Bloomberg is reporting that credit contraction for July was $21.9 billion instead of the economists predicted contraction of just $4 billion and I can tell you the unintended consequences of banks stupidity and greed.

I am now, almost weekly, getting credit card balance transfer offers for either 0% or 0.99% APR on balance transfers but with some huge caveats.  First, the balance transfer fee is 4% almost across the board so if I did a 25k balance transfer I’d be hit with a $900 fee JUST for transferring.   That’s bad enough but the bank can also renig on the deal whenever they want so who’s going to pay a $900 fee on the premise that the APR for the balance transfer might now skyrocket the very next day?  The new credit card rules prevent changes to fixed interest rate cards not variable so it’s a no-brainer not to go down this road.

Secondly, I know many people that have stopped using credit cards altogether because of the high interest rates.  Many people have been rate jacked, including 700+ FICO consumers of which I recently posted and received a few comments on here.

Third, I think banks have lost a great deal of the “trust” factor and it’s not coming back anytime soon.  I have little intention of ever borrowing arbitrage money again from credit cards.  Like any sensible person, I’ve moved on to student loans locked in at 5% APR with a max cap of 9% and that’s really the new safe arbitrage and way to borrow money.

And the revolt has begun….