Posted on 03/05/2005 8:50:28 PM PST by drt1
Amen.
The borrower is servant to the lender. period.
NO ONE forces someone to get a credit card (or ten) and open up lines of credit in your or jointly in your name.
At what point does someone think it's a "Good Idea" to buy and spend more money than they make/have ?? What dumb-ass really thinks "I don't have to pay for the items/services/vacations/clothes/cell phones/and ANYTHING else" that they "just had to have" ??
You don't Drown by falling in the water, you Drown by STAYING THERE.
Everyone of those people are where they are by there own "Bad Habit" of Using Credit Cards constantly, AND then not taking responsibility to pay there debt back. They are the last ones to pay there bills, but the first to file bankruptcy AND expect someone else to pick up the tab.
Ummmm.... there are tons of people signing up for variable interest home loans. They're gonna be squealin' like pigs when the interest rates go back up, and I am sure there will be all kinds of stories like this one explaining how the evil mortgage company tricked them into taking that enticing lower variable rate over the higher, but fixed, rate.
The problem is in the fine print. Virtually all of these cards have very, very onerous penalties and interest escalation provisions that are purposely concealed from the Holder. Some of the examples in the article demonstrate how disastrous for the Borrower these provisions are AND how lucrative these (IMO) unethical arrangements are for the Lenders.
Agreed. Dave Ramsey bump!
My car loan, through 5/3 Bank (why the heck would a bank have an improper fraction as their name???), I pay in person at the local branch. After they totally screwed up our change of address last year (they changed the city but left the street the same!), tried to assess us late fees and gave us a huge hassle, I always pay at the branch. That way I've got a dated, stamped receipt in my hot little hand.
Its a minor incovenience, but the peace of mind is worth it.
Exactly. I wonder how people advising others to be deadbeats would feel if the shoe was on the other foot, and their boss/client/etc., decided not to pay them...
1) IT is not the Credit Company's fault that people get into high debt loads. If someone did not want to be debt ridden with credit cards then just do not get one. It is that simple in theory, but people always get suckered into it.
2) The only issue i have with Credit Card companies is when they set up shiop on college campuses and hand out cards to students (often with a, scoff scoff, 'free' t-shirt and some pizza coupons). That is wrong, since these kids do not understand the first thing about money, interest and debt. Hence this is one area i would stand against the Credit issuers 100%. It is exploitation.
3) However the rest of the game is legit. If a eprson has 8 different cards, each of them having 3,000 dollars, it is that person's fault for not limiting their spending. Those Nine West shoes or shiny Lawnmower could wait.
Hence, although i am against credit companies setting up shop in college campuses and luring wet-behind-the-ears freshmen into signing contracts in exchange for t-shirts, i would say that apart from that the credit companies are well within their rights. If a 30yr old decides to apply for his.her 9th credit card, that is not the credit issuers fault.
Agree that she was ignorant. The CC Companies took full measure of that ignorance and had a field day. I have a problem with an industry that depends on consumer ignorance or distress for the lions share of their profit. I also have serious problems with their marketing tactics, to College Students, to those who are obviously not qualified for an unsecured loan, etc., etc.
As I said in a prior post, I am all for the free market System but I'm astute enough to recognize when it goes wrong, becoming excessive and oppressive. IMO this is an instance of that.
PS, I have no credit card debt. I use them for 10% off Hess Gas, air mileage and to track sales tax for my Federal Tax deduction.
Well, there is that, but I was thinking of something else...and this is difficult to express without coming off like a moralizing creep or a goody two shoes. Trust me, I'm neither.
But I firmly believe there are lines in life that you don't want to cross. Once you cross them, either nothing happens or it's like stepping over the edge of a cliff.
Over the past decade I've seen far too many decent people cross lines that shouldn't be crossed and find it distressing.
I beg to differ there. That's how I got my first credit card. After the first or second late fee, I learned that the bank likes to be paid on time (just as I do when I'm owed money), and it hasn't really been a problem ever since.
Of course, they only gave me a $250 line of credit to start, so it was hard to get into too much trouble.
Not really: they are very good at hiding the conditions under which the interest and/or acceleration clauses are triggered.
In other words, people are being told they are entering into a legally binding contract for a loan in which the other party may change the repayment terms (length or term, interest rates, penalties) at any time in any manner for any reason.
It seems to me you'd have a good legal case of intent to defraud and/or disproportionate bargaining power on the part of the credit card companies and could try to get the contract or increased costs nullified.
"marketing practices" = intent to defraud
What's good for the goose is good for the gander: if the cc issuers use deceptive practices and make high risk loans, they should expect to take the losses in bankruptcy court.
The Free Market requires, among other things, complete knowledge and disclosure as well as an equitable standing between the parties. These CC Companies set it up so that the high rates and penalties kick in at exactly the time when these conditions are not present and therefore, IMO, most of these arrangements do not meet even these basics. Following, I would not characterize them as having rates established by the 'Free Market'
There is something wrong in offering credit cards to people fresh out of highschool, people that think credit cards are free money. While financial education could easily be taught in highschools and/or by families, it rarely is. Thus most kids starting off in college are just lambs to the slaughter when it comes to credit offers. Especially once they see the free t-shirts, free magazine subscriptions, and pizza coupons.
When i was in college i personally voted in student council to throw the companies off campus, and it passed and they were kicked off. But what they did was to simply set up shop across the street from the main entrance in one of the many restaurants making the college town.
Anyways, i am not one to blame the credit companies for the spending habits of their customers, but i would never accept offering credit cards (with a lot of fanfare and freebies) to freshmen as appropos. Most of the kids, even though they got high SAT scores, never know what hit them!
I would not characterize them as having rates established by the 'Free Market'
And, you would be right. There is nothing moral about these Shylocks. They pay lobbyist big bucks to limit their free market exposure.
The conclusion from the article:
Credit card use continues to grow, with an average of 6.3 bank credit cards and 6.3 store credit cards for every household, according to Cardweb.com Inc., which monitors the industry. Fifteen years ago, the averages were 3.4 bank credit cards and 4.1 retail credit cards per household.
Despite, or perhaps because of, the large increase in cards, there is a "fee feeding frenzy," among credit card issuers, said Cardweb president and chief executive Robert McKinley. "The whole mentality has really changed over the last several years," with the industry imposing fees and increasing interest rates if a single payment is late.
Penalty interest rates usually are about 30 percent, with some as high as 40 percent, while late fees now often are $39 a month, and over-limit fees, about $35, McKinley said. "If you drag that out for a year, it could be very damaging," he said. "Late and over-limit fees alone can easily rack up $900 in fees, and a 30 percent interest rate on a $3,000 balance can add another $1,000, so you could go from $2,000 to $5,000 in just one year if you fail to make payments."
According to R.K. Hammer Investment Bankers, a California credit card consulting firm, banks collected $14.8 billion in penalty fees last year, or 10.9 percent of revenue, up from $10.7 billion, or 9 percent of revenue, in 2002, the first year the firm began to track penalty fees.
The way the fees are now imposed, "people would be better off if they stopped paying" once they get in over their heads, said North Carolina bankruptcy attorney T. Bentley Leonard. Once you stop paying, creditors write off the debt and sell it to a debt collector. "They may harass you, but your balance doesn't keep rising. That's the irony."
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