Credit Cards in Army

HSBC Credit Card Lending - the Military Concern

HSBC bank, one of the 10 giant financial services organizations, is well known for its wide range of personal financial services, private, commercial and mortgage banking. It is the third biggest provider of sub-prime lending but it is also abundant in good and excellent credit card applications displayed on the market.

HSBC credit card offers are generally designed for various credit consumer groups with individual social and financial backgrounds and up to very recently there has been an overall satisfaction with their services. However, there have appeared a number of complaints relating the bank's policy concerning low-income customers from ethnic minorities and, which is especially disappointing, the US military members.

HSBC has been accused of applying predatory practices towards the US military personnel who are on the watch or duty in Iraq. How is it expressed and how are soldiers affected under the new arrangement which is a serious violation of Servicemembers' Civil Relief Act?

If you have ever heard of the Act, you probably know it is a legislation providing for the ease of the economical and legal pressures on the military personnel who are on the active duty in Iraq (Operation Iraqi Freedom).

In point of credit cards, mortgages and other loans, the Act required companies to restrict interest rates on the balances to a maximum of 6% a year, no matter what part of the military service period a soldier is carrying.

Now, HSBC is reported to be floating the rule and keeping the interest rates too high for most of the military to manage. Thus, they plan to make more revenues from the bad debt interest rates collected with servicemen and women.

Just for comparison, let's take Chase bank that has gained firm recognition among military members for the caps on the interest rates and even abolition of credit card late payment fees.

HSBC, on the contrary, is blamed by soldiers' wives for continuing to charge unmanageable high rates. Once a soldier cannot repay the debt, his account is handed over to debt collection agencies.

The most deploring thing is that the military debts were incurred through no fault of the cardholders - when they were wounded and couldn't make payments - but they were still subject to the tough actions of the debt collectors.

Well, as long as HSBC is quite loyal to its other consumer categories, businesses and students, offering them lowest APRs, no annual fees and frequent flyer rewards, the military sector seems to be discriminated.

So, HSBC's relationship with the US military is declared to be a sham and the servicemen's credit troubles are openly ignored even though these servicemen help to invest the company in the Middle East.

If we restrain from making any undisputed conclusions, we can suggest the following. HSBC is attempting to make more profit in Iraq and Iran at the expense of the US military. But to succeed in their enterprise, the bank needs to have support from the rest of the American consumers.

So, it will continue courting its customers with irresistible credit card terms and various benefits.

Doug Nicholas

Doug Nicholas, a financial consultant by profession with a Masters degree in International Business from Brown University, is also an ardent writer. Though he has a full time job at one of the companies listed on Wall Street, he does manage to squeeze in time to follow his passion. He puts his ideas to words in his articles related to finance and business.