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post #1 of 43 (permalink) Old 05-19-2009, 06:19 PM Thread Starter
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Credit Card Laws Redux?

Am I missing something here?

If you pay off your credit card bill every month, what does it matter what the interest rate is or what the notification of rate increase is or anything else for that matter?

Senate passes tougher rules for credit card firms | Reuters

I have very little sympathy for people who over spend and then complain that the owner's of their debt want their money when it is due!

Who's John Galt.

"Timeo Danaos et dona ferentes" - Virgil, The Aeneid, Book 2

If the Arabs put down their weapons today, there would be no more violence. If the Jews put down their weapons today, there would be no more Israel. --Benjamin Netayahu
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post #2 of 43 (permalink) Old 05-19-2009, 06:53 PM
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Am I missing something here?

If you pay off your credit card bill every month, what does it matter what the interest rate is or what the notification of rate increase is or anything else for that matter?

Senate passes tougher rules for credit card firms | Reuters

I have very little sympathy for people who over spend and then complain that the owner's of their debt want their money when it is due!
I think the problem comes with the folks who either, for some reason don't or can't pay on time each and every month. Sometimes it is "overspending" as you point out. Sometimes it is simply very bad timing or loss of job or sickness or over extension from issues beyond their control.

You can search BWOT archives for a bunch of posts on this but for a bunch of years I have volunteered to do debt counseling in Appalachia once a month as part of a group that worked with high poverty areas. Many of the folks were not simply overspending due to lack of discipline.

The most common issue was a sickness in the family or job change which put the account one month behind. This would bump a normal 12-14% card which was being paid to 22-29% and payments would nearly double. While the first issue might be within easy budget when things were good, something as simple as a week off, or a doubling of gas prices would through the budget in arrears. Not everyone has months of cushion [hard with $12-20K incomes]. With the piling on of fees and the doubling of rates, a normal cost becomes extraordinary.

As a virtual test, take your card that you float monthly. Now, because of an "emergency" don't pay it for two months, only paying the minimum, knowing things will sort. Now they don't. Look at the balance on that 12% card, now, miss one payment and watch the rate go up, recalculate the payments if you now have to pay it as a monthly payment. That is the trap many folks get in.

The best thing that I could see happening on this is, for folks who are in arrears is to establish a freeze on their card, set a payment and a reasonable fixed rate. NOBODY needs to be paying 25-29% interest on any accounts. There are just too many variables as to why they got to that position and with that rate, most folks just can never pay the account off. The math doesn't let them if the balance is over $10,000.

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post #3 of 43 (permalink) Old 05-19-2009, 07:09 PM Thread Starter
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McBear, I do not disagree with you that there are SOME people out there who have genuine issues that would preclude them from paying on time however, they are by far and away the very few.

The vast majority of people are those who make poor decisions.

Drive by a local trailer park at night. You can tell who has the big 52" flat screen from the giant glow of the trailer. You see new trucks, Satellite antennas with 4 LNB's on them, etc. etc.

As for the poor who have medical issues I thought that was what Medicaid/care was for? Doesn't KY have something like TN for the kids? I know GA does.

My point is that there is help for those who are genuinely struck down. I just don't see why we should shed a tear about a person who doesn't pay their bills.

Who's John Galt.

"Timeo Danaos et dona ferentes" - Virgil, The Aeneid, Book 2

If the Arabs put down their weapons today, there would be no more violence. If the Jews put down their weapons today, there would be no more Israel. --Benjamin Netayahu
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post #4 of 43 (permalink) Old 05-19-2009, 07:46 PM
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As for the poor who have medical issues I thought that was what Medicaid/care was for? Doesn't KY have something like TN for the kids? I know GA does.
Medicaid is for children and the disabled – adults with no children who aren’t disabled don’t qualify; Medicare is for those over 65 or disabled who have ‘paid’ into the Social Security system for ten or more years. There is a two year black out period before one can receive Medicare benefits after retiring or being established disabled. This is where many of the 45 million uninsured exist – credit cards are their de facto ‘insurance’ in the event of a medical emergency.
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post #5 of 43 (permalink) Old 05-19-2009, 07:56 PM
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McBear, I do not disagree with you that there are SOME people out there who have genuine issues that would preclude them from paying on time however, they are by far and away the very few.

The vast majority of people are those who make poor decisions.

Drive by a local trailer park at night. You can tell who has the big 52" flat screen from the giant glow of the trailer. You see new trucks, Satellite antennas with 4 LNB's on them, etc. etc.

As for the poor who have medical issues I thought that was what Medicaid/care was for? Doesn't KY have something like TN for the kids? I know GA does.

My point is that there is help for those who are genuinely struck down. I just don't see why we should shed a tear about a person who doesn't pay their bills.
The problem is the perception that it is the poor decision makers that are the issue. Just look at the middle class folks that have lost jobs in the past two years, the MILLIONS of them. Are they just "poor decision makers"? Did THEY know their job was going to Bangalore?

Yes, there is Medicaid for the very poor but the problem with the credit card folks is not that deep poverty group as much as it is the next two tiers up, those that don't qualify for Medicaid.

You say "I just don't see why we should shed a tear about a person who doesn't pay their bills." This bill is for those who CAN'T or for those who COULD but, because of circumstance no longer can. That is much different than the DOESN'T.

I have dealt with both types. There certainly are "doesn't". And yes, they do have the sat dish and the new trucks...maybe. But they are a minority, all statistics show them the minority, not the majority. And we also don't know who might be paying for that truck so they can get to work. Might be mom and dad who want billy to make sure he can get his ass to work.

Just like the foreclosure rumors of last year, where it was swirling that it was mainly those "speculators" and "those folks that got in over their heads". Well, it turned out to be Ma and Pa who just got behind because the economy fuxored on their heads and their jobs and lives...and credit.

McBear,
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post #6 of 43 (permalink) Old 05-19-2009, 08:36 PM
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This is a pretty bad move IMO.

CC mofosd have a lot at their disposal.

Such as implementing annual fees, getting rid of the grace period etc.

And you can be damn sure they are going to use it.

Imagine all CCs w/o the grace period. Even if you pay your debt each month, you are still required to pay interest.

On the other hand you can't live w/o CC in the modern world, you just can't.

So be careful what you wish for, you might just get it.
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post #7 of 43 (permalink) Old 05-19-2009, 09:37 PM
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TNT,
Why do you always have to be so righteous? Just because you pay yours off monthly does not mean everybody does. Just like Bear said, some are circumstantials and some just over spent. Like it or not, this country has been living on credit for more than 25 years and average Americans have 5 or more credit cards in their pocket at any given moment.

Let's face it, the issuers are the ones created the situation, and it looks and smells like the sub prime fiasco to me. They issued credits to people borderline qualified, already under water, too young to know better because penalty charges for late payment makes up 10% of their profit. They want you to be in debt, they want you to be late. It is cha-chain to their ears. If you want to blame someone, blame the banks. People will always be allured to easy credit, disciplined or not.

I think this legislation is close to worthless because it still allows banks to charge whatever APR they want. So they fore go a little on the late charge but make it all up on the APR and more. One must wonder why this Administrations even allows such a lousy legislation to be written. With a 25% -30% APR, it will still take someone a very long time to pay it off a $1,000 balance, and hopeless for those poor souls who carry a $10,000 or more balance on their card. They will be working for the banks for a very long time.

I often wonder your intentions. I think you are one of those who has debt above your eyebrows, but still like to act as if you are a goodie-two-shoes that has a squeaky clean balance sheet. Get over with yourselves already.

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Last edited by elau; 05-19-2009 at 09:40 PM.
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post #8 of 43 (permalink) Old 05-20-2009, 07:15 AM
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Imagine all CCs w/o the grace period. Even if you pay your debt each month, you are still required to pay interest.

On the other hand you can't live w/o CC in the modern world, you just can't.

So be careful what you wish for, you might just get it.
They do have a lot at their disposal but at the same time they don't want to intimidate people from making purchases because of the 2-5% fee that the vendor pays to the cc company. I'm one of those people that just uses a cc as a 24 day interest-free loan - it gets paid off in full every month. If my cc company eliminated the grace period I'd just stop using my cc and would instead use my prime +1.5% line of credit, and pay that off every month. Using "cash" that way can give you the opportunity to get a vendor to lower their price by the amount of the cc vendor fee, and I don't pay an annual cc fee, so the small amount of interest I pay becomes a wash by the end of the year.

I think that cc companies could institute a two-tier annual fee system instead. You pay an annual fee of XX.xx and then at the end of the year if you've paid your bill off every month, a certain percentage of that fee is credited towards your next year's fee. If you didn't pay your bill, you pay the full whack. Something like that would keep me using my cc but would also provide them with an additional revenue stream.
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post #9 of 43 (permalink) Old 05-20-2009, 07:46 AM
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I liken a credit card to a stick of dynamite. Dynamite is a useful tool in the hands of a few disciplined people. However, dynamite in EVERYONE'S hands is going to result in a high rate of incidents.

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post #10 of 43 (permalink) Old 05-20-2009, 08:54 AM Thread Starter
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The problem is the perception that it is the poor decision makers that are the issue. Just look at the middle class folks that have lost jobs in the past two years, the MILLIONS of them. Are they just "poor decision makers"? Did THEY know their job was going to Bangalore?

Yes, there is Medicaid for the very poor but the problem with the credit card folks is not that deep poverty group as much as it is the next two tiers up, those that don't qualify for Medicaid.

You say "I just don't see why we should shed a tear about a person who doesn't pay their bills." This bill is for those who CAN'T or for those who COULD but, because of circumstance no longer can. That is much different than the DOESN'T.

I have dealt with both types. There certainly are "doesn't". And yes, they do have the sat dish and the new trucks...maybe. But they are a minority, all statistics show them the minority, not the majority. And we also don't know who might be paying for that truck so they can get to work. Might be mom and dad who want billy to make sure he can get his ass to work.

Just like the foreclosure rumors of last year, where it was swirling that it was mainly those "speculators" and "those folks that got in over their heads". Well, it turned out to be Ma and Pa who just got behind because the economy fuxored on their heads and their jobs and lives...and credit.
While I worked in Sales (Commission and a Salary at about $24k) I made good money when I was working. The industry I serviced was the automotive for the most part. Needless to say last one hired first one fired.

I went through a 6 year period where I was working for a company for about a year or year and a half and I would get laid off because I was not making enough sales. In between boughts of lay offs I worked at the Local Home Depot twice for $11.50 an hour for 9 months and the most recent time was for a year and 2 months.

It was not until the last 3 years that my wife went back to work as a teacher at a private school (read less money than a public school).

We never missed a mortgage payment, we never missed a credit card payment. We scaled back considerably, NEVER ate out at a restaurant, drove cars that were paid for, etc.

I have been amongst the unemployed, I have a savings account that is the emergency fund (6 months of living expenses), we shop with coupons, we still may only go out to eat once a month and that is with Friends after church for lunch.

My whole point is, we have chosen to live a lifestyle below our means. We are the ones who are responsible for ourselves.

Why is it that people who make 65K a year think they "deserve" to live in a home with a $2,500 mortgage, a $600 month car note on two cars, the latest TV's etc?

And when they fall on hard times all of a sudden those credit card bills should become someone else's problems? Or they should not have to pay what they agreed to pay?

If credit card companies want to charge X% they should be allowed to. If you do not like it, then get a different credit card!

I will say, Credit Card companies should not be allowed to raise an interest rate on a balance that was created when the interest rate was lower. That is just fundamental fairness.

Who's John Galt.

"Timeo Danaos et dona ferentes" - Virgil, The Aeneid, Book 2

If the Arabs put down their weapons today, there would be no more violence. If the Jews put down their weapons today, there would be no more Israel. --Benjamin Netayahu
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