Big changes in store for US credit cardholders

[Cris413]

As hard pressed as I am to post yet another current events thread:

(sadly...I learned my lesson trying to post in the "christian" current events forum).....

Big changes in store for US credit cardholders

What do you all think of this and how do you think it will effect the economy?

 

[MrJim]

I haven't had a credit card in probably 5 years now~ how cool is that?

 

[Lady Bug]

I'm sort of trying to understand the implications of it all. Surely, if Obama is in favor of it, it probably means it is automatically bad.

 

[BobW188]

In the long run, I think it will lead to more responsible spending and consumption; but something tells me that many of us who are glad to see some limits put on bank practices are going to be howling not long after the law takes effect. We're instant gratification junkies, and having to save for our purchases or use layaway are going to take some getting used to. I wonder how many of us who think this law is years overdue really understand plastic isn't going to be as readily available.

We want to just blame the banks, but by continuing to use and overuse the cards we've really condoned everything they've done. If we'd "gone on strike" when interest rates were raised with little or no notice, or when we'd drawn a surcharge for paying by phone, or when we'd paid off our kid's bill from the card he got no-questions-asked, those tactics would've died a natural death.

Like a trip to the dentist, it's likely to hurt; and we'll be the better for it.

 

[Cris413]

I'm sort of trying to understand the implications of it all. Surely, if Obama is in favor of it, it probably means it is automatically bad.

That's the mindset I'm trying to avoid....I mean....something good, at some point should come out of this Admin....not sure this is it.

I've often said that some of the Credit Card industry is nothing short of legal loan sharking...and something should be done....again....I'm not sure this is the right way though.

 

[Cris413]

In the long run, I think it will lead to more responsible spending and consumption; but something tells me that many of us who are glad to see some limits put on bank practices are going to be howling not long after the law takes effect. We're instant gratification junkies, and having to save for our purchases or use layaway are going to take some getting used to. I wonder how many of us who think this law is years overdue really understand plastic isn't going to be as readily available.

We want to just blame the banks, but by continuing to use and overuse the cards we've really condoned everything they've done. If we'd "gone on strike" when interest rates were raised with little or no notice, or when we'd drawn a surcharge for paying by phone, or when we'd paid off our kid's bill from the card he got no-questions-asked, those tactics would've died a natural death.

Like a trip to the dentist, it's likely to hurt; and we'll be the better for it.

I hope your right Bob....about the more responsible spending and consumption....and perhaps more clear guidelines regarding consumer credit will help folks manage their money and their credit better.

....while I'm sure there are those who have gone into debt out of necessity....food, clothing, emergencies and such....the bulk of this debt...IMHO....is irresponsible spending....those who live beyond their means now and pay later....'cept they couldn't pay later...and now they are in a world of hurt. It's all yippie skippie to buy the plasma tv...quite another to pay for it.

My understanding is part of the consumer credit problem....is just like the mortgage problem...banks forced to extend credit to those who are not credit worthy.

I think Credit Card Companies should be held to full disclosure. So many people don't understand how credit works...and this "we reserve the right to change any terms at any time for any reason" is hoo haaa.

If I make a purchase with the understanding my interest rate is going to be 7% that's all well a good...but then to turn around and jack it up to 24% for no reason....ummmm....not so good.

 

[porterross]

Interesting. As much as I detest credit cards, I have retained both a Master Card and AmEx with US banks for family business reasons, but I feel that credit card companies are predatory and I feel little sympathy for their losses that result from their pursuit of customers, especially via their mass mail marketing to college students. They count on the fact that most parents will bail their kids out when they get in over their heads with repayment and it needs to be curtailed. It's a racket, for sure.

 

[MrJim]

OTOH all the warning information is in small print, and people are supposed to be responsible for their purchases and debts. It's not necessarily the fault of the credit companies that people get in over their heads. I speak from experience; it's a reason I haven't had any in years..

 

[dies-l]

I don't know if this is the best way to deal with the problem, but I am glad that something is being done about it. I remember how common it was in college for credit card companies to set up on campus and offer free gifts to get kids (yes I think most college age students are still kids) to sign up for a credit card. Usually, these cards would come with a small limit, but the limit would grow exponentially if the borrower showed even the slightest bit of self-control and resposnibility.

I am convinced that this is set up as a trap to get kids who have little self-control or wisdom to make incredibly poor decisions that will leave them spending much their adult lives indebted to the credit card companies. How else can I explain the fact that by the time I finished college, I had credit lines of 2-3 times my annual salary?

I confess my wife and I both fell into the trap, and I do not at all deny our own responsibility. Our only excuse is that we were unwise, immature, stupid, and naive. We are making great strides in becoming debt free, we are learning the joy of living more simply.

However, I do believe that there is just something evil about this particular lending practice. The mindset behind this practice (banks going out of their way to lend money to people who are too poor, unwise, or immature to make an intelligent borrowing decision) is largely to blame for the current economic situation. Addressing the problem will probably not fix the current situation, but likely will help prevent similar situations in the future.

 

[Cris413]

Interesting. As much as I detest credit cards, I have retained both a Master Card and AmEx with US banks for family business reasons, but I feel that credit card companies are predatory and I feel little sympathy for their losses that result from their pursuit of customers, especially via their mass mail marketing to college students. They count on the fact that most parents will bail their kids out when they get in over their heads with repayment and it needs to be curtailed. It's a racket, for sure.

Yep....when my stepson graduated from high school....the credit offers just came pouring in....it was frightening.

Establishing good credit is important...maintaining good credit even more important. It means when you do need the credit...purchasing a home or an auto or something....you won't have any probs and will get the best interest rates.

As I mentioned to LB...a lot of these CC companies are nothing more than legal loan sharks....and IMHO....those compaines and their practices should be addressed....but I'm not sure this bill is the way to do it.

I dunno...I'm not financial expert....but I think this is going to add to the already big problems we have with the economy at the mo....

...again....rewarding those who are irresponsible with their finances....and punishing those who are.

 

[Cris413]

OTOH all the warning information is in small print, and people are supposed to be responsible for their purchases and debts. It's not necessarily the fault of the credit companies that people get in over their heads. I speak from experience; it's a reason I haven't had any in years..

Yes...and it's usually buried somewhere in very small light gray print.

I know there is big problems in the industry and I've had more than my fair share of battles with credit card companies.

I had the most stupid problem with a BoA credit card. I had a small balance....around 4K....and I don't mind paying on small balances with reasonable interest rates as it does help your credit score...with the intent to pay it off in no short order...

....any way....after 12 years driving our vehicles...it finally came time to buy a new car....so we did...which lowered my credit score a few points as my credit to debt ratio changed...

...so BoA raised my rate to the default rate due to the drop in my credit score...basically penalizing us because we purchased a vehicle. Even though my score only dropped like 5 points and was still very, very good.

I had to close the account to keep the rate from going up....then....a few months later....they did it AGAIN...on the very same closed account. When I called to ask why... it was because I didn't respond to some "JUST SAY NO" letter they sent..... 15 minutes after that convo...I transferred the balance to another card...and then paid it off as planned.

And THAT was the problem....we paid our debt TOO WELL....I'd never been late, always paid waaaay more than the minimum and they were just looking for ways to keep us in debt and keep paying....:o

....those are the type things that need to be addressed in dealing with the credit card industry...IMHO.

People who do not repay what they borrow or pay late…because they borrowed more than they could repay….should be penalized with late fees, higher interest rates and such.

Now…I do agree with the 60 days late rather than 30 days before going into the default rate…or even 90 days for that matter…as things happen from time to time and people shouldn’t get blasted because they had a hard month or two.

And I think the default rate should only apply to the card from that lending institution…not because one was late on some other card once with another company. Yikes…what a domino effect that could be! Late on one card…and every other card goes to the default rate as well as most people have multiple cards...

And they certainly should not be allowed to arbitrarily raise the rates based on a few point drop in credit scores…and because someone failed to “JUST SAY NO” to an interest rate increase….that’s just craziness!

 

[Hentenza]

To me the answer is simple. If you can't afford it, don't buy it. Although I do have credit cards, I will not use them unless we travel or have an emergency. I like my visa debit card cause I buy it and is paid for.lol!!!

The credit card companies don't like me. Hehe!!!

 

[MrJim]

To me the answer is simple. If you can't afford it, don't buy it. Although I do have credit cards, I will not use them unless we travel or have an emergency. I like my visa debit card cause I buy it and is paid for.lol!!!

The credit card companies don't like me. Hehe!!!

 

[CyberPaladin]

I'm not convinced that this legistlation will do much of anything the credit card industry is big enough that they have both parties in there pocket this probably endup just being more liberal that we are pro little guy anti-big corporation.
The credit card customers need to step up and take responsibilty while must of us don't understand the exact details of there plan they know how it works in general in other words you may not know what the amount of your late fee is or what your interest will jumped to if you don't pay things fully and on time but you know it's going to be massive.
The credit card companies need to stop playing games they need to get people there bill 2 full weeks before it's due, they need have send your payment to there closest processing center some have been making people send there payment cross country just in the hopes it will be late and some of them have been caught telling employees to not process checks if it's due date until late enough in the day that it will go onto tommrows statement.

 

[Cris413]

To me the answer is simple. If you can't afford it, don't buy it. Although I do have credit cards, I will not use them unless we travel or have an emergency. I like my visa debit card cause I buy it and is paid for.lol!!!

The credit card companies don't like me. Hehe!!!

We try not to keep large balances on any card...and pay them off quickly...but we don’t worry about a bit of a balance here and there as it does keep our good credit established.

Normally the balances we do carry....were for emergencies....like IKE blowing a hole in our roof....my emergency trips to care for my aunt in Ohio and such…

And every one of my appliances that broke down...we were able to replace right away...with the 12 months no interest no payment deals on the store credit card and we've not paid one penny in interest. That came in quite handy when our fridge broke down and we didn’t have to keep our food in an ice chest while we saved to buy a new one….same when our stove broke…and the oven….and then my beloved dishwasher....

We make the credit work for us....we pay little to no interest and reap the rewards in the "perks" for using our cards.

We've paid no interest and earned hundreds of dollars in rewards using our cards like cash and our credit scores just keep going up and up.

Pretty much all of those perks will be gone when this bill passes.

Such as….the card we use for spending is with the same company we have our P&C insurance with….and we get reward dollars to pay our insurance….and that can amount to 2-4 hundred a year…basically….our auto insurance is almost cut in half…because we use our cards. So…we pay no interest…and we actually get paid for using the card.

CC companies will start charging annual fees...stop reward programs, stop offering 12 months same as cash and more than likely will eliminate grace periods as well and start charging interest from the moment of purchase.

I know this is going to put a damper on the way we personally handle our finances and it does contribute to the economy.

If emergencies arise or things break down…I guess we’ll just have to muddle through and do without….because I simply refuse to pay interest, pay annual fees and such….and we’ll actually lose money because those rewards do add up.

soooo....now we'll have to stop purchasing what we need and sit on the money instead. We'll have to stop spending as well...to build up funds for emergencies...and we'll actually lose money because the rewards we earn exceed the puny interest we would earn in our savings account.

I know we're not the only people who manage their credit this way...and it does stimulate the economy...

...not to mention...many will not be able to get credit at all...for homes, autos and any major purchases by those who can repay responsibly...

I know...I'm no financial genious...but I can see where this is going to have an adverse effect on an already devistated economy.

Or...maybe...I'm just screwy...I dunno...

 

[CyberPaladin]

To me the answer is simple. If you can't afford it, don't buy it. Although I do have credit cards, I will not use them unless we travel or have an emergency. I like my visa debit card cause I buy it and is paid for.lol!!!

The credit card companies don't like me. Hehe!!!

Just be very careful with debit card you go over by penny and they'll charge you like $30 or $40 to cover it.
The only thing I have used my credit card on in the last 3 months are my health and car insurance and cell phone bills them directly each month so I doubt there that thrilled with me the only money there making off of me is the fee they charge companies when someone pays with a credit card.

 

[Hentenza]

We try not to keep large balances on any card...and pay them off quickly...but we don’t worry about a bit of a balance here and there as it does keep our good credit established.

Normally the balances we do carry....were for emergencies....like IKE blowing a hole in our roof....my emergency trips to care for my aunt in Ohio and such…

And every one of my appliances that broke down...we were able to replace right away...with the 12 months no interest no payment deals on the store credit card and we've not paid one penny in interest. That came in quite handy when our fridge broke down and we didn’t have to keep our food in an ice chest while we saved to buy a new one….same when our stove broke…and the oven….and then my beloved dishwasher....

We make the credit work for us....we pay little to no interest and reap the rewards in the "perks" for using our cards.

We've paid no interest and earned hundreds of dollars in rewards using our cards like cash and our credit scores just keep going up and up.

Pretty much all of those perks will be gone when this bill passes.

Such as….the card we use for spending is with the same company we have our P&C insurance with….and we get reward dollars to pay our insurance….and that can amount to 2-4 hundred a year…basically….our auto insurance is almost cut in half…because we use our cards. So…we pay no interest…and we actually get paid for using the card.

CC companies will start charging annual fees...stop reward programs, stop offering 12 months same as cash and more than likely will eliminate grace periods as well and start charging interest from the moment of purchase.

I know this is going to put a damper on the way we personally handle our finances and it does contribute to the economy.

If emergencies arise or things break down…I guess we’ll just have to muddle through and do without….because I simply refuse to pay interest, pay annual fees and such….and we’ll actually lose money because those rewards do add up.

soooo....now we'll have to stop purchasing what we need and sit on the money instead. We'll have to stop spending as well...to build up funds for emergencies...and we'll actually lose money because the rewards we earn exceed the puny interest we would earn in our savings account.

I know we're not the only people who manage their credit this way...and it does stimulate the economy...

...not to mention...many will not be able to get credit at all...for homes, autos and any major purchases by those who can repay responsibly...

I know...I'm no financial genious...but I can see where this is going to have an adverse effect on an already devistated economy.

Or...maybe...I'm just screwy...I dunno...

You are making the CC's work for you instead of for the CC companies. That's great.

Many unfortunately use them for discretionary items or impulse buys which get them in trouble very quickly. My wife learned that the hard way. When we were first married she received a pre approved m/c with a credit line $1500. Well, what do you know, she had it maxed out is less than two months. When the bill arrived she told me, "look, is only $15 a month". Of course she had overlooked that $13 was interest so the payment to priincipal was only $2. She quickly figured out that all of the items that she bought 'on sale" cause they were such a great deal turned out not to be such a great deal after all. My wife is more intelligent than I am so if she can get caught up in the hoopla then anyone can. The CC companies bank on the human weakness and exploit it. Most of the "victims" are folks that really can't afford the 30% interest if they miss the payment dateline by a day or the additional fees. To me, the CC companies are in the business of financial slavery but the people just let them do it. If the majority of folks would use CC's responsibly I bet that the CC companies would change their tune in a heart beat. But.....we must have it now!!!!!lol!!!!!

 

[Hentenza]

Just be very careful with debit card you go over by penny and they'll charge you like $30 or $40 to cover it.
The only thing I have used my credit card on in the last 3 months are my health and car insurance and cell phone bills them directly each month so I doubt there that thrilled with me the only money there making off of me is the fee they charge companies when someone pays with a credit card.

Most banks do offer either a line of credit attached to your checking account or an automatic transfer from savings to cover a debit purchase when there is not enough money in the account. Most of these do not have fees or have a much smaller fee than a standard no funds fee. You might want to contact your bank and inquire.

 

[Cris413]

You are making the CC's work for you instead of for the CC companies. That's great.

Many unfortunately use them for discretionary items or impulse buys which get them in trouble very quickly. My wife learned that the hard way. When we were first married she received a pre approved m/c with a credit line $1500. Well, what do you know, she had it maxed out is less than two months. When the bill arrived she told me, "look, is only $15 a month". Of course she had overlooked that $13 was interest so the payment to priincipal was only $2. She quickly figured out that all of the items that she bought 'on sale" cause they were such a great deal turned out not to be such a great deal after all. My wife is more intelligent than I am so if she can get caught up in the hoopla then anyone can. The CC companies bank on the human weakness and exploit it. Most of the "victims" are folks that really can't afford the 30% interest if they miss the payment dateline by a day or the additional fees. To me, the CC companies are in the business of financial slavery but the people just let them do it. If the majority of folks would use CC's responsibly I bet that the CC companies would change their tune in a heart beat. But.....we must have it now!!!!!lol!!!!!

Yep...same thingy with me....I learned my lessons the HARD way and it took me years of sacrifice and deligence to get out of debt and rebuild my credit. Which is why I'm so careful with it now....

It was unfortunate...that medical problems, employment problems, my mom dying without life insurance....really put me in a bind and everything just tumbled out of control for a few years and my consumer debt just kept growing...and my credit kept sinking...it happens and people should be protected in some of those instances...

What I found out....is that if you communicate with the lenders...they will work with you...at least they would back then. They lowered my interest rate and some agreed on a lesser balance too...I mean...they knew I was sincere and wanted to pay it back...and did a lot to help me do just that.

It's when we ignore the problems....they just get bigger and bigger and so overwhelming....but it is possible to dig out...just depends on what we're willing to do I guess.

It took me about 5 years to become debt free....and another 3 for my credit to go from weak/fair....to good/excellent!

I have to give credit where credit is due though....to the Lord....

Cause it was all about applying biblical standards to our finances...that was the main motivation.

I owed the money...I needed to pay the money back...whatever it took and applying principles of good stewardship....and mainly....giving a portion back to God with a cheerful heart.

When we give our finances to God and manage them in a way that honors Him...He does bless us and honors our good stewardship.

 

[desmalia]

I think the idea is great in theory, but I have a problem with the government doing it. This sounds like just another opportunity for govt. to get greater control by exploiting a problem with our society (and yes, it's the same problem with CC companies up here in Canada too). The solution to this whole thing is not government legislation. Young people need to be properly taught how to handle their finances long before they head to college. It's the only way to correct the situation, really. Parents teach their kids not to run out into traffic (well, most do, lol). Same deal with financial dangers. My parents taught me that when I was a kid, and it stuck. I did carry a high balance on my credit card for several years when I was single, but that was because my income was lower than the most basic cost of living (and man was it basic!! lol). I still always found ways to pay well more than the minimum balance due each month though, and my credit rating just got better and better. And I paid a bit extra each year to have a low interest card while I carried the balance as well. Once I got married and our combined income gave us some breathing room, the first thing we did was pay off that card. And we have not carried a balance since. Like Cris, we just use them to collect airmiles and keep our credit rating up. That's it. And that's how it should be. I worry that government control over these things may indeed hurt some innocent parties who would not have otherwise fallen victim or abused the system. It's not a good solution, IMHO.