One of those issues is customer service. Cardholders are receiving notices in their statements, or in separate pieces of mail that are often mistaken for junk mail. These notices are hard to understand, so they’re calling customer service for help.
But… often the company reps can’t answer their questions. They don’t understand the notices either. Some will give an answer, and then if the consumer calls back, someone else will give a different answer. This is no help for the cardholders.
Consumer advocates are saying “Train your people!” This is especially important when those consumers are getting letters telling them they’re going to be paying more to pay off their debts.
Even more anger is generated by broken promises. Cardholders who have complied with the initial agreement they had with the card issuers are now getting notices that the agreement has changed. Their interest rates have been raised, they’re getting new fees, and their credit limits have been lowered.
This might be understandable if the consumer had been late with payments or had gone over limit. But these notices are also going to people who have held up their end of the bargain. Card issuers are changing the terms of the agreements with no provocation, after consumers are already in debt to them.
When interest rates escalate from 11% up to 19% – or even higher – more consumers have trouble making the monthly payment and of course are taking longer to pay down their debt.
Other consumers report that they had responded to offers urging them to transfer balances from higher rate cards, and would receive a 4.9% interest rate for the life of the transferred balance. They’ve been paying more than the minimum monthly payment, on time, every month. Now, while their interest rate has not been raised, they’re being slapped with a monthly service fee. Technically, it isn’t an increase in interest. But in practice, it is.
Credit card issuers say they are taking these steps to manage their own risk, but they knew when they went into the business of loaning money with no collateral that there would be risk involved. That doesn’t mean they should be able to change the rules after the game has begun.
Interestingly, these risk management moves may backfire. In addition to keeping people in debt longer, these credit card issuers are forcing some to default. Thus their worries about collecting the money owed are becoming reality.
According to the Federal Reserves’ most recent report on consumer credit, Americans have $976 billion in credit card debt, and the card issuers have been making billions in interest, annual fees, late fees, and over limit fees for years.
That makes it pretty difficult for credit card issuers to gain any sympathy from consumers struggling to pay off their credit cards.
