Here’s a miniature follow-up on the cursory business critique I offered a few days back.
Like many humans, I make use of credit liberally. I’m kwazy for e-commerce, and only seldom do I get through a month without making some kind of virtual purchase. I’m much better with my cards than I used to be: once upon a time I had the residue of a decade’s worth of inevitable spending (hospital bills, auto repairs, and the like) spread out over three cards to the tune of about $20 bajillion. As soon as I was semi-solvent, however, I attacked those cards with a vengeance, closing out one account and paying down the others to $0.00. They have manageable interest rates (7.99% on a Discover, 8.99% on a MasterCard), more manageable still because I pay off the monthly balances as soon as the bills arrive.
If you’ve had a credit card for any length of time, of course, you know that the banks bombard you with mail. I receive sooper-special balance transfer checks almost weekly, and perhaps once a month I’ll receive notice that the terms of my agreement have been modified in some material way. About 85% of these changes are modifications to privacy policies, but every once in awhile they’ll throw in some odd new wrinkle. Bank of America just changed its approach to foreign currency transactions, for example, and was kind enough to keep me in the loop.
Sifting through all that mail is a little tedious, but an excess of information is a forgivable sin. It’s the secret snookeration, however, that I object to. In the midst of all these throwaway mailings, I recently received the kind of mail that veteran creditors have assuredly seen before: the spontaneous rate hike. For no particular reason that I can discern–unless they’re peeved that I’ve zeroed out my balance–Discover has hiked my interest rate from 7.99% to 12.99%. I’m not taking it personally, since the change comes with one of those opt-out statements that folks who are carrying a heftier balance ought to exploit. They can reject the change and freeze their rates wherever they happens to be, or–if they’re one of the many who instinctively tear up and throw out all those ridiculous modification-of-terms notices–they can find themselves on the hook for 5% more interest than they bargained for in the first place.
What strikes me as somewhat sad is that the practice is at once diabolical and appallingly common; it’s happened so often that I’m not even fazed by it. It’s interesting to me today, however, because it arrives on the heels of a new effort to nudge banks toward something like transparency, if not bona fide fairness. The President has been stumping for a new bill that would prevent capricious hikes and excessive penalties, and the credit card companies have responded with the kind of position that would prompt me to jot “logic?” in the margins were it offered in a freshman essay: the new “measure could backfire by restricting credit for consumers,” per the AP writeup. As games of agency go, that’s a doozy, though I think it’s actually quite bracing to see the credit card companies so brazenly threaten to tighten their lending practices because they are so deeply committeed to gouging consumers. Although I’ve come across that notion before, it’s refreshing to see the credit dispensers concede their priorities by opposing plainspoken disclosure.
It’s nice to be able to comment on these odd phenomena from a position of (relative) security. I’ll be curious to see how things play out. In the meantime, I’ve got a card to cancel.
