Posted on 05/20/2009 4:28:09 AM PDT by GOP_Lady
Sweeping new restrictions on credit-card companies would ban extra fees and fluctuating rates and arm tens of millions of consumers with more information on their debts.
Starting in February 2010, a Senate bill passed Tuesday would ban practices such as charging consumers to pay by phone and sudden surges in interest rates. Payments above the minimum due would be applied to balances with the highest interest rates. Information once relegated to tiny print must be made clearer, and consumers will soon be told how long it would take to pay off a balance if they pay only the minimum due.
(Excerpt) Read more at online.wsj.com ...
The interest rates will increase for everyone to be “fair”.
Remember when credit card interest was deductible. Is Obama going to add a government “fee” to our accounts??
This will simply make it more difficult for marginally creditworthy consumers to get credit.
Who cares? The way the Credit Card Industry is headed, by Feb ‘10 there won’t be a CC industry...
I know many people who will be happy to see this type of government control.
The problem was not the credit card companies/banks but people living way beyond their means. If this were not the case they could take their business elsewhere.
It’s not good news if freedom is what you’re after.
When the governmnet “lightens your load” in one instance it doubles, triples, or quadruples it in another.
When is Timmy The Wunderkind going to begin printing warning labels on US Treasury bonds: 'Warning This Currency Is Being Devalued Before Your Eyes"
Sounds like a good plan to me. They will have to save more, pay their bills on time, and build a good credit rating.
Another example of redistributing wealth and scr...... responsible people who pay their bills on time etc...
I’ve always wondered about the legality of increasing the number of frequent flier miles needed for a trip. If they can raise the requirement from 25,000 miles to 35,000, it seems to me that they could raise it to a billion miles, thus rendering worthless all those miles we’ve collected.
No, that's not necessarily true at all. In the past, I've been in situations (major car and home repairs, medical bills, and wholly unexpected college/university fees) in which I would have been royally screwed if I did not have a credit card to back me up.
The credit card companies are in fact THE problem, with their fraudulent lending and pricing policies, and countless pitfalls, any one of which leads to major fees and interest rate hikes at usury levels, courtesy of those fine-print "Important Amendments" we all get in the mail from time to time. The whole system, as it is now constituted, is one big debt trap.
Having been screwed myself by my credit card issuers in the past, I actually agree with Obama on the need for this legislation because this industry is wildly out of control, with prior congressional complicity (Kennedy, Biden, and Dodd).
Sorry to burst some bubbles on this thread, but even a clock is right twice a day.
I like the disclosure info, but whenever something is changed quickly like this, the “Law of Unintended Consequences” will kick in and cause problems.
Same thing with the new mileage and emission standards.
I have two credit cards.
I have no problem with the two companies at all.
They have treated me very well for years.
Am I an exception?
This will probably hurt the cc industry more because by raising the interest rates at usury rates the people who can afford to pay will just wait and pay cash. So raising the rates on these people may work for the first couple of years until people pay their debt off, then people will shed the cc and start paying cash. The cc industry will shrink (which is a good thing) less users who can afford to pay their debt and less fees from retailers.
Though I pay my CCs off every month and do not carry a balance I do not have a problem with these consumber protections.
CC companies should still have the right to charge the appropriate level of interest based on credit risk. They just crossed the line by screwing everyone.
I agree.
I agree
They're not allowed to do this now? There are lots of gas stations around me that charge about 4 cents per gallon less if one pays with cash.
ML/NJ
What I really resent is when you pay off a credit card and close the account, your FICO score drops. That is simple wrong and should have been addressed by this legislation.
You might when credit card companies eliminate the float or cancel rewards programs because of this legislation. This is no different than the housing stuff--the burden has been shifted from irresponsible consumers to responsible consumers, and now we'll have to carry the water for people who chose not to themselves.
Your unexpected expenses are not that much different then mine have been over the years. I’ve used credit cards for over 30 years and never fallen into such a debt trap. When a particular credit card issuer would notify me that it was unilaterally changing terms (and this did happen at least twice), I would respond by canceling the card and moving to a different issuer. My credit rating was such that I never had trouble moving to a better deal.
Unsurprisingly, the article doesn't understand the finer points of credit card merchant agreements, or, perhaps, the Senate doesn't understand it either. Either way, no surprise.
There is no prohibition to a merchant offering a cash discount to a person that chooses to pay with cash instead of a credit card. It must be advertised as a cash discount. What is prohibited, on the other hand, is charging an additional fee for use of a credit card. While it is two sides of the same coin, the credit card companies see it differently.
Incidentally, there are a lot of these rules that get completely ignored. For instance, a fairly common practice among smaller merchants is to have a minimum charge for credit card use--this violates the terms of the merchant agreement and if the credit card companies found out, the merchant could lose its ability to accept credit cards.
I have had numerous problems with a credit card company that I have(Read Bank of America). Once, in spite of making a payment online on time, the computer system said it would not take my payment “at this time,” thereby forcing me to schedule a later payment and it became late. If one wants to argue a ridiculous notion of “should have sent it earlier,” well no, I shouldn’t have, that’s why there is a due date in the agreement, although I eventually resolved the problem, it was a mess to sort out.
Additionally, my rate was raised without my knowledge, and no indication was given on my bill that my rate would increase. (This was later, not related). Then, because the rate was almost doubled, the interest put me over my limit, further raising my rate and giving me an “over the limit” fee, which took hours to resolve. These credit card companies have ridiculous practices, and there are all kinds of other stories I could tell. I moved to cash about 2 years ago, paying off my last card (I inherited about 10 when I married 1.5 years ago, they were closed first).
I will happily never use one again, probably in the direst of emergencies, medical rates are lower anyway, and I have found in the meantime I can live without a vehicle easier than I can pay down usury-like interest rates, which can vary on a whim. Want more stories, I’m full of em’.
In my opinion this is not a bad thing, but the law of unintended consequences may or may not be in play. If the effort is to socialize, you may well see quite-intended consequences.
They have had the ability to rewrite your agreement every year. Given to them by the same dufers like Dodd and Schumer who are stumbling over themselves to reach a microphone and claim credit for fixing it.
Credit card companies & banks are the new mafia.
Stay with small local banks and run like hell from chase, wells fargo and citibank.
This is correct. It violates the terms of the agreement to have either a minimum charge or a credit card fee, but often goes unreported.
The credit card industry has no business complaining. Their methodology has been anything but straight forward- which has resulted in an image that they actively try to trick their customers and then hit them with super high interest rates. That’s called usury and it’s immoral.
You probably are. I’ve had several accounts over the years. Discover is the best. BoA and MBNA were the worst.
Exactly correct. Damned if you do and damned if you don’t with the FICOs.
“Senate bill passed Tuesday would ban practices such as charging consumers to pay by phone”
I would like to see them banning the practice of charging for ONLINE payments. Good grief - they don’t even have to touch the 1,000’s of payments processed daily - it’s just “a file” to process. My mortgage company charges $10 for a payment from an account that is not with them. They don’t have any retail outlets in my state. I’ve had a car loan with them that I now can pay online for free. Go figure!
For smaller merchants, these are usually mom & pop establishments I don’t mind the minimum purchase. I understand the reason, the purchase has to give them a minimum profit.
I know this may sound silly, but I LOVE Capital One.
They’ve given me a great interest rate for YEARS and their fees are low.
I second the BOFA. I think also, while people theorhetically should be, they in reality are largely uneducated as to the consequences of using credit and practices utilized by these thugs. I take responsibility, but they’re no saints.
I’ll have to look into them ;)
It was a hard lesson that I have never forgot nor forgiven.
I hate to dissent, but I fail to see how it matters. Running a business (manager), I know that 3% is 3%, whether it is on $10.00 or on $500.00. My family was also in business for about $100.00 years. If one’s profit margin isn’t wide enough to cover the fee at $3.00, I find it unlikely to do so at $100.00. I may just be ignorant, but I have never understood the philosophy.
In all sincerity if someone cares to explain their logic behind it, I’d be open, but I’ve never been able to figure it out.
I am so grateful I no longer have any credit cards that I carry a balance on! FREEDOM ROCKS!!
All the dollar signs, sheesh. Our business was open for about 100 years. ::sigh::
I’ve been with Capital One for at least ten years, and they only raised my interest rate ONCE (the rate really was too low).
“Having been screwed myself by my credit card issuers in the past,”
No one can be screwed by a CC company if they pay their bill 100% on time every month.
Anyone that carries a balance deserves to be charged a hugh intrest rate.
I think the "Unintended Consequence" will be that interest will be charged from the time of purchase. That is every credit card user will pay interest even if they pay off their bill as soon as they receive it. This will lead to a significant drop in credit card usage which will have a depressing effect on spending. This would normally be deflationary but the central planers will do whatever they can to obscure the evidence and destroy the currency instead. Have a nice day.
ML/NJ
I know you know your stuff. I agree with you first premise, but I don’t know about deserving a huge interest rate, although, I certainly understand you’re thrust.
I think people deserve to know what their getting into, not deserve turning themselves into debt slaves, but I also don’t necessarily agree it’s the CC companies’ job to educate them.
Another classic example of the Government in solving one problem, create 3 or 4 more other problems as a result. The card companies will simply make up the difference in other even less friendlier ways. Late and over limit fees increase, card holders who pay off their balance each month may be charged an annual fee. Interest rates increase across the board. And say goodbye to perks such as cash back, or flier miles.
“I think the “Unintended Consequence” will be that interest will be charged from the time of purchase”
That’s simple, just cancel the CC and pay everything in cash.
A CC is nothing but a convience card anyway and will only make checkout lines longer.
I’ll just get 500 or 1000 everytime I go to the ATM instead of 200 I get now.
Get your cards through your credit union and only use them for emergencies and pay them off every month and they are not a problem.
If I don’t have the cash on hand to pay the bill totally then I can obviously not afford whatever it is I am using the card to buy.
(Of course some medical type situations may arise but even these can be worked around)
“I also don’t necessarily agree it’s the CC companies’ job to educate them.”
The terms are very clearly laid out in the CC agreements.
Most people are too lazy to read them.
Most people are too stupid to read what they sign and deserve to be had more than they are!
Do debit cards have a fee to use or interest? Or the cards that draw direct from your savings/checking accounts? I’ve never used either, but if they start charging interest on purchases from the time of purchase, I’m sure a lot of folks will.
I’ve used credit cards for almost 20 years now, carried a balance at times, missed payments once or twice (when I was much younger), and used them in emergency situations. Not once did I feel I was screwed by the credit card companies.
I just said i didn’t mind, if a mom & pop business asks for a minimum of $30 in purchases to use a credit card, I don’t get my panties in a twist. If I don’t like the policy I shop elsewhere. These are usually stores I frequent often that provide good prices on their product to make it worthwhile for me to shop there. This policy helps them provide good value to their customers. I get to keep my $3.00. Why pump up your prices to lose customers to give to the cc companies?
Paying bills on time is a big part of good relations with a credit card company....AND YOUR CREDIT RECORD. I have no problems with my two either.
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