Those stricter rules are one reason credit cards remain so profitable to lenders. But now banks and finance companies are taking the practice a step further. Card issuers are beginning to examine updated reports from independent credit bureaus to adjust the rates they charge customers. That little-noticed technique, which many consumer advocates consider unfair, is triggering the ire of those diligent few cardholders who read the fine print in their card agreements. But McDowell is indignant that it is even a possibility.
Consumer advocates say card companies are going too far.
Card issuers say the more aggressive pricing tactic is necessary, because customers who stop paying other creditors on time are greater credit risks overall. If you take into consideration a person's payment record, it makes sense to look at how they're paying their other outstanding debt. Mierzwinski and some consumer advocates have no problem with card companies periodically reviewing their customers' credit standing. That has been standard practice for years, and helps lenders determine whether cardholders are still eligible for the credit they were given. But he and others vehemently oppose the relatively new practice of raising rates to existing customers based on those credit reports.