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There is a lot of talk in the news lately about credit card companies having unfair business practices.
Here’s how to tell if your credit card company is unfair or not.
Now, consider this…
Can you imagine your children being overlooked for admission into a good college because other students who went to their high school did poorly at the school, even when your child’s scores are superior to those other students?
Can you fathom a dentist drilling and filling teeth that don’t need cavities just because your neighbors generally get cavities in the teeth they have targeted?
What if you were denied car insurance because you once visited a car wash that has a customer base of people who get into accidents.
Well, if these scenarios sound a bit odd and unfair, imagine how Kevin Johnson of Atlanta (who has a near excellent credit score) felt when his credit card limit was dropped nearly $7,000 based on nothing more than a store he shopped at!
Never mind that his credit score was impeccable. Never mind that he never carried a balance. Never mind that he owned his own home and was a successful business man.
One innocent stop at one store led to his account being flagged as a potential credit threat.
Today’s Credit Card Rules
These aren’t your father’s credit card rules.
Apparently, credit card companies are now using a system of behavioral issues to flag accounts.
It is also apparent that this system is flawed.
According to New Credit Rules (a site created by Kevin Johnson that documents his challenging journey to change what is wrong, unfair, and unjust in the credit card industry), customers are literally getting the shaft and their credit limits are being decreased. Credit card customers are also being mistreated in other unimaginable ways, as well.
Some of the biggest insults to the public include:
American Express is encouraging cardholders to leave. They are dangling $300 in front of customers, hoping they will choose to close accounts that American Express worries could possibly default.
This offer is likely to have a small number of participants and is banking on those ignorant of the devastating consequences of closing an account -a lower credit score by as much as 100 points. The smart consumers know that the opportunity cost of taking the gift card is too high, especially in this economy. Regardless, the offer certainly identifies the lowest rung of customers -those who the company wants to get rid of regardless of their ability to pay. Source
Credit card companies are canceling cards of responsible customers.
The days of companies rewarding responsibility are over. In their latest efforts to minimize risk and maximize customer pain, credit card companies are canceling accounts of those who don’t use their cards often or at all. Some of the targets are “transactors” and “freeloaders” — those who pay their balances in full every month. Others are customers who prefer to have credit cards for emergencies only, and therefore hoard cards with zero balances in the bottom of a drawer somewhere. Source
Meanwhile, American Express has been late on payments to publishers.
The note sent to Internet publishers who put American Express ads on their website reads:
American Express has confirmed that the November commission payment is delayed. American Express’ accounting team is working very diligently on securing the payment so that you have it as soon as possible. We appreciate your patience on this issue.
Light At The End Of The Tunnel?
While they won’t stop credit card companies from coming up with new and imaginative ways to take abuse customers, the most used and most blatant abuses have been addressed.
- Credit card companies are prohibited from raising interest rates on money already borrowed.
- Credit card companies are prohibited credit card companies from charging interest on amounts already repaid, through 2-cycle billing.
- Credit card companies are forced to end the practice of so-called deferred interest.
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- NPR: Companies Engage In Credit Line Profiling
- Proof Of Racial Profiling In Credit Card Offers
- Data Mining And Credit Profiling
I have been a certified tightwad striving for financial freedom since I became pregnant with my first child — and I decided to find a way to stay home with him full-time. I enjoy sharing my personal experiences in my journey back to financial health and planning for a future — which will include sending 2 kids to college and early retirement.