Sunday, October 25, 2009
More reasons to hate big banks and to do whatever it takes to get your credit cards paid off as quickly as possible and never, ever again carry a balance are provided in this column by David Lazarus in today's LA Times.
Ed Myska works as executive vice president of El Segundo's Bank of Manhattan, so it's pretty fair to say that he knows a thing or two about keeping his financial house in order.Obviously, Mr. Myska's mistake is that he occasionally does carry a balance, the big bad banks figuring they can make up in quality what they're lacking in quantity from this particular customer (at least from their point of view).
Yet he was among numerous people who have been notified by Citibank in recent days that the interest rate on their credit cards is soaring to almost 30%.
Letters being mailed out by Citi say only that the rate increase will allow the company "to continue to provide our customers with access to credit."
Myska told me he seldom carries a balance for more than a couple of months and never misses a payment. He now plans to burn off the mileage accumulated on his plastic and then switch to another card.
"If we ran our bank the way Citi runs theirs, we wouldn't be in business," Myska said. "Our clients wouldn't put up with it -- and they shouldn't have to. Fees and rates should be fair."
Having paid off all of our credit cards many years ago after playing the "Zero percent interest for six months" shuffle for a number of years prior to that, I can tell you from personal experience that once you are free of this burden, you'll never go back.
Want less, spend less, and don't rely on Citibank or Bank of America to finance your lifestyle.
There's more in this report including Fed chief Ben Bernanke's concern that the banks be provided with sufficient time for an "orderly transition" to new rules aimed at protecting consumers that are set to take effect early next year.
It seems that some lawmakers want to get these safeguards into place sooner rather than later and both sides are now scrambling to make adjustments.
Some comments from the banksters:
Samuel Wang, a Citi spokesman, declined to comment on details of the new fee. He said only that "a small number of Citi customers were notified in August of changes to their card agreement which included an annual fee."No.
For its part, Bank of America says it will soon start experimenting with annual credit card fees ranging from $29 to $99.
"We are testing an annual fee on a very, very limited number of consumer credit card accounts," said Betty Riess, a BofA spokeswoman.
"Customers can reject the fee, but we will close the account."
Will the fee be imposed on cardholders who pay off their bill monthly and don't carry a balance?
"That's not the basis for selecting accounts," Riess answered. "But conceivably some accounts that typically pay off monthly could be in the test."
Other banks have said they plan to introduce "inactivity fees" for credit cards that aren't being used enough.
Is it any wonder that lawmakers are saying consumers need safeguards sooner than later?
Somehow, all those Visa/Mastercard "Priceless" commercials take on a whole different feel after reading about developments such as the ones above.
Hopefully, there will be some good parodies of these spots in the coming months.