Credit crank

 Usually, I toss out the tiny-print letters I get from my credit card company after barely glancing through them.  It's always the  inside-baseball kind of stuff that I'm pretty sure matters only to the banks--how they're now using a "Foreign Transaction fee" instead of the "Foreign Transactions/Fees."  But yesterday, when I got a letter from my credit card's bank, I actually tried to read and understand it.  Why?  Fear, engendered by an interview I did last week. 

I spoke with UC-Berkeley economist Martha Olney for an upcoming story, and she said that credit card companies are currently in a race to kick up rates and minimum payments before new regulations are phased in. She also said that banks are rushing to drop 'undesireable' credit card holders while they still can. Therefore, banks are unloading those who use their cards too much or too little--those who will likely never be able to pay off their debt and those who never have any.  In other words, they're dumping people who don't make them any money through either interest, or the fees that they charge merchants every time a cardholder makes a purchase.

Can they do that? Yes. At least for now.  The Credit Card Act of 2009 is slated to go into effect in February and will make it much more difficult for banks to dump customers and revise existing credit agreement. So if you've ever wondered about what those cryptic communications from your credit card company have been all about, now's the time to act on that curiosity!