Comments on: Banks don’t want our business anymore…

By: NtJS

NtJS — Wed, 24 Dec 2008 15:31:24 +0000

Well sure they do, Jonathan. They have every right – contractually and logically. Dan is a risk. Kristy as well. You are too, as well as myself (if I carried a card, that is). The risk that they are adjusting for is independent of your FICO score, spending habits, and payment history. It’s the risk of the economy. The issuer has less tollerance for all of this unsecured debt. There is a much greater risk that folks who typically pay it off each month will loose an income and not be able to pay up.

There has been a misconception that those deemed “credit-worthy” by FICO are somehow impervious to risk. This has not held true in 2008.

By: Jonathan

Jonathan — Fri, 19 Dec 2008 06:55:28 +0000

Dan, that’s unbelievable. Think seriously about dumping the card – with that kind of credit score, they have no right to treat you with such disdain.

By: dan

dan — Thu, 18 Dec 2008 15:52:33 +0000

I am one of those who received a letter. I haven’t carried a credit card balance since 1987. My credit score is 786. The change is apparently unrelated to risk and is strictly a money grab. Like others I am electing to shelve the card for now. I have until 1/31/09 to decide whether to let the card expire at the end of its term.

By: Kristy

Kristy — Wed, 10 Dec 2008 01:01:06 +0000

I got a frickin’ letter today from Chase saying they jacked my rate to 30%. ‘Scuse me? I don’t think so! I called to complain and the best they said they could do was take it to 25%. Wow…five whole percentage points…just for me? Awww…go stuff it in your ear! I’ve only been with them for 7 years or so. And all of my other cards are less than 10%. I’m not paying 25%, but it’s the card I’ve had the longest. So, my options are to close the card and let my score drop…or wait it out and see if they come to their senses. I’m going for the latter as I don’t carry balances on the card anyway. But, frankly, it’s annoying that we have to pay for the mistakes of others. *sigh*

By: Jonathan

Jonathan — Tue, 09 Dec 2008 19:57:37 +0000

NtJS, couldn’t agree more. I wrote an article a few days ago (http://masteryourcard.com/blog/2008/11/27/credit-card-owners-to-get-an-extra-60-days-to-pay/) showing how delinquincies have doubled in under 3 years and will probably double again in 2009.

Be interesting to see how this all plays out.

By: NtJS

NtJS — Tue, 09 Dec 2008 10:59:46 +0000

No doubt, these companies are all trying to limit their risk – and all of this unsecured debt is a HUGE risk. They’ve been drunk on debt for years. And the sobering conclusion is that despite the new bankruptcy laws, when enough people don’t pay, it screws up your cash flow.

The reason you are seeing these changes across the board is certainly not based on anything the consumer has done. Rather, they are fearing what will happen, and tying to head another wave of delinquencies off at the pass.

Consumers haven’t figured it out yet, but the banks have known all along – even those who pay in full each month are huge risk. They are not immune to layoffs. It’s not impossible for them to fall behind. There is no reason to assume that they are any less a liability than say… a more casual user with casual payment habits.

By: Jonathan

Jonathan — Tue, 09 Dec 2008 06:05:42 +0000

Steve, I’d repress it all if I could!

What really makes me angry is that now the banks know, without a doubt, that they can get away with incompetence and greed. Where’s the incentive to lend responsibly when you’re ‘too big to fail’?

By: Steven

Steven — Tue, 09 Dec 2008 05:51:10 +0000

Jonathan – good point about the bailouts. I had blocked that unfortunate assault on the free market from my mind (aparently a subconscious defense mechanism on my part!)

But that’s another post subject altogether…

By: Jonathan

Jonathan — Tue, 09 Dec 2008 05:40:49 +0000

Steve, I think you’re spot on about banks and credit card companies bearing a big chunk of the blame. Unfortunately, I’m not sure just how much the chickens will come home to roost for them – so far the tax payer has been the one paying for their mistakes.

By: Steven

Steven — Tue, 09 Dec 2008 05:02:25 +0000

Regarding “credit card deliqnuincies approaching a 3 year high,” it looks to me like it’s a case of the chickens coming home to roost.

Banks and credit card companies bear a lot of the blame, as their have in the past relaxed requirements and pushed their product onto people who probably shouldn’t have qualified. It’s a similar situation to the mortgage lending crisis.