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Credit Card Company Abuse

In these times of financial distress, the New York Times runs a good editorial on the issue of credit card company abuse:

When the Federal Reserve asked for comments on its proposed rules on abusive credit card practices, an astonishing 56,000 poured in. Most were from outraged consumers. They told of interest rates skyrocketing when they paid an unrelated bill late. They complained of unwarranted late fees and pushed-up due dates. One Pennsylvania customer fumed: Im fed up with credit card company tricks that drive us deeper in debt.

This anguished deluge should send a clear message to leaders in Washington. The Federal Reserve should swiftly adopt its proposed rules against unfair or deceptive credit card practices. But the real burden to curb these abuses falls on Congress. For too long, members of Congress have shirked the responsibility to ensure fair lending to credit card customers and have listened more intently to the banking lobbyists.

More...

. . . As heartless as [the new] bankruptcy law has been for beleaguered consumers, the Democrats, who have controlled Congress since 2006, have not fixed it. . . . The huge file of comments at the Federal Reserve contains plenty of anecdotes, and there are surely many more where those came from. Congress should give consumers what they need and deserve fair and clear lending rules for credit cards.

Let's face it, expecting this Democratic Party to fix anything is becoming a forlorn hope.

Speaking for me only

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    A few months back (5.00 / 3) (#2)
    by Steve M on Wed Aug 06, 2008 at 08:01:05 AM EST
    I got a credit card bill for 83 cents.

    When I put it to one side and forgot about it, I got another bill for like 20 bucks in interest and penalties.

    When I called up, they gladly waived the penalty.  (They make piles of money just by collecting it from all the people who don't call.)  "Okay, now you owe just $1.26."  "Uh, isn't that like 50% interest in one month?"  They ended up waiving that too.

    Shady, shady people.  You could sustain an entire class-action law firm doing nothing but suing these folks.

    Shady is right.... (5.00 / 3) (#5)
    by kdog on Wed Aug 06, 2008 at 08:10:23 AM EST
    I can proudly say I've never had a credit card.  Like my old man always said...if ya can't afford, ya don't need it.  Words to live by.

    Had to break down and get a pre-paid when it became impossible to get a hotel room or rent a car without one, but I refuse to let the bankers make a vig off me.  When I do business I like to keep it to two parties...the buyer and the seller....cutting out the leech-like money changers.

    Parent

    Good for you! (5.00 / 1) (#8)
    by kempis on Wed Aug 06, 2008 at 08:13:59 AM EST
    My old man said the same thing, and I wish I had listened. I'm in the process of paying off my last one and I'm actually enjoying going without rather than adding to my debts and giving those b*st*rds more interest.

    Parent
    Paying it off will feel great (none / 0) (#11)
    by shoephone on Wed Aug 06, 2008 at 08:19:17 AM EST
    Congratulations!

    But don't cancel the card. That would lower your credit rating considerably.

    Parent

    But you need one (5.00 / 2) (#10)
    by shoephone on Wed Aug 06, 2008 at 08:17:46 AM EST
    in order to create good credit. A high credit rating will help immensely with renting an apartment and getting all sorts of loans, including a home loan.

    The key is realizing the card isn't free money.

    Parent

    Luckily my landlady.... (5.00 / 1) (#14)
    by kdog on Wed Aug 06, 2008 at 08:23:29 AM EST
    is old-school like me...no credit check, no lease, rent paid in cash.  Moved in with a handshake.

    I don't even know what my credit score is...nor do I care....I don't wanna borrow their money, I'd rather earn my own.  I don't have a strong desire to own any land...if you really think about it, we are all renters of our space on planet earth.

    Parent

    To each his/her own. (none / 0) (#18)
    by shoephone on Wed Aug 06, 2008 at 08:35:31 AM EST
    Hopefully.... (none / 0) (#19)
    by kdog on Wed Aug 06, 2008 at 08:41:40 AM EST
    I can continue to live this way...I often worry about what a cashless society would do to my way of life.

    You know the bankers salivate over the dream of a cashless society...where they could get a percentage of every piece of business conducted in the entire country.

    You've got employers, the govt. and the banks pressuring people to get direct deposit, and the ever incresing use of debit cards in place of cash...maybe I'm just paranoid but it scares the sh*t out of me.

    Parent

    A good New Worth statement is better ... (none / 0) (#20)
    by Robot Porter on Wed Aug 06, 2008 at 08:46:59 AM EST
    than a good Credit Score.  So if you're ever in a position to buy a house, Kdog, you won't have any problem.

    Parent
    "Net Worth" ... (none / 0) (#21)
    by Robot Porter on Wed Aug 06, 2008 at 08:47:16 AM EST
    I mean.

    Parent
    Good to know Robo.... (none / 0) (#23)
    by kdog on Wed Aug 06, 2008 at 08:53:57 AM EST
    If it ever happens, it will be after a monster gambling score and I'll be paying in cash up front:)

    Parent
    heh (none / 0) (#25)
    by Robot Porter on Wed Aug 06, 2008 at 09:26:48 AM EST
    yes, you need one (none / 0) (#15)
    by TimNCGuy on Wed Aug 06, 2008 at 08:25:13 AM EST
    but, far too many people use them for things they can't afford and don't actually need.  I'm always amazed when I see someone talking about their credit problems on TV and when asked what kind of charges are on it, they most times say things like vacation to Mexico, or dinners out, etc.

    I do feel compassion for people who use them responsibly and the credit card companies still try to screw them.  But, for those who use them just to live the kind of life they think they DESERVE instead of what they can afford, I don't have much sympathy.

    Parent

    Few and far between (5.00 / 2) (#27)
    by angie on Wed Aug 06, 2008 at 09:33:17 AM EST
    I do bankruptcy work -- the "frivolous" bankrupt is the perception (much like the "welfare queen"), but the reality is most of these people have gotten themselves into trouble with the cards by charging groceries, not vacations.  Filing bankruptcy is the last thing they want to do -- by the time they come to me they haven't used their cards in years and have tried to pay them off. But with skyrocketing interests rates they keep getting deeper in debt even though they keep paying the "minimum balance." The stress is overwhelming to them. I do not exaggerate when I say I loathe the credit card companies. I will not give them my business.

    Parent
    you are probably right (none / 0) (#29)
    by TimNCGuy on Wed Aug 06, 2008 at 09:39:42 AM EST
    and I feel much sympath for those folks.  But, they must never interview that type on tv.

    Anyone I have ever seen on Suze Ormann or just a week or two ago on Oprah is always, you spend your money on WHAT???

    The one on Oprah recently was spending near $40 at Starbucks for her and her kids and taking her daughters to the mall almost daily, never leaving without a purchase.  Her family had more than enough money to be able to live a comfortable life.  She just couldn't control herself or was unwilling to deny herself.

    Parent

    There is such a thing as "shopaholics" (5.00 / 1) (#32)
    by angie on Wed Aug 06, 2008 at 12:56:23 PM EST
    I know a few myself -- people with low self-esteem who buy things to make themselves feel better, never mind if they can afford it. One friend has every closet in her house overflowing with clothes, 70% with the price tags still on. She buys things that aren't even her size but are such a "great deal."  Meanwhile, she struggles to get the light bill paid. So, I'm not saying they don't exist, I just think they get more air-time because their stories are more "shocking." And, just like all those "shocking" stories about "outrageous personal injury recoveries" that the insurance companies push out into the media, I'm willing to bet that the credit card companies have a hand in getting the "shopaholic" stories out into the media as well.

    Parent
    I'm with Kdog ... (5.00 / 1) (#17)
    by Robot Porter on Wed Aug 06, 2008 at 08:26:04 AM EST
    I don't use Credit Cards anymore.  

    And thanks to my Visa checkcard (debit card that is accepted like a Visa) the only reason I ever had one (big ticket items, plane tickets, hotels, etc.) is now moot.

    Life without credit cards is much better.

    Parent

    Yeah (none / 0) (#12)
    by Steve M on Wed Aug 06, 2008 at 08:21:26 AM EST
    I only use mine for car rental or work-related travel, but I mean, I'm kinda fortunate.  Living within your means can be challenging when unanticipated stuff occurs.

    If I was accustomed to getting multiple credit card bills every month, I probably would have just sent in a check without even noticing that the entire bill was nothing but late fees and interest that I shouldn't have to pay.  That's how they get you.

    Parent

    We only use debit cards (none / 0) (#38)
    by splashy on Wed Aug 06, 2008 at 04:40:28 PM EST
    So we can buy online or do other things with a card.

    Sure, you don't have credit, but then you aren't tempted to get in over your head.

    If you can't do it, then you won't.

    We are very grateful now, in spite of all the looks we got from family members that acted as though we we nuts for not having credit cards. It's amazing how people will act as though you are silly for not going into debt!

    Parent

    Sheesh. n/t (none / 0) (#4)
    by shoephone on Wed Aug 06, 2008 at 08:08:10 AM EST
    Legal Loan Sharks (5.00 / 1) (#3)
    by BarnBabe on Wed Aug 06, 2008 at 08:07:01 AM EST
    Last year Bank of America sent friends letters saying they have to pay higher interest or pay off the balance immediately. And they were always paying tons time the min balance. Discovercard sent me a letter saying the same thing and I owed $1100 on it. I paid it off and now only use one of the Rewards cards and charge everything to it and pay it off monthly. The amazing thing about it is the 4 of us are in that high credit score category.

    In as much as that happened 8-9 months ago, I suspect BoA saw they had a big potential problem train coming and were legally, thank you Congress, able to slap the people who were paying their debts. I suspect a lot of people were also paying their monthly mortgages and heating bills, etc. with their credit cards and have piled up a heap of balances.I feel banks are like a legal case in Discovery with one side sending all the evidence over. In this case the banks send you a 5 page 'Change notice' all in very small print to make sure they are advising you while at the same time knowing you are not going to be able to read it.

    Getting rid of my B of A VISA card (none / 0) (#7)
    by shoephone on Wed Aug 06, 2008 at 08:12:01 AM EST
    and rolling over my SEP IRA into another one at another institution were two of the best things I ever did for myself.

    My VISA has been through my credit union ever since, and I am perfectly happy with the service I get.

    Parent

    This Democratic Party (5.00 / 3) (#6)
    by kempis on Wed Aug 06, 2008 at 08:11:19 AM EST
    has been a profound disappointment.

    I remember being thrilled when "we" finally took back the Congress. I remember being so hopeful as Pelosi and Reid trumpeted their goals for the first 100 days. Then all the diluting started. Then it became more and more apparent that these people talked like Democrats but were just as concerned about cultivating a good relationship with corporations as the GOP.

    But in all honesty, they have to be, given the fact that it costs a fortune to win and stay in office. Until we have real campaign finance reforms, this is how it will be. The Dems will just work harder to create the illusion that they're interested in social safety nets, environmental regulations, and civil rights. And they can be--as long as there is no conflict with their corporate sponsors. (See the ATT Democratic Convention and consider the real motivation behind not stripping telecomm immunity from the FISA bill.)

    As long as the financial institutions fund the parties, usury and predatory lending etc. will be AOK with our DC representatives, not in word, of course, but in deed.

    Vultures (5.00 / 4) (#16)
    by Dave B on Wed Aug 06, 2008 at 08:26:01 AM EST
    I've about paid my cards off and won't be using them.

    I recently bought a truck (yes a truck, some people actually need them).  They ran my and my wife's credit report.  I had a credit score of 830, my wife 831.  Yet, because we've made a couple payments past the due date, not for lack of money but because I tend to focus more on my work and hobbies than sitting down to pay bills.  My interest rate on the cards rocketed from about 12% to over 25%.  So, I paid them down, and I won't be swiping...

    Screw them.  If they want to screw people with good credit and good cash flows, I'll quit using them.  They will chase people like me that can afford to have a card, and they will be left with the folks who can't.

    I refuse to get a credit card (5.00 / 1) (#35)
    by CST on Wed Aug 06, 2008 at 02:01:51 PM EST
    Although I use my debit card as a credit card, so maybe that counts.  I never spend money I don't have... except on college.  I am terrified of debt, maybe because I have so much already.  Hopefully paying student loans will be enough to raise my credit score.

    I will probably be like kdog and not by a house until I can pay cash... so I will never own a house.  Which is kinda ok with me since houses are pretty wastefull.

    Evan Bayh voted for the Bankruptcy Bill (none / 0) (#1)
    by shoephone on Wed Aug 06, 2008 at 07:55:43 AM EST
    and opposed amendments to it that would have made life less miserable for debtors. That pretty much says it all.

    Sirota devotes some ink to Bayh (none / 0) (#37)
    by Donna Z on Wed Aug 06, 2008 at 04:18:04 PM EST
    in Hostile Takeover. Bayh represents a state with many fixed-income elderly who are threatened by the bankruptcy bill, and Bayh represents a state that doesn't host the homeoffices of credit card companies. Bayh did more than just vote for the bill; according to Sirota, Bayh lobbied for the legislation. Once it passed, the credit card companies donated over $200,000 to Bayh.

    Bayh was the only Dem to receive Sirota's "hack" label.

    Parent

    Can you solve it with an executive order? (none / 0) (#9)
    by Saul on Wed Aug 06, 2008 at 08:14:16 AM EST
    Or does it have to be solved by congress?

    So many burdens (none / 0) (#13)
    by Lahdee on Wed Aug 06, 2008 at 08:21:29 AM EST
    so little time.
    So many issues, so little backbone.

    They've fallen and the can't get up.

    I charge everything on credit cards (none / 0) (#22)
    by TeresaInSnow2 on Wed Aug 06, 2008 at 08:51:34 AM EST
    Groceries
    Gas
    Other bills like Sprint, gas/electric, water, etc.

    At the end of each month I pay the credit card bill off IN FULL. I can check spending online and curb it if it's getting out of hand.

    No interest, no late charges and most of my cards have 1% cash back.

    This means I use someone else's money all month, and get 1% money back for the priviledge.

    If you can do it, credit cards are a great thing.

    But I know when people actually can't make ends meet and have to use credit cards sometimes for necessities.  I was there as well once.

    True, we'll never have good credit card reform as long as banks are running the show in WA.

    Exactly, me too (none / 0) (#24)
    by andgarden on Wed Aug 06, 2008 at 09:09:37 AM EST
    Do you know what they call us in the industry? "Deadbeats." I love it.

    Credit cards are a terrible, terrible, way to get a loan.  Sometimes you can game the 0% offers, and that's great. But anyone who needs to take out a several-thousand dollar loan at 20% interest is paying way too much.

    Parent

    My credit cards are a fixed rate (5.00 / 1) (#26)
    by shoephone on Wed Aug 06, 2008 at 09:31:00 AM EST
    of 9%. Mastercard called and asked me why I had stopped using their card and I said, "Well, my credit union VISA gives me a fixed rate of 9% and yours is 13% and now you're threatening to take it up to 15%, so..."

    They immediately fixed my MC rate at 9% to match what I have.

    But I'm like you and Teresa. I pay my cards off at the end of every month. Haven't paid an interest charge in four years. Now if they would just quit sending me those annoying cash advance checks...

    Parent

    We're deadbeats? How cute! (none / 0) (#28)
    by BarnBabe on Wed Aug 06, 2008 at 09:37:17 AM EST
    So because we use the Rewards or Freedom cards and pay them off monthly, we are called deadbeats? Ha. I guess because they do not get interest payments. I use to use my debit card for a lot of things, but now I use a reward card and buy everything with them. It is a great way to control and monitor your spending. And in the last 6 months, I have gotten about $250 in Home Depot gift cards. So essentially I am paying cash for everything but paying it once a month. On the big ticket items, I take advantage of the 12 month zero interest. I take the total and divide into 10 months. It is a great feeling to look at a large appliance or other item and think, "OK, two payments to go and you are paid off"

    Parent
    Yup (none / 0) (#30)
    by andgarden on Wed Aug 06, 2008 at 09:42:01 AM EST
    You are still making money for VISA/MC because they collect transaction fees, but they sure want more. The Amex charge cards that make you pay in full every month still charge an annual fee--there's a reason for that.

    Parent
    We're also deadbeats! (none / 0) (#31)
    by NWHiker on Wed Aug 06, 2008 at 10:55:13 AM EST
    I love it. Deadbeats.

    That said, we've used the 0% or 1.99% fixed interest offers quite a bit. Our car went on one (we could have paid cash for it, but I had 0% for the life of the balance. Why bother? Heh.).

    My best score? Daughter's braces. Ortho gave us a 15% discount since we paid our part in full, we put it on a card, got 1% to spend at REI, transferred the whole mess to a 1.99% card and paid it off in 6 months. Heh. I paid -I calculated- peanuts in interest.)

    The thing is, all of these things are purchases we could have paid for, using a credit card just got us extra time/extra bennies/whatever. I think that's the key.

    Parent

    A little harsh on the Democrats don't you think? (none / 0) (#33)
    by MikeDitto on Wed Aug 06, 2008 at 01:29:51 PM EST
    Maybe we should focus on House leadership rather than "Democrats." There's an important bill with 155 cosponsors sitting there waiting for action.

    Hoyer and Pelosi just need to bring it up for a vote. Of course it will then die in the Senate.

    It's not just Hoyer and Pelosi (5.00 / 1) (#34)
    by shoephone on Wed Aug 06, 2008 at 02:00:15 PM EST
    It's all the Blue Dogs and their cohorts too.

    The Democrats deserve all the derision they are getting.

    Parent

    The Blue Dogs don't control the schedule (5.00 / 1) (#36)
    by MikeDitto on Wed Aug 06, 2008 at 03:08:55 PM EST
    And 12 out of 47 Blue Dogs are cosponsors of this bill.

    65% of the Democratic caucus is signed up to be cosponsors of the bill, and many more will vote for it if it's brought to the floor. It is therefore inaccurate to say that it's "Democrats" fault or even Blue Dogs' fault.

    It sits squarely on the shoulders of the two people who control the schedule-- Nancy Pelosi and Steny Hoyer.

    To be fair, it has been held up in the Financial Services Committee due to shenanigans by the credit card companies. But the bill passed committee on July 31st and now it's up to Nancy Pelosi and Steny Hoyer to get it on the floor for a full vote.

    Again, where it will go to the Senate to die because the Republicans filibuster every single Democratic bill.

    Parent

    Excellent Frontline On this (none / 0) (#39)
    by RustedView on Wed Aug 06, 2008 at 05:24:26 PM EST
    There was an excellent Frontline on the deceptive practices of credit card companies done some years ago.  It is available in full for viewing on the PBS Website