Posted on 10/18/2008 6:58:57 PM PDT by RKBA Democrat
You want the credit card company to stop you from shopping?
What ever happened to personal responsiblity.
So let’s recap just what CBS is whining about:
- Even though I (and anyone else who manages to actually pay his debts) am getting credit card offers by the boatload, the lowest-common-denominator “pre-approved” offers are finally decreasing in quantity, so somewhere someone who doesn’t pay his debts might not keep receiving ready-to-go cards in the mail, so when he maxes his latest one he’ll actually have to put forth the effort to get another one to shift his balance to.
- In a tight credit market, doing things like not paying your bills, carrying large balances, constantly overdrawing your account, and other actions that say “I’m very likely to default on the money you lent me!” may actually make lenders want to lend you less. The audacity!
- Whereas in the past if you called and complained to customer service enough, they’d cave in and drop the charges every time you exceeded your limits or skipped a payment, now lenders are *actually* making the penalties stick when you repeatedly skip out on payments.
As someone recently out of college with a very modest income who makes it a point to buy what he can afford and pay off his balance every month, I’m feel so badly that life is getting ever-so-slightly more difficult for the bums who decide to upgrade their cell phones instead of paying the minimum on their outrageous shopping debt. When O’Teleprompter jacks taxes up even higher, maybe “community” organizers can use the extra money taken from me to help bail out my peers who enjoy throwing away triple the money I do to keep up the same lifestyle they had when Daddy was paying the bills...
Probably by hoping that I trip up and become not so responsible. It is not that important for me actually, I was going to cancel my card if they didn’t give me a better rate. It just gives me options if need access to additional funds quickly.
I don’t carry credit card debt, or car notes either. Except for a very modest mortgage, I owe nothing.
But this move by the banks is going to have temporary adverse affects on the economy.
The economy is largely based on consumer spending as well as the jobs of millions. In addition, this can cause deflationary pressure as credit is a big part of the money supply.
I agree, I think one motivation for them to jack up the interest and fees, is to get a higher percent of whatever gets paid out than the other creditors do.
But I think that in a bankruptcy the credit cards should have to restate the last three years and apply all payments as though only legal interest was charged, with the rest of the payment reducing principle. That way the credit card company could only claim in bankruptcy the principle plus legal interest, they would lose the excess profits from raking people over the coals with dirty tricks. (That might be what you were trying to say, but you said apply to the additional interest first. I say ignore the additional interest and fees.
Okay, that makes cents. Idiots!
They make money even if the user pays in full every month. Vendors pay a 3% fee every time they accept your credit purchase.
There's only one problem. People like Obama - with the help of ACORN - sued banks to force them to make loans to people who couldn't afford the house payments. That set banks up.
I don't know if they did the same thing with credit cards - but it' seems likely. Over 97% of people are paying home mortgages on time. This mess wasn't caused by the middle class...
If you have a lousy score and someone steals your identity, then they cannot get credit using your name. By not caring what your score is, you are free from worry.
I'm on track to pay my cards off, but I'm pretty sure I'll always keep at least one of them. Thanks for the advice above about getting out of debt.
My inclination would have been to apply payments toward the interest and fees, but not allow those things to count against other creditors. I can see that applying all payments exclusively toward interest and fees (until they were paid off) could be unfair to other creditors, but it wouldn't seem right to totally ignore those things either. Though maybe it wouldn't be unfair. True, one could end up in a situation where a credit card company would recover nothing when someone goes bankrupt with $0 in principal and $10,000 in interest, but perhaps that wouldn't be such a bad thing if companies knew that was the rule.
Looks like my plan to never, ever allow the credit card companies to collect a single penny of interest from me is paying off.
Your advice to keep an emergency stash of cash on hand makes a lot of sense right now, esp with money market interest rates at less than 2%. There are a number of reasons, besides the ones you quote, that may require such a stash, regardless of how improbable they are of ocurring.
If things get so bad that credit cards are ubiquitously being canceled, that will hurt the retail business. Retailers will come up with creative ways to peddle products, although the industry as a whole will take a hit. Some stores will offer credit, lay-a-aways (remember those) may make a comeback and preferred customers will be able to write checks or keep some type of tab. I am sure other ideas will emerge.
Aren't they shooting themselves in the foot by making it harder for people to pay off their balances?
No, because they are predatory lenders. As you noted normal lenders and businesses realize that when a customer has trouble paying a debt the best approach to collect the debt is to extend the terms, reduce the interest rate, etc. But that isn't the goal of most large credit card issuers. Their goal is to get the credit card pushed up to their default interest rate and collect the interest for as long as possible. Collecting the principal only cuts their profits, so they want to push the interest rate so high - 33% in some cases now - that the borrower finds it very difficult to pay off the balance.
Of course this has the side effect that it causes great financial hardship for their customers/victims. In some cases their customers choose to default on their mortgages in order to pay their credit card bills, since the mortgage is a non-recourse loan and the credit card debt is. But for the bank, which resold the sub-prime mortgage, they still consider it worth the effort to wring out some more income from their customer.
The banks view the high interest credit cards the same way they viewed sub prime, high interest rate mortgages, as a giant source of profits.
You can guess who ultimately pays for the bailout when their predatory lending schemes go awry.
Ahhhh, saved by the debit card. Some places want the debit card back up with MC or Visa, but it usually works. I use my debit card/visa most of the time. I like the idea of not getting a bill at the end of the month.
Not all credit card companies are banks. Ever see a Discover or American Express branch?
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