The days of credit card abuse may be numbered, putting extreme pressure on what remains of HSBC Finance and HSBC’s credit card business.
The Obama administration yesterday called for an end to unfair credit card industry practices such as retroactive interest rate increases for any reason, late-fee traps that penalize borrowers with weekend or middle-of-the-day deadlines and teaser rates that last less than six months.
Obama is very good at letting people draw their own conclusions, and does not cite specific names and abuses. For instance Obama did not mention online payment websites that don’t work, nor did he mention insurance packing and debt cancellation.
In other words Obama did not address specific abuses by HSBC. The practices are a profit center for HSBC. That does not mean nor imply that Obama does not know of HSBC abuses. He does, because went sent a 25 page document.
New credit card legislation is moving closer to becoming law, although it will not be effective for one year after passage, unless something changes. During that year many credit card holders will be targets for abuse. One look at our complaints section tells the real story.
On the other side of the coin, US consumer credit quality deteriorated further in February as credit card losses hit record levels amid a worsening economy. Debit card use is on the rise. Debit cards immediately deduct funds directly from a checking account. Debit cards are especially popular with younger consumers.
Merchants give up a small percentage of every purchase, known as the discount rate. HSBC is also a credit card and debit card processor. HSBC hides the fact that merchants may be charged up to $299 to terminate a credit/debit card terminal agreement.
As more small businesses go out of business HSBC is living off of the termination fee, thus reaping huge profits on both ends. With regard to credit cards, HSBC is reducing vulnerability by dropping available credit limits on credit cards, often stranding customers or putting business users one step closer to closing their doors.
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