So the credit card companies have been scrambling to jack-up their customer’s interest rates and lower their available credit in anticipation of February’s changes passed by congress in August. Since the summer we have seen a spiral of cards lowering the available balance which screws the card-holder’s FICO score by lowering your percentage of available credit to credit used. Then your other cards raise your rates based on your new lower FICO – or just because they want to, which increases your minimum payments and lengthens the time it will take you to pay-off balances. All this without you having been so much as a day late or a dollar short.
This weekend we got a letter from Chase announcing that they were going to move our interest rate from 12.24% to 19.24% (wowzers). Their reason? They were kind enough to provide it in black and white: “The principal fact we considered in amending your account is maintaining profitability on your account”. I guess getting a 12.24% return was just not profitable enough!
Of course the banks claim that they absolutely have to do this because of the amount of charge-offs they are incurring in this economy. I have no doubt they have ran the numbers and they have figured out how to maximize the amount of squeeze they can administer before the interest rate changes contribute enough to charge-offs to offset profitability.
