interest, it forces you over your credit limit and they hit you with the over the limit fee?

Grrrrrrrrrr

[lrprn]

And don't you just love when they lower the LOC to exactly what you owe, so the next month when they add interest, it forces you over your credit limit and they hit you with the over the limit fee?

Grrrrrrrrrr

Read something online today (which I can't find at the moment) that said currently more than 30% of credit card profit comes from raised APRs and late fees. Doesn't surprise me one bit.

See http://www.bcsalliance.com/creditcard_profits.html for a good explanation of how credit card companies make their profits.

[joe_siy]

[QUOTE=IOIOIO;65608]Yeah, I think that post should be removed entirely. The thread has been successfully derailed. I can try reposting my question that's on topic here, but I'm afraid that even with the bleeped out word people are going to respond to the troll post.

So I say something you disagree with and it should be deleted??? Sending you an application in the mail is not predatory lending. CC companies clearly disclose their options in that application, and if you chose not to read it, don't blame them. Should I be allowed a lower rate, even though I can pay my bills, because you were allowed to have one?

[PenneyP]

Credit cards

Um . . . . no one held a gun to anyone's head and forced them to accept a credit card. If I accepted every credit card offered to me, I would have filed BK a long time ago. As it was, even though my husband lost his job due to injury, we KEPT UP ALL OF OUR CC PAYMENTS (3), our mortgage, car payments, everything . . . . and guess what? Our credit rating went to hell because 1) Our income was cut in half when hubby lost job and 2) our cards and other avenues of credit were maxed out. So it didn't make ANY DIFFERENCE if we made all our payments on time, without fail. Our credit score still went to hell. So why BOTHER??? Dump the debt and start over . . . . and throw the CC offers in the mail without even opening them!!