Predatory practices

I got an updated "customer agreement" for my gas credit card yesterday. Normally I don't read them, but I was curious about what was changing. The first thing that caught my eye was the part about what can be changed and when. "We may change the rates, fees, and terms of this agreement for any reason at any time." In other words, I, the customer, must adhere to a strict payment schedule and other limits, but the card company has no such obligation to adhere to any contract it generates. I want this kind of all-encompassing power over my relationships.

The next part that I took a look at was about the money. The APR is increasing--across the board, for all customers--to 23.9%. That's not a penalty rate, a new-customer rate, or a rate for accounts with higher balances. It's just the new, going rate. Wow. What an incentive to use that card when I buy gas. I think I'll stick with my credit union VISA card at 11.9% and buy my gas at the mom-and-pop no-name station down the street. Their price is always substantially lower than the big-name company, anyway.

Next order of business. My monthly payment to Discover Card went up a lot. I pay my bill every month, I certainly pay more than the minimum due, I've had the card a long time, and the government implemented that minimum payment increase a long time ago. Then I notice, with horror, that my APR had also gone up to about 30%. I called to find out what happened.

The phone clerk filled me in. "You underpaid your last payment by $22. That automatically triggers the default rate APR." I was puzzled. "What do you mean, default APR?"

She said, "It's the APR on accounts where the customer has defaulted."
"You mean, as in abandoned the account? The customer has ceased making payments?"
"Yes."

I pointed out that not only do I make payments well in excess of the monthly minimum, I have never missed a payment on this account. The clerk admitted that although that was true, when my minimum payment was increased, by not including that missed $22, I didn't pay the whole thing and that is no different than not paying at all. She said changing my APR was not something she could do.

One of the most baffling and frustrating aspects of my BP and taking lithium has been my inability to keep track of details like paying bills and going to appointments. The stress of not being able to keep things straight in my head causes me tremendous anxiety and self-loathing. Being stupid is a mortal sin when it's me who's being stupid. To avoid problems, I have implemented a collection of strategies that keep my life straight. Calendars, post-it notes (even on the steering wheel of my car), alarms, and more. The most valuable tool in my coping kit, though, is automatic bill pay.

For a mere $5 a month, the credit union pays my bills on a schedule I have set up. All of my bills get automatically sucked out of my account on pay day. No creditor or service provider can access my account. In the past, I had these payments set up via the creditor's Websites, only to find out that the clause in the credit agreement about them making changes at any time also meant they could take the payment from my account unexpectedly (to me) if they adjusted the payment due date. Now I use the bank's service. It's not perfect, but it keeps me from having a brain explosion when I try to manage money.

Why Discover raised my payment by $110 dollars is a mystery. I didn't check my bill, so it is, ultimately, my fault that the payment was $22 short. Still, raising the APR to 30% seems egregiously punitive to me. I can't understand why, in a time when the economy is frighteningly bad, people are losing their jobs, savings, and homes, food banks are empty, and banks are collapsing, that predatory credit practices are understood to be the best way to keep customers and to keep them paying their bills. Are companies like Discover Card trying to strangle their customers and force them into default? What is the advantage?

The more I think about this, the more there's something else that bothers me. I know the economy is bad and people need whatever jobs they can get, but seriously--who works for these companies? How can actual living, breathing human beings go to work every day for unethical, greedy, loan-sharking employers who make an overt effort to hurt people through extortion? Has nothing changed since the days of the company store?

Needless to say, my wallet is getting lighter. I have removed my Discover Card and my gas card, along with two other cards I paid off this year (Although my balances were low, I ditched the cards when the accounts were taken over by Bank of America, which was quickly followed by a letter saying that if I used the cards, my APR would instantly go up to 29%.)

I have very good credit with a steadily declining debt-to-income ratio. I can't imagine the burden these practices are inflicting on people who were already struggling and now find themselves being crushed under the heel of predatory lenders.