Debtors Revolt

[Inkstain82]

Indeed, I was contemplating entering the personal credit market myself but was discouraged from it by my other business partners who showed me some daunting statistics. people just don't pay back..sigh...

If they were financially responsible, they usually wouldn't need loans.

[Seeker]

For credit cards, the maximum length of the repayment period is set by the minimum payment requirement. Personally, I think the minimum needs to be substantially higher than 2% or 4%. That would eliminate so many problems. Make the minimum monthly payment 10% of the outstanding balance or even more than 10%. That way, even if a person pays just the minimum, the debt will be repaid in a reasonable period of time.

I just checked a CC calculator to give an example but the highest minimum payment it lets me pick is 5%.
$5,000 at 15%
2% minimum will take 331 months (27.6 years) to repay.
5% minimum will take 97 months (8 yrs) to repay.
10% minimum would only take about 4 years to repay (which is still too long IMO but at least reasonable).

Is this really the intention from the credit card companies? If the "minimum payment required" is meant to actually pay-off the debt, then along with that minimum payment requirement, they should (by law) be required to also compute and print a date by which that current balance will be paid-off by continuing to make that minimum payment.

People don't want to have to make any calculations.... and they shouldn't have to. The billing and minimum payments should be a greater percentage if that is the true standard for repayment in a reasonable amount of time.

In the past, I've gotten quite a few "minimum payment required: $0" ; this IMO this should also be outlawed. If you owe something, you should not be allowed to prolong that debt (and increase your own future debts), by postponing the inevitable.

[disneysteve]

I didn't read about being assessed a $30 balance transfer charge even though the transfer was 0% and marketed as such. I suppose it was somewhere in the "fine print"

They swindled $30 out of me

3% is pretty much the standard balance transfer fee. That's been mentioned here in numerous threads in discussion on credit card usage. I would assume 3% unless the paperwork stated otherwise. Obviously, not everyone knows that though.

Because you chose not to read the contract you were entering into, you feel they were untrustworthy and swindled you.

I totally agree that all fees should be clearly and prominently displayed, not buried in 2-point text. In fact, I think the new credit card rules going into effect next year address that issue, as well as something about how long it will take to repay a balance at the minimum payment. Ultimately, though, the onus still rests on the customer to read the paperwork before signing on the bottom line.

[disneysteve]

Is this really the intention from the credit card companies?

No. I don't think it is the intent of the CC company at all. In reality, though, the minimum payment requirement does create a finite term to the loan, even if that term might be several decades.

[Snodog]

This is why we need more regulation so people are not taken advantage of like this. Yeah she signed a contract but those contracts are difficult to understand and you shouldn't need a magnifying lense. What do you do if your like me and can't understand the legalese. Do you really expect people to hire a lawyer before they sign a credit card application?

Also you have no way of knowing if the credit card debt was from being irresponsible or just bad luck. Unlike others I don't automatically like to assume the worst in these situations.

I say good for her! If this would have happened a few months from now what BOA did would be illegal. The banks get bailed out and loan money from the government at 0% and in turn give the consumer no break. Reminds me of the parable of the unmerciful servant.

[disneysteve]

If this would have happened a few months from now what BOA did would be illegal.

Great point. The biggest farce with the new rules is that they weren't put into effect right away. They gave the CC companies nearly a year to figure out ways around the new policies before they had to abide by them.

[jasonnoguchi]

This is why we need more regulation so people are not taken advantage of like this. Yeah she signed a contract but those contracts are difficult to understand and you shouldn't need a magnifying lense. What do you do if your like me and can't understand the legalese. Do you really expect people to hire a lawyer before they sign a credit card application?

Also you have no way of knowing if the credit card debt was from being irresponsible or just bad luck. Unlike others I don't automatically like to assume the worst in these situations.

I say good for her! If this would have happened a few months from now what BOA did would be illegal. The banks get bailed out and loan money from the government at 0% and in turn give the consumer no break. Reminds me of the parable of the unmerciful servant.

Seriously, from my humble observation so far, people who are dying to get their first card won't read the small prints even if they were the size of a billboard. There is a certain degree of lull from these "free money" and all they will tell themselves then is that they will be fine as long as they pay back but that's where all the problem starts. So, contract or not, as long as people greed for money, they will take up whatever terms it may be to get it.

[disneysteve]

So, contract or not, as long as people greed for money, they will take up whatever terms it may be to get it.

Unfortunately, you are correct. Look at all of the people who take tax refund loans. It takes me less than 14 days to get my tax refund each year. Why would I possibly take a loan at 200% interest (or more) just to have the money any sooner than that other than pure greed and utter stupidity? Same goes for payday loans.

[Snodog]

Seriously, from my humble observation so far, people who are dying to get their first card won't read the small prints even if they were the size of a billboard.

Very true. Alot would not be helped but some would; as we've seen right here in this thread.

So, contract or not, as long as people greed for money, they will take up whatever terms it may be to get it

You say greed I say its just being young and stupid. No offense to all the smart young people we have here in these forums.

[LuxLiving]

Snodog said:
"You say greed I say its just being young and stupid. No offense to all the smart young people we have here in these forums. "


Old folks can get stupid w/ credit as well. No offense to all the smart old people we have here in these forums.

No matter our age, Mom and Dad were still right when they told us - read the fine print!

[disneysteve]

Old folks can get stupid w/ credit as well.

True. The percentage of retirees with mortgages is higher than ever, for example.

[Snodog]

Old folks can get stupid w/ credit as well. No offense to all the smart old people we have here in these forums.

Well since I am neither young OR old I am not offended.

The reason I singled out young people was because Jason was talking about those "dying to get their first card".

[Snodog]

Old folks can get stupid w/ credit as well.

I agree, and so can middle age folks.

[jasonnoguchi]

With increasing accessibility to credit, we are just going to see more and more of these things happening even with credit ratings and things like that. There is no stopping people who really wants the money. Credit is what drives the world economy from Governments down to the individual. In fact, governments sometimes default and don't pay their dues as well. So, it seems like it is more human nature than age.

[wincrasher]

Maybe some would like us to return to the days of debtors prison.

Wouldn't that be a hoot in times like these?

With the corporate stranglehold on our government, that wouldn't be out of the realm of possibility.

But in all seriousness, you can look at everything in life as a transaction that has a price to be paid.

If I don't pay my taxes, what will I pay later?
If I don't pay my mortgage, what will it cost me later?
If I cheat on my wife, what will I pay in alimony?

Probably a more reasonable analysis than trying to put price on "burning in hell for eternity".