Writing for SmartMoney.com, Kelli B. Grant’s article entitled, “How to Blow Your Credit Limit — Without Spending,” (March 11, 2009) warns of a new threat: card issuers cutting credit limits “below the balance” that account holders currently owe. As per one example in the article, this can result in overlimit fees:
Paul Pensabene of Saratoga Springs, N.Y., received a statement from HSBC on Dec. 8 that said he had a $359.99 balance and remaining available credit of $8,640. But when he went online to pay the bill several days later, his online account showed that same balance put him over his newly-reduced credit line of $300. And that didn’t include the $35 over-limit fee.
We consider this to be an extremely unfair tactic on the part of any card issuer. It’s one thing to reduce credit lines, it’s another thing altogether to penalize a customer for doing so. Shame on any card issuer that employs this tactic (not that they seem swayed by being called out for shameless behavior). Bankers want to reduce risk, and that’s fine, they need to. But purposely manipulating accounts and putting someone in default when that person has done nothing to deserve such treatment is deplorable.
Another example in the article mentioned a small business owner, who has been left (by Amex, which would not answer even after repeated calls) “to juggle business expenses on his personal cards.” Hence, given that we need to support entrepreneurs, I remain concerned on that basis as well.
I hope some class action attorneys are interested in this new “trap.”
Loading ...
on Mar 16th, 2009 at 10:27 am
I grew up reading – a lot. Among other things, I read some books about wild, wild, wild American West. Don’t we have it?
on Mar 16th, 2009 at 10:31 am
Hi anna22,
I think you are right. Credit card companies are the ones wearing the black hats.
on Mar 16th, 2009 at 6:37 pm
I think in addition to massive lobbying of our representatives in congress, we need to organize massive marches and PEACEFUL demonstrations outside the headquarters of all the major banks.
Corporations do not like bad publicity. Imagine the visual of thousands upon thousands of people congregating on the steps of these banks. I’m talking about simultaneous PEACEFUL protests across the country with local media there to cover each and every one of them.
I think then and only then will the banks begin to realize that they can no longer hold us hostage. Let us speak up for ourselves!
on Mar 16th, 2009 at 7:01 pm
Hi MJ,
I agree with you. I might also mention something else that I think is important: bad PR for banks when they are lacking adequate regulatory controls (given their ability to be virtually do as they please, and engage in such outrageous behavior) simultaneously sends a message to regulators (they’ll be next, if they don’t do something proactive to put a stop to these abuses). Thanks for your comment. Take care.
on Mar 16th, 2009 at 10:09 pm
Let me know the time (I know the place) I’ll be there with bells on (and Tie Dye)
Liquored up and ready to vent! I live 7 miles away.
Take a look at Chase’s response to prop Z.
It’ll really stir you up in light of thier actions since.
http://www.federalreserve.gov/SECRS/2008/August/20080801/R-1286/R-1286_239_1.pdf
on Mar 17th, 2009 at 3:14 pm
MJ, I think that is the only way that may be effective. Unfortunately, you need a few hundred thousand people to band together and protest outside of Chase. I cant even begin to imagine how to organize such a protest, nor how to get that many people to show up. A few hundred wont carry any weight….
on Mar 17th, 2009 at 4:47 pm
Hi Steve,
Respectfully, I do not entirely agree that a “few hundred thousand people” are required in a protest outside of Chase. Years ago, I spent some time in film school. An unhappy mob does make for a likely subject for media coverage. That being said, a close-up of a committed protester with determination in his or her face (through the lens of a photographer) can be just as provocative. Did you see the picture of Martin Rodriguez in the New York Times? He also used artwork that I supplied and arranged for the reporter to speak to me as well (I challenged the Chase “spin” that it was only people who paid the minimum — that may the first time that this “only paying the minimum payment” claim was refuted in the press). Thus, Martin made a difference.
Protests have a long history. Remember that some of the most significant events are started by just one person who is willing to stand up and fight. Rosa Parks comes to mind as a person I admire for doing just this.
Just one person. One moment in time. One picture. I would not be here if I did not believe in the power of “one.”
P.S. Notwithstanding the above, I think that it would be interesting to create a collage or otherwise display a large number of images such as “ticked-off customers” standing in front of Chase ATMs and branches (or its HQ facilities). A series of still shots could also be animated.
on Mar 17th, 2009 at 10:05 pm
Maybe so…it is tough to fight an opponent that is so well entrenched.
Its hard to know the way…for me at least.
on Jul 25th, 2009 at 5:54 pm
I have low income, yet, my credit cards all starting raising their limit by leaps and bounds. In January of 08, I got a American Express card With a credit limit of 20,000 dollars even though I was 65,000 in debt and had no increase in income.
This brought my total amount of available credit to over 100 grand!
I got cocky and spent 30 grand in one year on buying websites and domains.
I still had 70 grand in credit and was able to pay all the minimum payments on time.
Now, American Express and Chase have, out of nowhere slashed my credit lines. I didn’t max them out, in fact, I was careful to leave 1/3 of my credit line alone.
I think they purposefully gave me(and others) much higher credit lines than they deserved planning to get them to spend more credit and then drop their credit lines as an excuse to raise interest rates and make over limit fees easier to get. I was the junkie and they were the pushers.
Easy credit is the root of our current economic crises. It just as destructive to individuals and the country as crack or heroin. The creditors have set up us all up for the kill.
Credit should never have been so easy to get in the first place.
Of course, I chose to get the cards and choose to spend a bit too much. But, the credit card companies enabled it.