A New Way for Credit Companies to Abuse You…Even Those with Good Credit

Credit CardWhen I see a new credit card offer I like to read the fine print.  After all, credit card companies aren’t in the business to give you a good deal.  They are in the business to make money off of human nature and error while looking like they are giving a good deal.

I want to know what happens when you make a mistake.  When you are a day late with your payment, what do they do?  Typically for first time offenders they give you a late fee.  For frequent offenders they increase your interest rate to penalty rates.  I was looking through the fine print of the Chase Sapphire Card and I couldn’t find anything on what they do if you are late.  Then I found this in the fine print. 

Your account will be in default:

1) If you do not pay at least the minimum payment due

If you are late with a payment, forget the penalty rates.  They can just declare your account in default.  This could apply to someone with good credit down to bad credit.

2) You fail to comply with this or other agreements with us or one of our related banks.

If you miss a payment or make a mistake with another related bank card, they can declare your account with Chase to be in default.

3) We believe that you may be unwilling or unable to pay your debts on time.

They get to arbitrarily decide to place your account into default because they suspect you are a credit risk.

So what do they do if they declare your account is in default?

I will skip the legalese and put it in real world language.  They can close the account.  They can demand the repayment of the account in full.  They can put you into collections.  If they put you into collections, they make you pay for every expense related to the effort of collections. Said another way, they can load up your account with bogus charges.

This type of fine print language is a game changer.  Let me give you a few situations where this could apply.  If you randomly make a few late payments, you could find your account closed and in collections.  If you lose your job, they could determine you a credit risk and declare you in default.  If your credit score goes down (and they randomly check your credit scores) they could declare your account in default.

In 2009, President Obama sign into legislation the Card Act to curb credit card company abuse. According to the way the law was originally written the entire Chase Sapphire card agreement would be a violation.  Obviously, the politicians made amendments to that piece of legislation in the darkness of the night.  They have to help those out who keep them in office.  The credit industry is one of the biggest if not the largest campaign contributors.

Incidentally, this fine print is only part of what is disturbing.  The agreement that you accept by using the card is full with other language giving Chase all types of power.

Bottom line is that you can’t afford to not read the fine print.  Will they automatically close your account on a missed payment?  It is tough to say.  The bottom line is that this new fine print gives them the ability to take unusual steps.

Credit card companies are more abusive than ever.  Oh and by the way, if you have perfect credit and apply for the Sapphire card your initial interest rate would be 16%.  What a rip-off!!

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