There is a new place of pain for credit cardholders nationwide that's just adding to the misery already permeating the current economic crisis: Rate increases and limit decreases are hitting consumers nationwide, often despite their stellar credit records.
If you hold a major credit card, make sure you are reading every letter that comes from the credit issuer.
In a Feb. 4 forum we called "Credit Crunch Wednesday," NBC Chicago opened the phone lines and the email inbox to let viewers talk about their credit questions and the headaches they're experiencing.
With more than 4,000 calls and nearly 500 e-mails, the number one complaint that came in centered on credit cards and the recent changes that many consumers feel are unfair.
If only credit cardholders had a crystal ball, maybe they wouldn't be as shocked as the consumers we heard from.
Here is a sampling of the reactions some viewers said they had after opening letters sent to them last month by their major credit card issuers:
"My wife and I did the math on it and suddenly our $500 payment was going to be $12,000 a month," said viewer Shaun Schofield.
"This interest rate, this can't be right. What happened with this interest rate?" viewer Mark Larson said he asked his wife.
Joe Zaja was more direct.
"What they've done is just gone ahead and kicked me in the stomach."
Banks call it "re-pricing." Their customers have different words for it. Some of the sentiments shared with us include, "thievery," "criminal," "wrong," "extortion," and "unreal."
The consumers interviewed had almost identical stories. All said they were lured by the promise of low Annual Percentage Rates on balance transfers, paid their bills on time every month, never maxed out, but still got smacked with rate increases and extra fees tacked on to their bills.
The customers said they didn't deviate from the agreement, but credit card companies did. And under a provision known as the "any-time, any-reason" rate change on many member agreements, they can.
"It's in the fine print, sadly. That is the agreement you made," according to financial columnist Terry savage. "So believe me, when they change the terms or raise the rate on your monthly payment, they have checked with their lawyers. They know they can do that. The question is, what can you do?"
Not so long ago, you could get on the phone and bargain, or threaten to walk away. Your ability to get relief is diminshed, many experts agree, in this changed economic climate.
"Don't bother calling them. Don't bother telling them how long you've been a good customer, that you've never been late, that you've been paying regularly," Savage said. "They don't want to hear it. They need to make money on the money they've loaned you."
Banks defend the "re-pricing."
In a statement, major card issuer Citigroup blamed "severe funding dislocation and significant consumer credit deterioration" for its changes, and said only customers whose rates have not changed in the past two years are now affected.
"They've got some money now and they want more from the consumer. I don't think it's fair and more important, I don't think it's sensible to destroy the very consumers they need as customers," Savage said.
The bailout followed by the squeeze has infuriated some consumers so much they've now turned to the legal system.
A group of Chase cardholders last month filed a class action lawsuit to fight a new $10 monthly fee added to bills that's on top of an increased monthly minimum. The suit alleged "egregious strong arm tactics" that are fraudulent and unlawful.
Some help is on the way: new rules will prevent this kind of any-time, any-reason change, but those regulations won't kick in until July of 2010.
