The Usurious Spirit: Credit Card Bank Loansharking

Bernard Pyron

The financial elite at the very top is made up largely of the same oligarchs as are in the ruling elite. What the patriots, populists and some Christians have been calling the New World Order is the ruling elite of the several American and European oligarchical families.

The executives who run the credit card banks might not be at the highest level of the ruling elite, perhaps not as high in the hierarchy as Lord Jacob Rothschild, or David Rockefeller who may be close to the top.

But the credit card bank executives are certainly at a high level of the ruling class and some may be at a lower level of the ruling elite - and they are part of the financial elite. The may use their money to support policies of the federal government that work against the interests of the people. The big credit card bank, MBNA, is said to have made large contributions to the reelection of President George W. Bush.

Even if somehow you do not think his wars against Third World nations are morally wrong, his policy on illegal immigration is certainly not in the interests of the people. Joining Mexico with the U.S. in some fashion is also not in the best interests of Americans. The credit card banks and executives make their money from usury and penalty fees that they put over on the American people. Therefore, we should not contribute money to them by our use of their credit cards.

While it is very difficult in the current economic situation to save enough money to pay cash for a $100,000 house, and pay rent at the same time, it is not necessary to use credit cards. I know, though, that often the poor have no choice but to use credit cards or starve. The use of credit cards makes one a victim of the ruling elite and helps finance their operations - often opposed to the interests of the people. Usury and penalty fees collected from cardholders have been making the credit card banks and executives rich and more powerful than ever.

Reviewing the huge number of complaints on the Internet against MBNA/Bank of America credit cards, Bank of America credit cards and those issued by Citibank shows these banks to be financial predators who engage in unethical business practices, deceive their consumers, run rip off scams on cardholders to cheat them out of money, make promises they don't fulfill, and they are rude to their customers. These practices in early 2005 caused the MBNA credit card bank to lose so many cardholders that its stock dropped by a huge 94%, down to $31.7 million from their initial projection of $519 million. See: http://consumeraffairs.com/news04/2005/bofa_mbna2.html

Yet MBNA, now owned by Bank of America, and Bank of America still engage in these rip off scams, deceptions and unethical businesses practices - probably because if they lose some customers there are more people waiting to sign up for their credit cards.

Cheating those with low income out of their money is a transgression of the moral law, for in Exodus 22: 25 it says "If thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay usury upon him."

Matthew Henry in commenting on Nehemiah 5: 1-10 says "Hard times and hard hearts make the poor miserable...money must be had, but it must be borrowed..."

But American credit card banks have been targeting people of low income, offering them credit cards. There is information on http://www.upenn.edu/pennpress/book/14098.html
about American credit card banks targeting low income people, with deceptive offers. On this site they report that the Attorney General of Delaware in 2003 brought charges against Cross Country Bank and Applied Car Systems for fraud, false advertising, deceptive business practices, abusive debt collection and for targeting low income people with deceptive pitches.

The Supreme Court in Marquette National Bank vs. First of Omaha Service Corporation (1978) ruled that credit card banks are not subject to the usury law limitations in the state in which the borrower lives. Rather, the credit card banks only have to obey the restrictions on interest rates of the laws of the states where they are located. Citibank then moved to South Dakota which has no restrictions on interest rates and many credit card banks are in Delaware which also has no usury laws. Congress could over-ride the Marquette decision is they had the guts to do so.

So, there are no legal restraints on the interest rates credit card banks can charge, and few, if any, on their practices in dealing with cardholders. In addition, Congress recently changed the federal bankruptcy law to make it harder to go into bankruptcy, a change the credit card banks desired.

Lower income people often use credit cards to buy food, pay the rent and pay for heating and gasoline because they run out of money before they run out of days in a month. Then, their credit card debt piles up and they cannot make the minimum monthly payments. The predatory credit card banks make the situation worse by charging the poor people added fines which in time more than double the amount originally owed.

Credit card banks charge fines if a payment is late a few days. They are not under a contract to stick to the original interest rate charged and they can increase the amount of monthly payment, although the Comptroller of the Currency is supposed to have authorized a doubling of the minimum credit card payment in 2005. This suggests that federal office may have control over the minimum monthly payments. Finally, a credit card bank can declare a borrower to be in default and then the bank demands the entire debt be paid in full all at once. Last, collection agencies, acting for the banks, come after the small amount of money and the few possessions the poor people have. These practices are exactly the kind of thing that Exodus 22: 25 forbids.

Inflation, especially in food and energy costs, hits low income people hard. One of the reasons for inflation and the lowering of the buying power of the dollar is the constant increase by the Federal Reserve in the money supply. According to the last published data from 16 March, 2005, M3 has been growing at an annual rate of over 8.22%. As of 16th March 2006 M3 was $10,336.3 billion. A year earlier, on 14th March 2005, the M3 was $9,550.5 billion. M3 is a kind of total money supply measure. This data is from: http://en.wikipedia.org/wiki/Money_supply

Lower income people spend a very large percentage of their income on food, rent, gasoline and heating costs, and when these costs go up due to inflation at a rate a lot higher than the "official" 3.55 percent, the people have to resort to the use of credit cards or go hungry and cold. The percent of families at the lowest income level holding credit card debt doubled from 15 to 30 percent between 1989 and 2001. See http://chervokas.typepad.com/trickster/2005/03/id_gladly_pay_y.html

With the lack of increase in wages and job growth nonexistent for the lower income level families, it is so hard for them to get out of debt that many will not be able to pay off their credit cards. Usury and penalty fees take a percentage of the income of the poor that they cannot afford to lose to the credit card banks. In addition, the lower income people have stopped saving, like many other Americans.

Not only have lower income Americans increased their credit card debt in the last decade, but so have the elderly, and many of them are poor. See: http://www.smartmoney.com/consumer/index.cfm?story=20040311 March 11, 2004

"According to the study, nearly one-third of senior citizens in the U.S. carry card balances. Within that group, the average debt is $4,041 — an 89% increase over the past decade"

"People aged 65 to 69 saw their credit-card balances grow by 217%, to $5,844, during the decade... The rate at which retirees are filing for bankruptcy has more than doubled over the past 10 years...Retirees are now the fastest-growing segment of bankrupted Americans, according to research by the Consumer Bankruptcy Project at Harvard University"

"Seniors who are having trouble making ends meet are increasingly using credit cards to pay for basic necessities, says Steve Rhode, founder and former president of credit-counseling agency MyVesta." And the credit card banks are probably targeting elderly people.

Because Christian leaders and ministries are role models for Christians who follow them, these ministries should not accept credit cards, and should be criticized if they do. For example, I found that Family Radio, under Harold Camping, and Texe Marrs, accept credit cards as payment to their ministries.

Ezekiel 22: 12-21 notes that usury practiced in Israel, or Judah, was one of the sins of the "princes of Israel" which brought down the severe judgment of God. In Ezekiel 22: 12 there are two specific sins mentioned, taking gifts to shed blood and usury. Verses 13 through 22 describe the Lord's anger at these sins and his punishment upon the nation of Judah.

Could rampant governmental and individual debt, including massive credit card debt, be a judgment of God on America for turning away from his truth as Deuteronomy 28: warns? In Deuteronomy 28: 15 it says that if a nation does not obey God, then "all these curses shall come upon thee..." One of the curses listed is in verses 43-44, is that the stranger who lends money to "thee" will get up above 'thee" and "thou" shalt come down very low."

The overall credit card debt in the U. S. was $273 billion in 1992. It's more than $800 billion today. This is from: http://www.cbsnews.com/stories/2005/11/30/eveningnews/main1088425.shtm

According to the Washington Post, January 25, 2004 "The average household now carries about $9,000 in credit card debt. From: http://www.washingtonpost.com/wp-dyn/content/article/2004/01/25/AR2005033106715.html

The following web site also says the average household credit card debt in 2004 was $9,000. http://www.fool.com/News/mft/2004/mft04060703.htm?ref=foolwatch June 7, 2004 . "Americans owe three-quarters of a trillion dollars in credit card debt. The average American household with credit cards owes about $9,000, according to CardWeb.com. Worse, the average U.S. household with cards pays about $1,100 in credit card interest alone per year."

Again, at http://www.click2houston.com/money/4170962/detail.html they tell us that "In 2004, the average credit card debt per household was a startling $9,000. If you subtract out those who pay off their credit cards every month, the number rises to a jaw dropping $17,000 per household."

A Study On Credit Card Debt

The Center for Responsible Lending did a study with 1,150 interviews of low and middle income people. It is called The Plastic Safety Net: The Realities Behind Debt In America, 2005. The study was done in 2004 or 2005.
It is reported at: http://www.demos-usa.org/page38.cfm They report that credit card debt has almost tripled since 1989. They found that the average credit card debt of low and middle-income households in America was $8,650; One-third of households had credit card debt over $10,000.

Their survey asked respondents whether they had used credit cards in the past year to pay for basic living expenses, such as rent, mortgage payments, groceries, utilities or insurance, because they did not have money in their checking or savings account. One out of three households reported using credit cards in this way, saying that they had used credit cards to cover basic living expenses on the average four out of the last 12 months. Households that reported losing a job sometime in the last three years and being unemployed for at least two months were almost twice as likely to use credit cards to pay for basic living expenses. Households who used credit cards for their basic living expenses had lower levels of savings and higher credit card balances than households who did not use credit cards to pay for their basic expenses.

They report - contrary to the idea that people often use credit cards for unnecessary items - that "Our ?ndings illustrate that most debt-stressed low- and middle-income consumers are trying to cover unavoidable expenses, not discretionary purchases."

The report says that forty-seven percent of households had been called by a bill collector. A little under half had missed or were late with a credit card payment in the last year, with nearly a quarter of households reporting paying a late fee at least one or two times in the past year. Having to pay a lot of late fees makes it much more difficult for low income people to pay off a credit card debt. Late fees at that time ran from about $30 per month to $39. Often credit card banks will drastically raise their interest rates in addition to charging late penalties, and the higher interest rates make it very hard to pay off the debt. Credit card banks will penalize cardholders for late payments by increasing the interest rate on the account two- or three-fold, often after only one late payment. A household with the average credit card debt of $8,650 would have had to pay an additional $1,100 in interest if their rate was raised from about 12 to 25 percent.

In addition, there is also the default practice of credit card banks, such that when the cardholder defaults on another credit card or on any loan, the bank will raise his interest from perhaps 12 to 25 or 30 percent.

Again, the authors of the report state that "Despite the common perception that families use credit cards to acquire luxury items and "live beyond their means," our research has demonstrated that a sizeable majority (71 percent) of low- and middle income families depend on credit cards to pay for basic living expenses or to deal with unexpected ?nancial emergencies."

They tell us that "The exponential growth of credit card debt has taken place in an economic context that breeds uncertainty for households. "Income volatility"—fluctuation in family incomes—almost doubled in the last two decades of the twentieth century. At the same time, wages have been stagnant."

"Rather than being a constructive financial tool, credit card debt can result in a downward financial spiral. Consequently, our nation cannot be complacent about the costs and risks associated with credit card debt. Credit cards are no substitute for adequate wages..."

And, they get to the heart of the credit card problem in saying "Deregulation of the credit card industry has created an environment where credit card companies can construct the terms, rules, and practices of the credit card agreement without meaningful regulation. These new and complicated revenue-generating practices often fall harshly on the backs of those consumers who can least affordthem...Too often, the pricing strategies of credit card companies make it more likely that a family will endure persistent and burdensome debt, with little chance of paying or keeping down their debt. While regulating credit was once the province of the states, deregulation and federal pre-emption have left states with little authority to regulate credit card practices - making federal policymakers bear the responsibility for reforming credit card practices." But the federal policy makers are under the influence of the financial elite and the credit card banks.

One of the credit card bank problems that has developed in the current climate of deregulation is the over-use of late payment fees. This report finds that nearly a quarter of households reported paying a charge for a late payment at least one or two times in the past year. They say that credit card banks expected to collect $16 billion in penalty fees in 2005.

Then they inform us that "Families are using credit cards to cope with rising costs, stagnant incomes and the lack of alternative safety nets. The findings of this survey indicate that for many low and middle-income households, credit cards are the primary safety net available to weather job losses and deal with unexpected expenses. In borrowing to make ends meet, these households are further draining their resources as they struggle to pay down their credit card debt, often inundated with high interest rates, excessive penalty fees and capricious contracts terms."

They introduce the concept of the income/debt ratio, apparently dividing the credit card debt by the household income to get a ratio. The higher the ratio, I would think, the higher the debt-stress. If the household income was $20,000 a year, and the household had a credit card debt of $5,000, the debt-stress would be .25. If the household income was only $10,000 and the credit card debt $5,000, the debt-stress would be higher, or .50 In their study the mean debt-stress ratio they say was 0.21, which is fairly high.

The report goes on to say that "It is consumers who taken on credit card debt to cover basic living expenses, medical expenses,or home repairs, or to cover expenses after a layoff in their family, who are most likely to have higher levels of "debt stress."

Tricks Used By Credit Card Banks To Steal Our Money

The following can be seen at: http://www.bcsalliance.com/x_creditcardtricks1a1.html

1. Late and over the limit penalty fees charged to cardholders now account for more than half of the income of credit card banks according to the site listed above.

A few years ago the penalty fee for a late payment was only $10. Now it is $39 for most credit cards.

2. To trick people into paying late some credit card banks have changed the due date so that more checks will come in late and the bank can hit the cardholder with a late fee of $39.

3. If a payment is late two or more times, the interest rate on a card is often raised to as much as 31 percent. In addition, some credit card banks have raised interest rates from around ten percent o 25 percent or higher - without giving the cardholder any excuse at all for doing so.

4. First USA credit card bank used the tactic of not mailing out statements at all to trick cardholders into sending in late payments.

6. Another dirty trick is to raise the interest rate to a very high level because the consumer is said to be carrying too large a balance. Citibank has done this.

6. The universal default scam is also used by many or most credit card banks. If a borrower is late just once with a payment on some other credit card, home mortgage or auto loan, the credit card banks use this as an excuse to drastically increase the interest rate.

7 Deceptive advertisement is also used by credit card banks. A bank may advertise a low interest rate but only a few people can qualify for this low rate.

Or, a "fixed rate for the life of the balance" may be promised to lure people into transferring balances from other credit card banks. After the balance is transferred, the interest rate is raised considerably above that promised as a "fixed" rate.

Lawsuits Against Credit Card Banks

This information is also at: http://www.bcsalliance.com/x_creditcardtricks1a1.html

Because First USA changed the date due for payment to trick cardholders into paying late a class action lawsuit was brought against the bank.

A class action lawsuit was brought against Chase credit card bank for not posting payments on time as required by federal law.

Providian credit card bank was sued for overbilling its customers. The court hit Providian with a $300 million judgment.

A class action lawsuit was brought against Advanta credit card bank for guaranteeing a low interest rate and then charging customers a higher rate.

Capital One was sued for charging late fees when credit card payments were mailed in two weeks before the due date.

MBNA, now part of Bank of America, was sued for cheating customers in improperly charging late fees.

However, these lawsuits were all civil actions and did not result in any change in the federal laws regulating business practices by credit card banks. A credit card bank that lost a class action lawsuit in federal court could have continued to carry out the same dirty tricks for which it was sued. In addition, the class action lawsuits did not usually bring in any substantial money to cardholders because the attorneys got must of the money from the judgments.

The Huge Number of Complaints Against Credit Card Banks On the Internet

Consumer Action testified before the Senate Banking Committee May 17, 2005 using complaints it received from credit card consumers. This is at: http://banking.senate.gov/_files/sherry.pdf

A Bastrop, Texas woman complained to Consumer Action that AT&T credit card bank had raised her interest rate from 12.9 percent to 28.7 percent because of a late payment to another credit card bank.

In this article Consumer Action says that thirty-nine complaints about the universal default trick were attached to their testimony to the Committee.

Consumer Action reported that in 2004 the average late payment fee was $27.45 with some major credit card banks charging $39 even then. Now most banks charge $39. Consumer Action says "With average monthly minimum payments of 2 percent of the balance, the late fee on a $2,000 balance would be double the minimum payment. This is outrageously excessive."

Then they say that "Even people who try to make timely payments will be hit with a late fee if their payment was delayed in the mail. We hear from many consumers who allowed seven days to post a payment, yet the bank still assessed a late fee. Banks should consider post marks when posting payments."

Consumer Action received a number of complaints about credit card banks raising their interest rates to excessive levels without any excuse.

The following complaints against MBNA/Bank of America are from: http://banking.senate.gov/_files/sherry.pdf

Some MBNA/Bank of America cardholders complained that they accepted offers of fixed rate of interest for the life of a balance at low interest rates (3.99 percent in one case), but the interest rates were changed to a rate of 25 percent or more without any excuses. Other consumers say that MBNA/Bank of America raised their interest rates from around ten percent o 25 percent even though they paid on time.

Consumer Action at http://consumeraffairs.com/news04/2005/mbna_interest.html
lists many additional complaints against MBNA/Bank of America.

MBNA/Bank of America raised the interest rates of many of its customers from about 8 percent or higher to 27 percent in many cases.

Consumer Affairs in this article reports that high credit card debt, increasing interest rates, dirty tricks and extra penalty fees led many consumers to file for bankruptcy.

They say credit card banks have demanded payment from dead family members who usually have no legal obligation to pay the deceased's debts.

Robert on Feburary 2, 2004 complained that MBNA/Bank of America raised his interest rate from around five percent to 22 percent. He says "My monthly payment is $317. the finance charge is $234.86 which means only $82.14 goes to the principal."

Here is a report on complaints against Bank of America credit cards by Consumer Affairs at: http://www.consumeraffairs.com/news04/2005/mbnbofa.html

They say that Bank of America credit card division, like MBNA, which it acquired in June of 2005, is drastically and irrationally increasing interest rates, and charging many late fees, often without justification.

Bank of America has offered its Visa Platinum card, Consumer Affairs says, at a low interest rate to transfer balances from other credit cards, and then raised the interest rate to 17.99 or even as high as 31.99 percent.

The Wilmington, Delaware-based MBNA credit card bank had been charging high interest rates, not living up to promises of "fixed" rates for the life of a balance, charging late fees upon fees and interest on fees. So many of its cardholders were closing their accounts with MBNA that its quarterly profits in April of 2005 had dropped 94 percent (according to this Consumer Affairs article). See www.consumeraffairs.com/news04/2005/bofa_mbna2.html

Bank of America then acquired MBNA in June of 2005. But now Bank of America has taken over the dirty tricks of MBNA, substantially raising interest rates, charging late fees too often, using bait and switch sales tactics, and not living up to promises of "fixed" rates for the life of a balance.

Consumer Affairs says Bank of America changed due dates to six days earlier to lure cardholders into sending in late payments. They then charged them $39 late fees each month and sometimes drastically raised the interest rates.

Tim on February 1, 2006 complains that Bank of America lowered is credit card limit and then raised his interest rate to 31 percent. Tim writes that "It seems it is not morally right or ethical for a bank to change its interest rate and/or to lower a limit below your current limit and then fine you for being over that limit. Also, their collection agencies have called even though I am paying more than the minimum."

Veronica complained to Consumer Affairs on January 20, 2006 that she had heard that credit card banks were going to double the minimum payment without informing their customers. In October of 2005 she called the Bank of America Customer Service and was told Bank of America was not going to double minimum payments and if they did they would send out a letter to notify customers. But in December of 2005 Bank of America did raise the monthly minimum payment to 4 percent of the balance, up from the previous 2 percent. Veronica says of Bank of America that "They lie and they do not stand by what they say."

Jason on October 26, 2005 says Bank of America charged him late fees of $39 and raised his interest rate. he says " I've had it with these corporate thugs who view their jobs like its some kind of religion and the Bank is always right."

On September 11, 2005 Kelly complains that Bank of America got him to use a convenience check at what they claimed was to be 1.9 percent and then raised his rate to 31 percent. He says "I'll never make this mistake again and shame on Bank of America treating their customers like that."

Vivian on September 11, 2005 tells Consumer Affairs that Bank of America charged her several over the limit fees, though she was not over the credit card limit. But the higher interest rate they slapped on her did bring her over the limit. She says "This certainly isn't ethical, so how can it be legal? Its not illegal because the federal government has taken over the control of credit card banks from the states. And the federal government ether has no laws regulating credit card banks or it does not enforce them. It seems that older contract law is no longer enforced by federal or state courts.

Marta, a senior citizen, on August 27, 2005 says she paid off her card each month and did not carry a balance. Nevertheless Bank of America charged her a $39 fee and put her into a "penalty phase' with a much higher interest rate. She says "This is the most blatant case of unethical business practices I've ever encountered...Don't fall for these zero percent scams as they will get you. At least they can't continue to steal my money since I've closed the account..."

On The Rip Off Report at http://www.ripoffreport.com/reports/ripoff186921.htm
there are other complaints about dishonest practices of Bank of America, many about excessively high interest rates (31 percent in some cases), and late fees.

The same type of complaints are found on the Internet against Citibank, another large credit card outfit. Some of these complaints are on http://www.badcreditcards.org/CITIcomplaints.htm

Citibank lowered the credit limit below his balance for one cardholder and then charged penalty fees.

After paying on his credit card account at Citibank for years and paying it off each month, they then raised one cardholder's interest rate to 28.99 percent. He says "I've paid the late fees, but they continue to charge more penalties...I can't believe they can legally get away with this type of business practice." They can get away with it because the federal government has, in effect, taken away the right of the states to regulate credit card business practices and the federal government then allows credit card banks to do pretty much what they please.

Citibank has been caught with the old scam of offering a fixed APR for transfer of balances (of perhaps 3.99 percent) and then raising the interest substantially (to 17.99 percent for one customer). This customer of Citibank says "These people are like dealing with street level con men. They manipulated my account without notifying me - up'ed all the rates, fees and charges for over six months and they suddenly notified me that they were going to send my account to a collection agency...And after I paid their fees to keep my record clear - they billed me again." It goes on and on.

GC SERVICES COLLECTION AGENCY

Credit Card Banks Turn Accounts Over To Collection Agencies

Bernard Pyron

Finally, a credit card bank can declare a borrower to be indefault and then the bank demands the entire debt be paid in full all at once. Last, collection agencies, acting for the banks, come after the small amount of money and the few possessions the poor people have. These practices are exactly the kind of thing that Exodus 22:25 forbids.

In addition, GC Services headquartered in Houston, Texas but with offices all over the nation, one of the larger collection agencies credit card banks used to go after the assets of card holders who have been declared to be in default is unscrupulous in its practices toward those who it targets. The federal Fair Debt CollectionPractices Act forbids collection agencies from calling people before 8 AM or after 9 PM, says they must not call employers, relatives or others to harass them, and must not make false statements to threaten people. Yet on the Internet there are numerous complaints that GC Services violate all these rules. http://ripoffreport.com/reports/ripoff88845.htm

The federal Fair Debt CollectionPractices Act authorizes courts to force collection agencies to pay attorney fees, though the total judgment allowed to the person harrassed is only $1,000. Civil cases under this law can be brought in eitherstate or federal courts. See http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm813. Civil liability [15 USC 1692k]