News: Credit Card Reform nears passage

[hakrjak]

Credit card reform legislation nears passage

Call me crazy, but last time the government tried to "help" us with our credit cards, they passed a new restriction that raised all of our monthly payments hugely overnight. (This was done with the warm fuzzy message of, "Let's help Americans get out of debt!) My personal payments went from about $250 a month on a $50k debt, to about $1200 a month -- literally OVERNIGHT. Short term credit became instantly less affordable for my business, and thus -- the amount of business we did went down.

Why do I get the feeling that we're in for another royal screwing? But of course we'll all get the warm fuzzies first, because after all -- they are here to help! Stop those big bad credit card companies from taking advantage of us poor innocent folks. Even if the ultimate result is further tightening of the credit markets, and less credit extended from here on out! What other businesses is the government going to take over and dictate how to operate next?

Cheers,

- Hakrjak :blah2:

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Fermovian]

Credit cards are a screwy business. I am generally against government intervention but the companies are run by people who don't have their heads screwed on straight. they give credit to people who shouldn't have it (I know someone here in Canada who got a U.S. card, and it wasn't a mistake. I should also mention this person has been in bankruptcy twice and is still has the bankruptcy on thier record).

There is also the issue of reducing credit even when the balance on the card is higher than the new limit (as I've seen mentioned here), even when there has not been a missed payment or a reduction in the debtors ability to pay. Maybe this isn't a good piece of legislation, but I still think it is at least partially the fault of the suppliers of credit who have created a lot of anger by their bad business practices.

 

[hakrjak]

If they were bad business practices, then the market should have been allowed to handle those companies future. If half the banks are screwing their customer, then the customers move their accounts over to banks tha treat their customers better -- and deservedly so.

When the government has to step in and dictate what bad business practices are, and how to fix them -- We are in serious trouble as a country, and as a free market economy.

- Hakjak

 

[Runum]

I have had 2 open credit card accounts cancelled in the last week. Always pay my ballances off each month. I still have a few more open but the loss of the available credit accounts dings me on my credit score.

Now it looks like the proficient credit card users are going to pay. The rules are changing.

http://www.nytimes.com/2009/05/19/business/19credit.html?_r=2&hp

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Luke12321]

As some of you may know, I work for a huge sub-prime credit card lender. I am a bit torn on this issue. Are we taking advantage of people? Most people would say yes.

We just had to pay millions from a law suit for essentially leaving stuff out of the terms and agreement. We deserved that, 100%.

We started closing credit lines long before many companies as we knew when the tough times really hit, customers would use all the credit they had and leave us hanging. Will we lose some good customers, sure. But these are subprime card holders so who else is going to give them a card. Overall, it will be a good move.

Most people (I am on of them) don't read the fine print. They don't read that if you go pastdue more than 7 days on your credit card, it will be closed.

Using our heads though, American's should undestand that if you go late, it hurts your credit score which in return makes you a higher credit risk and may force your APR to be jacked up. If you are late, you get a late fee. And if you were close to your credit limit when you got the late fee and go over because of it, yes...you get a over the limit fee.

Honestly, I don't think much will change in the long haul. We are addicted to credit cards and people will continue to get screwed out of money when they do not handle them correctly.

Side note, I am very bull on our companies outlook for about 3-5 years down the road.

 

[Runum]

I understand what you are saying Luke. I've never been late, always pay balance off, and all other loans are current. Definitely not sub prime. However, the card issuers make no money off of me. No biggie to me. I remember when getting started that I couldn't get credit, even with begging. Then the banks started calling me and begging me to tke on more credit. Now they are cutting credit. It all runs in cycles and they will be back. Hopeully, I will be in a position to not need them at all.

 

[biophase]

My discover card was just canceled on me.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[andviv]

two cards increased the rates (no late payments). Another one reduced the credit limit (basically left me with $200 less than what we owed).

A couple of months back I cashed out and maxed out almost all credit cards (did not care much for the impact on the credit score these days). Taking a cash position was more valuable to me.

Many changes going on, so I have no clue was going to happen next. I guess this move will force more people into being late in payments.

 

[Pinnacle]

The credit card companies are doing what any other private sector business would do under government controls. Because the government is making business decisions based on political morality instead of sound business principles, they are undermining what would otherwise be a means for consumers to pay off their credit cards and discourage their use. If I had ever gotten credit cards, I would have used them for my business and that alone. But because the government is forcing its hand in the name of "fairness" to the credit card customer, the OPPOSITE is happening and making consumers' debt obligations worse. Isn't it ironic?

 

[hatterasguy]

The government needs to stay out of business. If CC companies leave stuff out of the agreements thats one thing, and they should get called on it. But if they don't they can make whatever rules they please. Don't like it? Get another card or don't get one.

I am happy to say I will be down to 1 CC in a couple of months. I closed one Mastercard last year, paid off the Visa which I will keep, and still owe a G note on the last Mastercard, which I'll be paying off soon and it will sit empty until Chase closes it. Good riddence freaken vultures. They are useless because you have to call someone in India who can't speak english to solve any problem. The Visa I'm keeping is through a credit union so you call a nice lady in the good old US of A if you have an issue!:banana:

People are dumb, they want everything now without having to work for it. If you don't have the cash don't buy it. If your living on CC's and have a job you need to get your house in order.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[bflash98]

Reading through one item that caught my attention was that payments would have to go to be applied to the higher interest balance first instead of what credit card companies do now which is to apply it to the lower interest balances.

I'm wondering if this will discourage credit card companies from offering lower rates for balance transfers and such. I have one credit card balance that has a fixed life time interest rate of 1.9%. This was great 18 months ago when I could earn 5% in a CD. I don't make any new charges to the card since those charges would be at 10% interest and my payments would apply to the lower interest balance first. I'm guessing credit card companies make there money when people do charge other items to cards with offers like these.

It will be interesting to see what happens once this legislation is signed into law.