Gentle Reader -- You are welcome to peruse my web-based journal. I assure you that my contributions to this medium will be both infrequent and inconsequential. Read on!

CREDIT CARDS: YOUR ENEMY OR YOUR WORST ENEMY?

You have a credit card. If you carry a balance they charge you -- buying with your card is essentially the same as taking out a short-term, high-interest loan. In accounting terms, this loan is a debt to you, and a credit to the issuer of the card. But they wouldn't seem as friendly if you called them "debt cards."

If you miss a payment, or don't pay the entire minimum, the issuer of the card takes a couple of nasty steps. One of them is almost certainly jacking up your already-high interest rate (11% if you are lucky) to usurious levels (up to near 30%). That hurts, but it's your fault. You messed up.

In the past few years, some issuers have been using a different set of criteria as an excuse to raise your rates. They have access to all your financial information (how did THAT happen, anyway) -- if you miss a payment on another card, or a utility bill, or a decline in your FICO score, suddenly you become a dangerous credit risk, and they "have" to jack you. That's even though you never missed a payment on your account with them. Bastards. At least it makes a certain kind of sense; you did something that changes your profile as a customer.

Now we've reached the next phase: They raise your rates just because they want more of your money.

Credit-card issuers have drawn fire for jacking up interest rates on
cardholders who aren't behind on payments, but whose credit score has fallen for
another reason. Now, some consumers complain, Bank of America (NYSE:BAC - News) is hiking rates based on no apparent deterioration in their credit scores at all.
. . .
What's striking is how arbitrary the Bank of America rate increases appear,
credit industry experts say . . . Bank of America appears to be taking an
even more aggressive stance because, beyond credit scores, it is using
internal criteria that aren't available to consumers. That makes the
reason for the rate increase even more opaque. "Congress has faulted credit-card
companies for lack of transparency in raising rates," says William Ryan, a
financial industry analyst at Portales Partners, a New York-based research firm.
"Bank of America is bringing it to a new level."

If BoA gets away with this, expect every other issuer to follow in lockstep. So pay off those cards. posted by Carlton at 12:36 PM