Everyday Finance

Why Credit Cards Are Gouging Customers - Because They Can

The credit card companies are changing the contracts.

And not because they "have to" but because they can.

Why Credit Cards Are Gouging Customers - Because They Can

It's pretty obvious isn't it?

In March, the sky was falling, right? Bailouts, printing cash, anything to stabilize the financial system.

Well, now that there's an obvious recovery "at least in shares of financials" in route to the tune of triple digit returns, do you believe AXP is "on the verge"? They need to hike fees to remain solvent? Come on.

They're doing it because now's an optimal time to generate massive gains on late fees and interest rate hikes. There are millions of Americans out of a job or losing a job soon, out of a house, out of cash, running out of their severance/unemployment coverage, etc. This is the total pinch point for millions of consumers and they pick now to hike their penalties.

So, my question to you: Did they "have to" do this as purported in their letter? Or are they exploiting the perfect storm?

There's a great documentary on I saw called "Maxed Out" if I recall where they intererviewed former credit card execs and lower management. The bottom line is that they generate the vast majority of their margin from the people at the lowest end of the economic spectrum. Right or wrong, capitalistic or exploitation, it's where their sweet spot is.