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2008-02-26 05:13:40

Credit Card Deals - Lenders Try to Recoup Their Losses

After dramatic fed rate cuts, millions of cardholders sighed with relief. For banks, it's getting cheaper to borrow money, but what about credit cardholders? Unfortunately, thousands of cardholders found themselves in a no-win situation. Really, it's rather embarrassing to be notified by your issuer that your rates are doubled for no obvious reason. Interest hike is just one of the ways used by creditors to keep credit card profits.

Do you happen to know that businesses associated with lending are the most profitable ones? Lenders know how to make money, even if the economy slides down, and credit card delinquencies are on the rise. Read more about the actions major lenders take in order to cover the losses they bear.

Credit card issuers are clever enough to protect themselves against losses, no matter how bad the economic situation is. Like it or not, but it's up to creditors to set the rules on credit games. And when you sign up for the card, you sign off their right to change credit terms anytime, for any reason.

While some creditors may raise your rates because of your credit card misuse, the others take these drastic actions for no obvious reason. And that's really disgusting, when thousands of cardholders have to deal with sky-high interest rates even if they haven't missed their credit card payments.

This way, Bank of America credit cardholders face pretty high interest rates on their cards. There's a certain tendency in credit industry in recent months to tighten up credit standards. Credit crunch hits all lenders, but some of them bore more losses from the mortgage meltdown.

That's why some banks have raised the interest rates on the credit cards of their clients. Anyway, these cardholders can opt out from high interest rates, but in this case they will have to pay off their balance and cancel the card. Things do not look promising, really.

Disappointing cardholders cannot figure out what they have done wrong, and the reps of credit customer service cannot give them a straight answer. Bank of America spokeswoman explained this situation as a usual business, pointing out that interest hike was the result of any action that might lower customer's credit score.

This explanation resembles a credit practice that led thousands of credit users to financial troubles. Universal default can hardly be called a fair practice. Though most lenders eliminated this confusing credit practice, some issuers still keep an eye of customers' credit activities. So, if you miss the credit card payment, you may expect the interest rate hike on the other. That's definitely unfair!

Last month the Fed Reserve conducted a survey. The results are really striking - more and more banks tighten credit standards. Some lenders cut credit limits on the cards, or tighten rules for credit card applicants, many lenders raise default rates greatly in order to limit the risk of credit card delinquencies. And there are companies that may change your rate out of the blue for no obvious reason. So, try to be extra vigilant with your current plastics these days.

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