Predatory Practices Persist

"Yeah, That Will Work" Department

I've been on a (very) brief family vacation -- Duluth water park and puppy scouting -- and returned to lots of mail, mostly business-related and bills. Including one from a large bank where I have had a credit card account -- and several other accounts -- for almost a decade.

Beginning later this month, the letter notified me, the interest rate on any unpaid credit card balance will be *28.99%! In fact, nowhere in the letter was the name of the bank even identified; rather, the correspondence, from "Cardmember Service" in ND, simply referenced the last 4 digits of my credit card (I had to check my wallet to realize which credit card account was affected)

Bad credit?

Hardly.

My wife and I have 800 credit scores, and just refinanced at 4 5/8% (we're part of the lucky minority that had enough equity and qualifying credit histories). And it's hardly like we are a new or unknown customer to the bank in question: our credit card account goes back years, and has never even incurred a late payment fee. We also have a mortgage with them -- also never late -- and multiple savings accounts.

Fortunately, it's not like it really affects us: we use credit relatively sparingly, and pay off the balance in full every month. (I also have several other credit cards that I can -- and quickly will -- switch my business to.)

But still.

What if we couldn't pay off the balance? The new rate would literally eat us alive in no time.

Predatory Practices Persist

At 29% compounded annual interest, $1 in debt balloons to $6(!) in seven years!

Clearly, anyone who fell into this pit would never be able to climb out. Is this how the banks propose to dig out of the crater they've dug for themselves -- and us, too?

Do the big banks really need to give people another reason to hate them right now??

*There are supposed to be usery laws on the books of most states. I can only guess that the card is issued from someplace like North or South Dakota, with a very "liberal" interpretation. In what has been called "a race to the bottom," some states compete for corporate business by gutting their consumer protection laws.

Tighter Credit -- For Realtors, Too

"Put it on my Marketing Account -- Not"

It's not just borrowers getting pinched by tightening lending standards -- Realtors are, too.

For years, Edina Realty and other brokers have basically extended credit to their Realtors through company marketing accounts. Print ads, mailings, Web site and technology fees -- all the day-to-day expenses Realtors typically incur could be charged to their marketing account. As deals closed, the broker would subtract the debit balance in the marketing account from the realtor's commission.

No more.

With deals fewer and far between -- and at lower prices -- brokers are getting stuck with their Realtors' IOU's for longer. And with more Realtors exiting the business, brokers have been increasingly stiffed with large, unpaid balances.

So prospectively, it's increasingly "pay as you go."