As a columnist for the South Florida Sun Sentinel, the newspaper of record for Broward County, Michael Mayo is a fairly astute fellow. But that hasn’t made him immune to credit card issuers pulling the rug from under him. This past April he posted the following tale of personal woe:
“I got a letter from Bank of America the other day. The fine folks at Bank of America wanted to let me know that they were raising my credit card interest rates.
Currently, the card has an 8.9 percent fixed annual rate on purchases. I have a credit line of $13,700 and a balance of $1,004. I’ve never been late with a payment.
The fine folks at Bank of America, who’ve spent the last few years buying up failed institutions like Countrywide and Merrill Lynch and taking some $163 billion in taxpayer bailout pledges, let me know that as of May, my interest would change to a variable rate of 14.65 percent annually.
From a fixed 8.9 percent to a variable 14.65 percent – such a deal!”
Complaints like these are cropping up around the nation with a depressing frequency.
Tens of millions of Americans with checking, savings and credit card accounts are learning first-hand the meaning of what MSNBC.com columnist Bob Sullivan calls “gotcha capitalism.” It’s a modern variation on the Chinese “death by a thousand cuts.” Banks and other financial institutions in recent years have raised existing fees to dramatic heights, imposed a broad range of new fees, doubled and even tripled interest rates on credit cards without prior warning and otherwise put the squeeze on unsuspecting customers.
The spate of major bank failures and federal bailouts over the past year hasn’t stemmed these predatory practices. Legislation might, and even then only up to a point. This May, Congress amended the Truth in Lending Act in ways that would curb abusive practices by credit issuers. Yet Georgetown University law professor Adam Levitin and many other industry observers believe that once the law fully takes effect next summer, credit providers will find ways to circumvent the law.
Carl F. Horowitz is director of the Organized Labor Accountability Project of the National Legal and Policy Center, a Townhall.com Gold Partner organization dedicated to promoting ethics in American public life.
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