Banks Raise Credit Card Interest Rates for no Reason!!

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xsocal land merchant_IHB

xsocal land merchant_IHB

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<p>This is a sign of the <a href="http://biz.yahoo.com/bizwk/080207/feb2008db2008026105146.html?.v=1&.pf=banking-budgeting">pending credit card problem that is on the horizon</a>. The banks are out of control and have the politicians under their control to allow this type of business practice to be legal.</p>

<p>I feel the next large crises is the "credit card" crunch. The banks need the cash flow to offset mortage losses and will raise it anyway they can. </p>

<p>Hopefully most posters on this forum are conservative in their CC use as stated on another thread. For lots of people with outstanding balances this will get pretty tough.</p>

<p>Man, I am starting to sound a little less like the IHB bull! </p>

<p>Regards</p>

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<p>Peter Schiff was talking on Fox about how AMEX cut his limit without informing him because he was involved in the investment business. The guy is probably a multi-millionaire and yet was not immuned to the fears of the CC companies. Scary thought.</p>
 
Bank of America blindsiding cardholders?





<p>The nation's biggest bank is doubling interest rates for some of its most responsible credit card customers.</p>







<p>http://articles.moneycentral.msn.com/Banking/CreditCardSmarts/IsBankofAmericaBlindsidingCardholders.aspx?page=1</p>
 
Wells Fargo is aggressively cutting credit lines. My friend is a business owner and had a 10k business credit line/card with them. He only owed 1850 on it. He received a letter from them last week indicating they were lowering his line from 10k to 4k effective immediately. He has never made a late payment and has 700+ FICO scores.





The FED's 2.25 point reduction has lowered HELOC rates by 2.25%. This is good if you already have an equity line, but results in lost interest income for banks. The cash starved banks are so desperate for reserves that they are hesitant to lower the rates they pay on deposits.
 
I wonder how much of the surpise, your new rate is 28% stuff is aimed at getting cardholders to transfer their balance (and corresponding bank liquidity problem) to some other bank's card...
 
Different issue but same root cause... My old local bank just raised their balance minimum on their interest checking from $750 to $1000 w/o notifying me as far as I recall and charged a corresponding service fee of $12. SInce I mostly use the account when I go back home to visit and to have a real bank to transfer funds through to my internet banking accounts they made the decision easy to close the account today.
 
Two of my cards increased my limit this month even though I never use them. One increases my limit every six months even though I only opened it for the balance transfer offer a few years ago and never made a purchase with it. I'm still getting promotional balance transfer offers from other cards, but no more 0% + $75 offers. The best offer I've gotten recently is 2.99% + 3% of transfer fixed for life and that doesn't sound very good.
 
<p>The banks are starting to sound desperate. I believe that some of them had 80% to 94% losses reported Qtr 4 1007. (I bet graph has those numbers)</p>

<p>Some heads are starting to roll with mid level execs and the big guys are worrying. They have to increase profits by end of QTR 1 2008 or they are next. </p>

<p>Love the corporate world!!! They often eat their own.</p>

<p>Regards</p>

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I have the an AMEX for years. Never been late. Then last week I paid online 2 days late then "Bam!" The very next day I saw a $38 late fee on my account! I remember a year ago. A customer care rep. informed me that you can actually pay online a few days late because had you sent the payment via US mail. It will take them a few days to post anyways.



Well, in a couple of months my remaining balance will be paid off. And to the shredder it goes. Darn bast@rds.
 
Reason,





This happened to me before and I called to complain. They took off the fee because I was a good customer and didn't want to lose my business.





Couldn't hurt to try it.
 
<p>Funny, B of A just raised my credit line. I suspect it's because I pay it off every month.</p>

<p>I did however have another bank try to slip an extra fee in on me. My "no annual fee" card suddenly had an annual fee. </p>
 
Credit card companies charge late fees because they have to pay bondholders as well. If you don't make your payment by a certain date than AMEX has to pay the bond holder out of their own cash. CDO's backed by credit cards are going to be destroyed beyond belief. They will make the Mortgage bonds look like AAA securities.....ohhh wait, they are(were) AAA securities. My bad!
 
<p>LM</p>

<p>I think the "<strong>wall street wizards" </strong>outsmarted theirselves with the CDOc, SIVs, and the rest of the slice and dice income generators they developed.</p>

<p>They were great as long everyone paid on time and things went up. It is kind like a "Ponzi" scheme so the banks gave anyone breathing credit card and hoped they would repay.</p>

<p>Like all pyramids they ran out of people to fill the next level.</p>

<p>Regards</p>
 
This may not be a popular thing to say around here, but the idea behind CDOs and SIVs is very valid, and these types of vehicles serve a useful purpose. Bundling of assets, then slicing and dicing them into components DOES reduce risk through the magic of data smoothing. The reason we are seeing what we are seeing now is because all the data smoothing in the world can't turn crap into diamonds. If the paper behind these securities was backed by assets that was fundamentally inline with the value reflected by the paper, we wouldn't have a problem.





But in an era of liar loans, cash back and close, and inflated appraisals, there is no way to make things work whether paper is bundled or sold as individual entities.





In other words, Garbage In, Garbage Out.
 
Winex



I agree and you said it better than I.



The wall street wizards created these vehicles but didn't have safeguards in place to allow the investors to know what they were getting. Its amazing to see the value of losses when totaled up.



I am just a simple country boy so it scares me that the best and the brightest could lose so much wealth.



Enjoy the weekend!
 
<p>The IDEA behind the vehicles wasn't bad, but the execution sure was. Also the idea was so complicated, that it would be very unusual if the execution was ok.</p>

<p>I just found out that the bank I moved my excrow acct to was owned by a guy who was a partner in a law firm I worked in in the late 70s early 80s. Trust me, this guy doesn't understand investment vehicles which I found out the bank invested in. I think I will be moving the excrow account again.</p>
 
I believe that a lot of the problem with execution was due to a lack of transparency. Essentially buyers of these Structured Investment Vehicles didn't have much more than a rating from Moodys of "AAA" to base purchases on.





I can't help but think that there is opportunity in this crisis to create structured vehicles that combine the benefits of data smoothing, but take advantage of the power of information technologies to allow people to drill down into the details of all the fractional mortgages making up the vehicle they are buying.
 
<p>That takes work. You have to pay for the work. Banks and other prospective buyers don't want to pay for the work. And with the commissions paid who can trust the seller to have done the work?</p>
 
I don't have the connections to pull something like this off, but it wouldn't be difficult to architect a system that would not only slice and dice the securities in a CDO, but also provide traceability to the loans that make up the security, the percentage of the security that each loan comprises, the impact on revenue streams of a default in any individual mortgage, and the probability of default based equity in the house, trends in housing prices in the area, and DTI ratios of borrowers.
 
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