Credit card execs defend rate policies

[sweeps]

[Sen. Carl] Levin's subcommittee, which has been investigating the industry, looked at how credit-card issuers raise consumers' rates, to as high as 30 percent, when their so-called FICO credit scores decline — even if they've paid credit-card bills regularly and promptly. In many cases, consumers have little notice of the increased rate, which are automatically triggered by declines in FICO scores for reasons left unexplained, the subcommittee found.

Credit card execs defend rate policies

[Sporkman]

Basically, they do it because they can. Plenty of borrowers out there, with little alternative but to pay what they tell them to. Supply & demand.

[am_vanquish]

Originally Posted by Sporkman

Basically, they do it because they can. Plenty of borrowers out there, with little alternative but to pay what they tell them to. Supply & demand.

Unfortunately true. By this same "pure market" perspective, some would argue that it is not the government's duty to regulate these rates & policies, eventually we will wisen up and decrease the demand for being ripped off. I disagree with this stance (the government should have stepped in to create more strict regulations long ago, before this became such a huge problem). Still, it is a fact that the average consumer is content to pay whatever their statement says to pay without worrying about how the CC company gets that number. They do this until they're in over their head and it's too late to understand the policies.

This "market correction" can also be seen in reverse with reward cards. Companies decided to regulate their reward policies on their own accord because a few of us were smarter than they thought we were (getting a bonus/reward back but never paying interest/fees). Funny how it works when you look at it forward & backward.

[Pleasenodebt]

Lets hope that someday they can defend these comments in front of a congressional committee investigating these same practices. Interest rates in excess of 30% are common and truly unfair to the consumer that may be forced to make minimum payments for years to come for borrowing several thousand dollars.