The Fruits of Civilization (26-12-2) Credit Card Companies

 Credit Card Companies

I asked them why my rate was so high, and they couldn’t really tell me. They just give you a lot of non-answers. ~ American credit card consumer Kelly Dilworth discovering the profit-gouging associated with her Discover credit card

The 2008 financial shock knocked the wind out of the US economy. To put the banks back on their feet, the government bailed them out and kept interest rates at record lows for years so that shell-shocked bankers could reap their profits in a sedate environment.

Feeling the need to show voters that they were not always spineless captives of special interests, Congress passed a law in 2009 that Senator Harry Reid said “stood up to abusive credit card companies,” by restricting fees and limiting rate increases. To compensate, credit card companies jacked their interest rates to usury levels for new customers.

Into 2016, banks borrowed funds from the Fed at less than 1% (annual percentage interest rate (APR)). Then they turn around and charge their new credit card customers 21% or more. To facilitate this extortion, most credit card companies do not tell applicants what their interest rate will be until after a card is issued.

Though US credit card debt climbed to $1 trillion in 2017, the unmitigated greed of credit card companies hurt growth potential. Young people are abandoning credit cards because of their rude rates.

The industry is very profitable, but prospects for growth are dimming. ~ American credit card company research analyst David Robertson

When it comes to collecting debts owed, credit card companies are viciously incompetent. According to judges who see their lawsuits, many are filed with erroneous documents, incomplete records, and generic testimony.

Roughly 90% of the credit card lawsuits are flawed and can’t prove the person owes the debt. ~ Brooklyn civil court judge Noach Dear, who was overseeing 100 such cases a day in 2012

Lenders try to collect from consumers who owe them nothing, so the companies tack on penalties and interest.

JP Morgan Chase engaged in fraudulent and unlawful debt-collection practices. ~ California Attorney General Kamala Harris in 2013

Even when owed, credit card companies fail to follow proper legal procedures. Some falsify credit card statements. These are the same sorts of practices that banks pursued during the mortgage-lending debacle and in its wake.