Credit card reform

[Pupart]

Last night on Lou Dobbs there was a clip of the US Senate banking comittee hearing on credit card reform being held this week. Harvard Law Professor Elizabeth Warren testified as did Robert Manning who is the suthor of the book Credit Card Nation. I believe people from the Center For Responsible Lending also testified.
I think Democrat Chris Dodd of Connecticut was the haed of this meeting.
He made the comment if the CC co's don't make some changes they will do it for them.
Interesting... I have my dounts that certain practices like Universal Default will be eliminated, because the CC/bank lobby is so big and powerful and donates so much $$$$ but one can always hope.
Bonnie

[vsjhoc]

Here's a link to testimony given at the hearing by Prof. Warren, Dr. Manning, and other speakers.

[creditcardfree]

Dave Ramsey made a comment yesterday..."if you don't like the rules the credit card company plays by...don't use them." That is paraprashed. And it is one approach.

[Pupart]

Originally Posted by creditcardfree

Dave Ramsey made a comment yesterday..."if you don't like the rules the credit card company plays by...don't use them." That is paraprashed. And it is one approach.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

That is good advice, but it still makes sense to have some credit card reform.
Big corporations that are actually writing the laws in the country need some
control.
It's not enough to just say if you don't like the rules, don't play. That is simple and not looking at the whole picture. What if people said, if you don't like drug dealers, just don't buy the drugs.

Too many people are being hurt and held hostage with loan shark fees because they made a foolish mistalke of running up a balance at a certain interest rate, only to have that rate increased because of an unfair policy called Universal Defualt. Their "crime" for this Universal Default to kick in could have been something as simple as being late for a payment to another creditor.
I certainly hope the US government steps in and puts a stop to this gouging of people. There are violent criminals who get lighter treatment that someone who screws up and is held hostage by these greedy credit card co's all because they are not able to pay the balance on an account..
Bonnie

Originally Posted by Pupart

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

It's not enough to just say if you don't like the rules, don't play. That is simple and not looking at the whole picture. What if people said, if you don't like drug dealers, just don't buy the drugs.

yes, that would work, don't buy the drugs.

Too many people are being hurt and held hostage with loan shark fees because they made a foolish mistalke of running up a balance at a certain interest rate, only to have that rate increased because of an unfair policy called Universal Defualt. Their "crime" for this Universal Default to kick in could have been something as simple as being late for a payment to another creditor.

it's not a foolish mistake, it's intentional

when I ran myself into the ground it was my fault, I bought the stuff. I knew what the rates were on my cards and what would happen if I screwed up. I knew how much I made and that the things I was buying were more than what someone on my income should be buying.



I was an idiot (still am, just about other things )



Elizabeth is a passionate lady and I admire her fight. She does, however, seem to completely ignore the concepts surrounding personal responsibility (at least on the occassions I've heard / read her).


I have many problems with the credit card industry, I think they're blood suckers who take advantage of people. (I think similar things about many other industries, particularly where pizza is concerned but that's a private battle I must fight alone.)


but that said, I actually don't have a problem with universal default. if I extend an open, ongoing line of credit to you (IT IS NOT A LOAN OR A MORTGAGE ELIZABETH!) and the "big picture" circumstances surrounding you change, you bet your Aunt Susie's ashcan I'm going to change the circumstances of that line of credit.

my only complaint though would be the change should only apply to future purchases, not the balance already accumulated, that I have a problem with and would like to see changed.


at the end of the day, I'm closer to Dave's philosophy, just don't use them. I charge my $50 or $60 worth of online bills each month and the occassional rental car and that's it.

[creditcardfree]

Originally Posted by rexdart

it's not a foolish mistake, it's intentional

Exactly!

[boefixepa]

I think it would take all day to read thier testimonies, but I found the quiz on the one guys web site interesting.

http://www.creditcardnation.com/financialquiz.html

It's a quiz by Dr. Manning to see if you understand CC. I was pleased, I got a perfect score. So I guess I can say it's all my fault, I will take responsibility, if I end up paying interest!

[bjl584]

I agree that a lot of the business practices that cc companies and lenders engage in are more than questionable, however whenever I hear about the federal government involving itself in anything it makes me nervous.

[Pupart]

Originally Posted by vsjhoc

Here's a link to testimony given at the hearing by Prof. Warren, Dr. Manning, and other speakers.

Thanks for posting that link.
It is very interesting to read the opening statements by Senators Shelby and Dodd.
I am going back to read more .
Bonnie

[puppypal]

There are a few loop holes and very mean practices that credit card companies do and the unknown owner ten to one doesn't even think twice and pays and pays and pays..
One is the mailing address changes.....
Boy! Nothing PO's me more than you sending in an bi-monthly payment and they change the mailing address on you in a months time!!!!!!!!
I pitched a royal woman fit if you will about that. Chase is the worst!
Also in december I recieved my JC Penny bill on the 13th and guess when the due date was 15th.......
I only carry a jc penneys card becvause of the extra % they give you when there is a sale and I NEVER not pay the balance in full when the bill comes it! I screamed big time on this....
How the heck can a person be expected to pay by check the old fashioned way when they recieve the bill one day and it is due the next!!!!!!!
Talking mean! I paid it online by debtr which I hate to do because of all the crud and the next bill came in saying I paid late. Even though I paid the thing in full the day I recieved it and It was due the next...Slick! I think that is the way some folks get got! They do not know any better and do not have the patience to stay on hold for 34 minutes to correct the problem. What about them recorded messages too. Like press one for english then the menu comes up that has nothing to do with why ya called.
I can go on and on!
Ohhhh, the end result with JC Penneys
They will credit my account by the next billing statement and guess what i am going do Cancel it. After 17 yrs YEP!

Here's a writeup on the hearings from CNN / Money.

aaaannnd....


since I haven't mentioned it in almost 2 days ( ) here's the Frontline credit card special for those who never saw it....


http://www.pbs.org/wgbh/pages/frontline/shows/credit/



Senator Dodd and Professor Warren are both in it.





by the way, going back to the CNN article...that annual fee for the deadbeats is rather amusing.

do they really think the majority of us savvy enough to not pay interest will stick around for that? they'll be giving up the transaction fees entirely trying to "punish" us? and if so, how long before some of them realize "shoot, now we don't get anything from those people!" and start offering us "we're sorry" no fee deals in the mail?



edited to add: I have re-read the piece and now realize it was a consumer advocate suggesting the "deadbeat fee." hmm, great, now that side wants my money too.

oof

just finished reading the testimony of Michael Donovan

Universal Default

Even consumers who always pay on time cannot avoid the pricing abuses. Mr. S, a consumer client from York, PA, is an example. He had two credit card accounts: one at U.S. Bank; the other at Chase. He always paid these accounts on time and diligently.

Nonetheless, in March 2005, U.S. Bank increased the APR on his account from around 9.9% to about 21.9%. The Bank told Mr. S in writing that a review of his credit report indicated he had too much total credit outstanding and, therefore, his APR was being increased.

At about the same time, Chase also increased the APR on his account, from about 11.9% to about 27.9%. But Chase went even further; it also lowered his available credit line. Like U.S. Bank, Chase told Mr. S that his lower FICO score caused the increase in his APR and the reduction in his credit line.

Incredibly, Chase lowered the available line to the exact amount of the outstanding balance on Mr. S’s credit card. So, when Chase added the daily finance charge to the account, it caused the account to go over the reduced credit limit, which then caused automatic over-limit fees to be charged as well. Mr. S did not learn of this bank-caused over-limit “default” until his statement arrived just days after the letter telling him about the reduced credit line.

What was even more frustrating for Mr. S is that the information that caused his credit report to change was itself incorrect. Apparently, one of the credit bureaus had reported an unpaid tax lien. But there was no tax lien. In fact, Mr. S was owed a municipal tax refund. The credit bureau evidently misread or overlooked one of the columns on the municipal tax lien records.

Color me E.G. Marshall from 12 Angry Men, "I'm convinced, it (universal default) and they suck." (ok, he didn't say suck)



There was a remark further in the testimony I couldn't help but notice because it was one of my excuses for eschewing rewards cards (and helped end my short lived experiment with them last year)...


--the "he" referenced is Duncan MacDondald, one time legal counsel of Citi's credit card group--

He further observed that card pricing had become a massive subsidy for the rich. The penalty fees and rates charged to less well-off cardholders -- who usually revolve their balances -- were subsidizing the cash back and frequent flyer perks used to entice the supercreditworthy, who typically do not carry monthly balances.

My perspective on that was never that those using rewards systems were bad people, just that I felt you have to acknowledge that stuff does not come to you without a price, one somebody must pay (and it sure ain't the credit card companies.)

[disneysteve]

Originally Posted by rexdart

my only complaint though would be the change should only apply to future purchases, not the balance already accumulated, that I have a problem with and would like to see changed.

This is also my problem with universal default. They shouldn't be able to lend you money with one set of terms and then change the repayment terms after the fact. I'd have no problem with them changing the terms for future charges.

[PauletteGoddard]

Interesting... I have my dounts that certain practices like Universal Default will be eliminated, because the CC/bank lobby is so big and powerful and donates so much $$$$ but one can always hope.

I saw the movie "Maxed Out" and I'm convinced that the bankers own almost everybody in Congress and the Senate. I don't think Universal Default will be eliminated... the ever-increasing fees, charges, and cute ploys like Universal Default tell me that the market is so saturated, and so dominated by a very few giants, that they aren't even attempting to seduce people into applying for their cards.

No caps on balance transfers, so no more having fun making interest with a 0% advance for eleven months. Grace periods reduced from 25 days to 20 days. Introduction of universal default. Funny that when my credit history was less established, I could get a 25-day grace period, and a cap of $75 on balance transfers. No more...

I have to agree with Dave Ramsey. It's no fun to use credit cards when the companies keep changing the rules to suit themselves...

[PRICEPLUS]

My personal preference is not to use credit cards unless I have to do so!

[Pupart]

Originally Posted by creditcardfree

Exactly!

Whether it is a foolish mistake or intentional,
nobody should be held hostage by CC co's that pile on loan shark interest fees which lead to overlimit fees all because the person is unable to pay the balance.
It amounts to being in a prison without walls.
There are some violent crimianls in this country who get off easier than someone who
makes some foolish financial decisons.

[PrincessPerky]

Originally Posted by Pupart

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.... What if people said, if you don't like drug dealers, just don't buy the drugs.

Ill say it..if you don't like drugs stop buying them, if you don't like lousy movies, stop ordering them...if you don't like..ect, stop ect.

You can't legislate companies into being 'nice' they are not nice, they just want money..and on the one hand it is rude, on the other......if companies didn't make big bucks, they wouldn't spend em..and you know how much the govt likes spending..while I think as advice to the general public it sucks, the basic math of a booming economy includes lots of spending.

So, I will stop using a CC, not because I can't take advantage, but because I do not want to advertise them.....We are walking advertisements, I aim to advertise what I like.

[disneysteve]

Originally Posted by PrincessPerky

You can't legislate companies into being 'nice'.

But you are forgetting something very important. It was Congressional legislation that CREATED the current credit card mess. They voted to deregulate the industry, do away with usury laws and limits on interest rates and fees. Had they kept those laws in place, we wouldn't have the consumer debt disaster we have today.