Two Sides of the Story: Are Credit Card Companies Really Predatory?

Do you have credit card sense? If you do, then apply credit card sense in this following point of views to see which side is right:

The consumer’s story
The world’s economy is in shambles. It is so bad; many people are losing their jobs. They are now starting to rely heavily on their credit cards for their basic necessities. They need reliable lenders now more than ever. However, the market is seeing a threatening trend. Card companies are steadily increasing their interest rates; they are applying universal defaults; they are also tightening up their customer’s credit limits. This is being done to even the people with high FICO scores and who have not been late in paying their monthly dues. What’s worse, they are applying harsh penalties even to first time offenders. One family had their interest rates doubled and their credit limit was lowered significantly. They have never been late in paying their card and they have been loyal to the card for more than ten years. Despite this, they’re account gets that treatment just for one slipup: a three day late payment. This kind of thing is happening all over the country. Even those accounts that have never seen any delinquent payments are getting higher interest rates and lower credit limits. It seems that the companies are doing this in the hope that these people slip up in their payment. If lenders apply credit card terms and conditions meant for delinquent or low FICO score consumers to those who have high FICO scores, then you will have to conclude that something fishy is going on.

The bank’s story:
Yes the economy is going down and we are needed now more than ever. Yes we are increasing our interest rates and are generally being more stringent in our terms and conditions despite the fact that the consumers could use some leniency now. However the fact is that the recession is hitting us just as hard. Lending money can only be continued if we actually get profit to pay off the over head costs. However, at the amount of bad debt or delinquencies of consumer accounts now, we may not have enough money to lend to other people. If we lend money to ten people and only nine people pay, then we will not have enough to sustain our very existence. Consumers who cannot manage their finances are also at fault here. These rate increases, defaults, and fees are simply a way for us to keep afloat despite the mounting bad debt. Things such as the credit card reform bill will only make things worse for us and the consumers since this might impede our ability to provide the service they so need right now.

The government’s verdict:
There needs to be accountability. The consumer outrage can no longer be ignored. Credit card companies have gotten away with unfair practices for a long time. It is not just about increasing rates or defaults, it is mostly about transparency. The consumer should be able to understand the terms and conditions clearly. Arbitrary increases should stop. Proper prior notice should be given before any increase. Lenders should no longer target those under 21 since they are not yet responsible enough and are very susceptible to sales talk even if the deal is unfair or dangerous.

In Conclusion
There you have the three sides in this story. Which is right does not matter as much as what the verdict was. The credit card reform bill has now been passed and for better or for worse (most who apply credit card sense know that it is for the better), things are going to change.