Rape of the Consumer? A dramatic headline, if true – you be the judge.
If you have a credit card (and on average I know you probably have 6) then the chances are great that you either just got or are about to get a rude awakening.
No matter what your credit rating the credit card companies are likely to cut your credit limit, kill some of your cards completely, or dramatically increase your rates.
Why? Because President Obama recently announced a plan to move credit card issuer reform up by several years.
The banks’ reasoning is apparently this: we will be forced to become decent lenders much sooner than we feared so we must put it to consumers as fast as possible.
Do you think that is harsh? An unreasonable description of what these big institutions are doing? Perhaps, but before you decide, look at what just happened to someone I know.
In the past year this individual had gas wells drilled on his property. These generate royalties, causing the value of the property to go up by about 500%.
In addition, he lives in an area where unemployment isn’t particularly high and there was no housing bubble so the other properties in the area are also up in value and there are virtually no foreclosures.
He recently hired two employees, both to assist in helping the economy recover and because he now had the ability to do so.
To do so he purchased about $20,000 worth of equipment to expand his business.
So far that is exactly what President Obama wants to happen and supposedly why those big banks were given all that taxpayer money.
- He has never missed a credit card payment.
- His family income has dramatically increased.
- The value of his properties has increased.
- He is hiring workers and doing exactly what the government has suggested small businesses should do to help the economy.
So, with the banks getting billions of dollars of help from the taxpayers (such as my neighbor), what do you think they did to help out the country?
American Express just cut his business credit card line by $25,000.
The next day Chase cancelled one of his two credit cards with that bank.
Both explained their reasons; see if they make sense to you.
American Express said they cut his credit line because he had borrowed money to expand his business and therefore had less available credit.
Chase said that his credit line was cut because he HADN’T been using his Chase credit card.
That is two completely opposite explanations for the same action by different banks.
Is either one true? Or, is one, or are both just excuses? What do you think?
If they do this to someone who has just had a major increase in his family income and whose home has gone up drastically in value, what do you think these fine companies will be doing to you?
Don’t worry about my neighbor. He doesn’t have much credit left this week, having lost nearly $40,000 in credit lines last week, but he does have what the credit card companies hate more than anything – a big sack full of cash!
Those new employees still have their jobs, in spite of the banks which took all that tax payer money so they could boost small business then turn around and cut credit lines to a successful business.
It amounts to the rape of the consumer by the big banks.