In the current economic miasma in which we find ourselves, I take consolation in one thing: we’re all in this big mess together. Whether you are an individual or a business, if you’re in Las Vegas, the odds are that you’ve been hit hard financially. And the entire country is angry about the draconian tactics of many banks, who have decided to continue squeezing credit during the middle of a depression-like recession—despite receiving billions of tax-payer dollars to do just the opposite.
Take the Fontainebleau, for instance. They sued their lender, Bank of America, after it decided it no longer found them credit-worthy and refused to give them money it had previously agreed to loan. I was happy Fontainebleau sued them.
How many people and businesses right now are in this same position, only not to the tune of $800 million? And how many middle class families are in a position to do anything about it? Many individuals and small business are using credit cards to get through these rough times. In response, credit card companies are slashing credit limits without warning (then charging over limit fees) and raising interest rates on customers who’ve done nothing other than use the credit they thought they had. Even consumers whose credit cards have no balance are seeing their credit cut. Jim Randel at The Huffington Post has a great list, “The Ten Sneakiest Credit Card Tricks,” about a whole host of credit card company practices that rob consumers of millions of dollars a year.
John Stossel speaks for the other side, the you-should-have-known-better side. Credit cards, he argues in his recent editorial, “Increasing Banks' Costs Makes It Harder for the Poor,” are preferable to loan sharks, pawn shops, and other similar institutions that loan money to the poor. He says, “Late and over-the-limit fees are unpleasant, but they aren't charged until a cardholder's conduct triggers them.” I’ve got no problem with common-sense rules and regulations, but a $40 late fee and a doubled interest rate for being one day late isn't unpleasant. It's usury.
In the Fountainbleau’s case, their strangled credit line has resulted in lay-offs, which means some of their unemployed workers will be looking to their credit cards to get by this month. When will our financial institutions get a clue? If we fail, they fail, too.
Picture courtesy of Alexander Korabelnikov at http://www.sxc.hu/photo/1136586