According to research by the credit scoring company FICO, 58 million consumers had their credit limits cut. This abrupt loss of available credit has caused an avalanche of problems for consumers.
Though the intent behind recently implemented credit card reforms were intended to reel in those who engage in abusive credit card practices, that doesn't seem to be happening as many realize the financial industry has found ways around that intent.
As many creditors realized that reforms were inevitable, not-so subtle changes began occurring in advance of the reforms. Interest rates began to skyrocket, fees increased, fixed rate cards turned adjustable and worse, since reforms were silent on the issue of shutting off or cutting a consumer's available credit limit, lines of credit were suddenly slashed -and so were credit scores. Since credit scores are in part calculated based on the amount of available credit versus the amount in use, a sudden loss of credit can negatively affect consumer credit scores. And due to that reduction in their score -they will no be faced with higher interest rates and insurance premiums, both of which, fair or not, are based on that three digit credit score!
Consumers feel duped by the same creditors they once trusted.
Many are rightfully frustrated and angry because they realize that though they paid billions in the form of TARP bailout funds to help stabilize the banks, they now refuse to return the favor. Rather than extending a helping hand to struggling consumers, they're cutting off their credit and raising interest rates --in some cases as high as 40.99%!
It's these very practices that make a Consumer Financial Protection Agency more important than ever before. The agency would have the authority to reign in those in the financial industry who continue to harm consumers and our economic recovery by engaging in unfair and abusive practices. Consumer complaints about the lack of credit card regulation fueled the fire for credit card reform -and it's these abusive practices that fan the same flames that have consumers wanting stronger oversight -so that the very laws intented to protect us are not used against us.
See today's Sun Sentinel's Talk Back South Florida Blog;
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You are right. It is the same people that put us here and cost us jobs and homes that are continuing to perpetuate the problem. Why isn't our government doing something about it? How do they expect the economy to return if we can't spend money. How can the public spend money if every penny is going to the greedy credit card company. We are not spending the money we need to in order to jump this economy because we can not trust our credit limits won't be hijacked leaving us high and dry? If congress continues to close their eyes and let them have what they want then we need to send them a message by voting them out. Greed shouldn't be allowed to bring this country down but I don't see anyone stopping it. Where are the hearings? While everyone in Congress is being partisan and only concentrating on is health care, the credit card companies are laughing all the way to the bank vault. Come on people, wake up. Get in touch with your Senators and congress and tell them there jobs require them to do more than talk about their agenda for health care. What good is health care if we go into a depression? this isn't acceptable and we will vote them all out if they don't get it soon. Keep up the good work here.