By John W. Schoen Senior Producer

Are banks and credit card companies partly responsible for the rise in personal bankruptcies in the U.S.? After our column last week about high credit cards rates — and this week's enactment of a new, tougher bankruptcy law — readers have flooded the Answer Desk e-mailbag with opinions on the subject on both sides of the issue. Here's a sampling:

I am not anywhere near having to go bankrupt and enjoy credit card rates at 3.99 percent.  My advice is to throw away cards that charge outrageous rates. I am hoping the (American Civil Liberties Union) or someone will jump on this new (bankruptcy) law and use it to bring down these usury rates. … If you and I charge these rates they will charge us with racketeering crimes... Finally... 500 pages to "reform" something?  Who actually read the bill before the vote? — Steve, Michigan

I work in the credit card industry and I don't appreciate your continual negativity towards credit cards. They are a more convenient form of payment for a lot of people (Can you pay cash over the Internet? No.) Also, credit card companies don't send a card with debt on it day one. How about some fiscal responsibility for the card member? —Marc B., Bellevue, Neb.

One immediate impact of the new federal Bankruptcy law should be that interest rates across the economy should drop by at least two to three percentage points. Credit card interest rates should now be at 4 or 5 percent, since their card holders cannot now easily get out from paying their debts. Why do we know that neither of these logical and mathematically necessary results will occur?
Earle, Salt Lake City

As a commercial loan officer at a small bank, I would like to offer a little different perspective on the high credit card rates.  Credit card debt is unsecured consumer debt.  When we lend money on this basis, we ask the customer what the money is to be used for, how they will pay it back, and verify income and employment.  Also, a solid credit score must be present for the customer to qualify.
In the case of a credit card, the customer receives a specified amount on a line of credit, and then is out and about using the card for reasons the credit card company will have absolutely no knowledge of, maybe even for reasons that do not always make perfect financial sense.  Commonly, banks charge 8.00 percent to 12.00 percent for unsecured debt with a loan fee of around $100.00, and this is to individuals we know well.  So it makes sense that the credit card company would charge an even higher rate on an open line of credit for which they have no control over the way the consumer may use the card…

David P.,  Lebanon, Tenn.

Very recently I received a statement in the mail from Chase, formerly Bank One, stating that my minimum payment due would be refigured for the upcoming month.  I frantically called the customer service dept. to see if I had done something wrong (late payment, missed payment, over the limit?) to merit this new rate of 29.9 percent.  Not only that, but my new payment was now being figured at 5 percent of my total balance versus the usual rate of 2.5 percent [rate] -- which results in more than doubling of my minimum payment!!  
The woman explained to me that my account shows a current status, never been delinquent, basically in good standing.  I asked her why then would you raise my interest rates?  Apparently the bank has designed this new plan for the "consumers to be able to pay down their debt in a more timely manner."  Yeah right.  I find it very peculiar these new hikes are going into effect within months — literally — of the new bankruptcy laws….—
Anna, Kansas City

What really needs to happen is to educate the American consumer and to simply fight back.I was born and raised in Germany, and know that German (or European) Banks charge on average of 3 percent to 5 percent in credit card interest. … My tip is simple: Charge as little as possible, demand lower rates and pay off your balance every month! Write letters of complaint to the banks and let them know how you feel.
Also, tell those banks to stop sending you checks and these stupid letters enticing you to go on a vacation. …On the one hand, the banks complain that people default on their credit card debt too much, but on the other hand they keep sending us these tempting offers and checks.
… I really resent it when the banks say:  "The consumer must be responsible and know what he/she can spend". I agree with the responsible part but it also applies to the banks. Banks simply need to give out less credit and educate the consumer instead of tempting us.
…My 21 yr. old daughter recently was approved for a 1,500 dollar Chase card even though she clearly stated in the application that she has no income. What is up with that? Are they crazy??? Yes, and they expect me to pay. She cut up the card (I guess I taught her well). I wrote them a letter and I am sure you can imagine what I wrote.
Constanze C., Atlanta

I would like it noted that people who actually take care of their debt, and pay their bills on time do not suffer from ridiculous interest on their credit cards. I have an interest rate of 10.5 percent which yes is higher than my second mortgage of 4.5 percent or my first mortgage of 5.5 percent but as stated in your article the debt is unsecured. Unsecured debt should have a higher interest rate. Guess what, if you call your credit card company and say, I have paid you every month, I haven't had a late payment in 12 months, can I get my interest rates reduced? The credit card company will do it. If they don't cancel the card. If you threaten to cancel the card not only will they drop your rate but they will increase your limit. Responsible people get good service. Yes some good people get on a bad track and need help. Guess what, any real credit card company will help you with that as well. Advanta, Chase, MBNA are all decent at helping customers...
Joshua D., Gresham, Ore.

A year ago, I signed up for a fixed rate MBNA card at 7.9 percent. I've paid on time every month and have a wonderful credit score. When I paid my bill online this month, I found out my interest rate is now 16.9 percent variable. Unfortunately, this is on a card with a $10,000 balance. I called MBNA, remembering to be super nice because my future rate is in the hands of the person who answers the phone. She "was able" to lower my rate to 10.99 variable because I'm such a great customer. … I was told that in January I received an addendum to my credit card statement outlining the change. It was only made available in my statement envelope. Is it a coincidence that this comes 2 months after I was almost forced to start making payments online because "MBNA would like to get rid of paper and provide a more pleasant and convenient online experience for its customers." … Unfortunately, they always win because unless we're able to pay off our cards, we're stuck. I would love nothing more than paying off my debt and cutting up the cards, but my life doesn't allow that at this point. And I'm saddened at how many people are tricked by credit card companies. I feel I was tricked by this maneuver…Scott K., Pittsburgh, Penn.

I have two [Citibank] cards, one with a $5500 balance, and an AT&T Citi card with a $3500 balance. One time, I was 2 days late, or at least they say I was. The rate I was previously paying was around 9 percent, now it is 29.99 percent. They say I was late and they can do that. I have never heard of such a high rate. I have never been 30 days late, maybe 2 weeks late, once in a great while, not on my cards though. I have a reasonable credit rating…
This is highway robbery. I have been self-employed for the last 10 months, and am not in a position right now to do anything about it, except take out a lower interest loan, or take it to a consumer counseling agency, to negotiate a lower rate.
Brian K., Oklahoma City Okla.

I would like to know, seriously, why it seems that the Government: the President, Congress and Senate, and all financial institutions and corporations seem bent on a path which appears to be aimed at utterly destroying the people of this county who are not politicians, rich, corporate CEOs or in financial institutions? How do they get away with constantly punitively striking at the poor and middle class folks through unregulated high interest rates, high taxes, low wages, no medical or pension benefits, no security at all, when they are all above the law and protected from financial disaster or health problems through free medical plans, tax loopholes, deregulation of guidelines to protect the consumer? Does NO ONE in the current or in past governments, state and federal both, care a whit about the obscenity of credit card companies, credit reporting agencies we never selected, politicians and corporate executives being allowed to bilk this country of every hard earned cent, every benefit? Who is trying to destroy us? Why doesn't the media or the Congress or someone take our side and help us fight back?
Karen W., Kennewick, Wash.

I wonder if the credit card companies realize how much emotional stress is caused to ordinary people when they begin to see that paying the minimum amount does nothing to decrease their debt and that they soon owe more than what was originally charged. It's a travesty. Our legislators should have the nation's emotional well-being in mind because with all this added tension there will certainly be a decrease in mental health when people cannot cope. And do we want miserable people but happy credit card companies?

We all live in this society and making lobbyists happy may be good for reelection contributions but do we want to see the nation spiral down in fear when jobs are lost because savings have been wiped out and the only thing to fall back on is debt?  … When a 29.99 percent interest is put on all cards when one has been delinquent, there is no way of paying off the debt. Clearly the legislators have never been in that position or the laws passed would have taken these things into account. A person who dies of a heart attack from stress will certainly be unable to repay.

Why were so much unsecured loans given and if that was a bad business decision, why don't the companies who made it need to absorb that bad judgment? That's what usually happens. It was the public who was unaware of how this would all add up. The credit card companies knew all about interest, all too well. It's their business, after all. — Sarah, Brooklyn, N.Y.

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