var json_comments = new Array("
\"user-pic\"
tard
May 13, 2009 1:13 PM
Moderate | Flag for review

It only makes sense. If someone becomes a higher risk (by missing a payment, losing a job, etc) and a credit card company can't increase the interest rate (to offset the higher risk), they'll just close the account.

Reply
10 replies
\"user-pic\"
Mary Marsala with Fries
May 13, 2009 2:22 PM
Moderate |Flag for review

@tard: And then other companies (colloquially known as \"competition\") will have a chance to take on that customer, if they like.

Reply
\"user-pic\"
ADismalScience
May 13, 2009 2:26 PM
Moderate |Flag for review

@Mary Marsala with Fries:


That's the other fun problem!


The government has provided tons of TARP money to virtually every investment firm. That is free capital provided by taxpayers to increase the lending capacity of the various firms. However, the money wasn't provided on a level playing field - some banks got a lot more than others, and the ultimate proportions of equity available at the firms to collateralize lending were not taken into account by the TARP process.


Therefore, has the government essentially created \"winners\" and \"losers\" in this artificial credit market? Will that be counterproductive to any recovery? What are the real competitive effects? Nobody knows, and that's a big problem.

Reply
\"user-pic\"
nakedscience
May 13, 2009 2:09 PM
Moderate |Flag for review

@tard: Why do you think increasing the rate NOW is a good idea? Yep, let's just make it even harder for someone to pay something off they are obviously having issues paying off now....

Reply
\"user-pic\"
AustinTXProgrammer
May 13, 2009 2:23 PM
Moderate |Flag for review

@nakedscience: Years ago I ran up a lot of debt on medical bills for my fiance and was laid off. When I became employed again I spend several years barely staying afloat slowly paying down the credit card bills. When the bankers used Cross default to jack my interest from 8% to 34% they never got another dime, I knew I could never dig out, so why try?

Reply
\"user-pic\"
pecan 3.14159265
May 13, 2009 2:04 PM
Moderate |Flag for review

@tard: Here we get a little unfair. Just because you lose your job, doesn't mean you're an automatic risk. I can survive off my savings for at least four or five months without ever touching my credit cards. I'd be extremely upset if any of my cards were canceled because someone sitting behind a desk ran some numbers and thought I was a risk.

Reply
\"user-pic\"
R3PUBLIC0N
May 13, 2009 4:01 PM
Moderate |Flag for review

@pecan 3.14159265: Do you understand what risk means? It means they can't take the time to look into every variable of your life, and that they have to rely on statistics to determine the *risk* - that is probability - that a person in your situation is not able to repay their debt.

Reply
\"user-pic\"
cf27
May 13, 2009 3:13 PM
Moderate |Flag for review

@pecan 3.14159265: I think you're misunderstanding risk. There's no certainty, but there's some risk. For you, for example, what happens if there's a sudden health emergency that depletes your savings? With a job, you may be able to pay back the credit card company; without, you might not be able to.

In any case, credit card companies don't really find out when you lose your job, unless you tell them. Instead, they look at your payment history and so on.

Reply
\"user-pic\"
ADismalScience
May 13, 2009 2:14 PM
Moderate |Flag for review

@pecan 3.14159265:


Yeah, uhm, that is exactly what any reasonable credit issuer would do. I'm not interested in your life story or personal financial situation, quite frankly. My job is to play the percentages, and if you lose your job expecting your creditors to take no action you're insane.

Reply
\"user-pic\"
Cocoa Vanilla
May 13, 2009 1:52 PM
Moderate |Flag for review

@tard: Yes, they should close the account, but increasing the interest rate isn't a very good business practice in my opinion. If they can't make their payments now at 20%, what makes you think they'll be able to make them at 30%?

Reply
\"user-pic\"
Brian James Schend
May 13, 2009 1:47 PM
Moderate |Flag for review

@tard: and they should

Reply
","
\"user-pic\"
menumbers
May 13, 2009 1:15 PM
Moderate |Flag for review

Perfect!!!! Credit Card reform retort...and why they need to be able to get away with backhanded tricks. They spend alot of money figuring out how they can short sell their customers, the good ones and the bad ones. The argument I do not buy. What happened to doing business in good faith, with reasonable expectation of a decent profit? Did we kill that off for win at all cost?

Reply
2 replies
\"user-pic\"
Lcstyle
May 13, 2009 6:57 PM
Moderate |Flag for review

@menumbers:

KILL IT? we freaking murdered that thing long ago in the post 1999 internet IPO debacle and with the Bush presidency.

Just watch elizabeth warren describe how backhanded politics work, including the o so beloved clintons.

Reply
\"user-pic\"
Lcstyle
May 13, 2009 6:58 PM
Moderate |Flag for review

@Lcstyle:

Elizabeth Warren interview, she describes the war on the middle class by the rich and powerful mega credit card corps.

Reply
","
\"user-pic\"
Darrone
May 13, 2009 1:23 PM
Moderate |Flag for review

Perhaps, if a client isnt worthy of a card with less than 35% APR, they shouldn't have a card in the first place.

People think everyone should have access to credit cards, the same way we thought everyone should be able to get a mortgage 10 years ago. Now we realize, certain simply can't afford a credit card.

Reply
5 replies
\"user-pic\"
kathyl
May 13, 2009 3:20 PM
Moderate |Flag for review

@Darrone: I agree. I don't think that the bulk of credit customers should have to be penalized with the shenanigans that were the impetus for this legislation in the first place to subsidize the losses credit companies will take on customers who should not have credit extended to them in the first place.

The problem comes when the whining from credit companies is based on \"we'll still make money, but not enough for everyone on the board to buy that fourth boat\".

I think the truth is somewhere in between those. The fact remains, though, that they are manipulating their systems to do things that any thinking, objective person would agree are not fair or reasonable. It's sad that the entire industry has colluded to the point where you can't just leave a shady company to find a trustworthy one because they are all shady, but once that happens, the only thing that will undo it is legislation.

They have created this situation by pushing it to the point where only legislation will fix it. Whining about it now is just childish.

Reply
\"user-pic\"
tard
May 13, 2009 2:46 PM
Moderate |Flag for review

@Darrone:

\"Perhaps, if a client isnt worthy of a card with less than 35% APR, they shouldn't have a card in the first place.\"

Let's say, for whatever reason, the only way for you to get by in the next 5 days is if you take out a loan at %35. Let's say you're waiting on a check to clear, so you know you'll have the money to pay it back.

Do you really want the gov't to take away that option entirely? A lot of people will take those loans and have no way to pay them back (that's why the interest rate is 35% in the first place), but for those people who do pay them back, that option is gone.

Reply
\"user-pic\"
Darrone
May 13, 2009 4:27 PM
Moderate |Flag for review

@tard: Let's say, for whatever reason, im late for work. And i know that i will lose my job. Just this once, i need to exceed the speed limit, but do it responsibly with both hands on the wheel and using my turn signals while paying full attention to the road. Why should the government regulate this?

Because that's not reality. It NEVER happens like that. Same with credit. Without some regulation, people will be doing things against their own interests, like using a 75% APR credit card, or driving 95 miles an hour.

Reply
\"user-pic\"
Firethorn
May 13, 2009 3:08 PM
Moderate |Flag for review

@tard: but for those people who do pay them back, that option is gone.


Instead they go down to the pawnshop or payday loan place and get a 800% effective 'loan'.


We need to take out the payday loan places first.

Reply
\"user-pic\"
Firethorn
May 13, 2009 1:55 PM
Moderate |Flag for review

jstonemo:
Nobody needs a lot of things. Matter of fact, we don't need most of the things in our lives today, they're just really nice to have.


As for relying on credit cards, I tend to use them as a evener - with them I can keep more of my money in higher earning but less liquid assets. Pay them off in full every month so I don't pay interest.


After that, it becomes situational. If you earn enough money - and 'enough' depends a lot on location and circumstances, sure, it can be a bad sign. But what if that emergency is particularly large?


Credit is good used wisely. But a large portion of the population hasn't learned how to use it wisely.

Reply
","
\"user-pic\"
Jim Topoleski
May 13, 2009 1:26 PM
Moderate |Flag for review

You would think that with all the hate this country now has for ANYONE in the financial sector, they would just shut up and sit on their hands and wait for the environment to get better for them to loosen up regulations, but I guess not.

Deregulation was the WORST thing this country has ever done. The regulations existed in the first place because of how untrustworthy these goons where. And time and again they have shown that they can NEVER be trusted to walk the balance between profits and care for the consumer.

Reply
1 replies
\"user-pic\"
seishino
May 13, 2009 1:40 PM
Moderate |Flag for review

@Jim Topoleski: It's not just profits vs customers. It's short-term profits vs. long-term profitability. Lots of people in the morgage industries knew that they were making a lot of bad bets. But the rewards were structured in such a way that making a bad morgage was more profitable for them personally (and in the short term) than not making one.


The banks did the same thing with credit card debt... they overextended, sacrificing long term profits for short term personal gain. If they're going to survive as an ongoing concern, there will need to be regulations against this sort of thing. It appears that the \"don't screw your customers as much as you have been\" clauses are in there mostly to frame the debate for the public.

Reply
","
\"user-pic\"
jstonemo
May 13, 2009 1:27 PM
Moderate |Flag for review

They realize their own mortality. Nobody NEEDS credit cards. If you rely on credit cards to cover shortages or emergencies, you are a bad money manager for your own finances. I know from whence I speak.

Reply
4 replies
\"user-pic\"
Mint137
May 13, 2009 5:34 PM
Moderate |Flag for review

@jstonemo: The catch is you kind of need a Credit History to get certain things like take out loans and stuff. Of course you could just get a credit card and not use it in that case [or literally freeze it in the freezer to prevent overuse].

Reply
\"user-pic\"
zandar
May 13, 2009 3:37 PM
Moderate |Flag for review

@jstonemo: Perhaps YOU'VE never HAD to buy groceries with a credit card. I have, and since the card was a shitty secured card, the interest was the suckiest, but 35% still beat ten times that rate at the payday loan trap around the corner.

Reply
\"user-pic\"
howie_in_az
May 13, 2009 11:05 PM
Moderate |Flag for review

@zandar: You could have simply closed the secured card and gotten your money back. Why pay interest on your own money?

Reply
\"user-pic\"
Cyberxion101
May 13, 2009 5:17 PM
Moderate |Flag for review

@PopulistOutrage: Don't think he said that bro. Might wanna chillax and think it out before you post. I've learned that lesson 'round here the hard way. :P

Reply
","
\"user-pic\"
ceez
May 13, 2009 1:28 PM
Moderate |Flag for review

man screw them banking big wigs...those b@stards DO control everything, and after the economic volcanic eruption they even control government.


now they're pulling strings by saying that if you reform we'll cut off credit, really, you're cutting credit cause you're not getting the extravagant fees anymore, how about you cut a few zeros off your paycheck and help CC holders out a bit for a change. stop raping them for your benefit.


and \"when they need it most\", I think having too much of it is what's gotten sooo many people in trouble, so people dont need more of IT! and there should be no correlation between the reform and you having to screw with ppls current credit cards!


damn you banking world!

Reply
","
\"user-pic\"
Nighthawke
May 13, 2009 1:35 PM
Moderate |Flag for review

Now that comment is greed talking, not a sensible officer of the bank.

They need to understand that their profiteering days are nearly over and sensible management of their assets are on top of them, like it or no.

That boy better shut his yap and reread the reformation act, for it will get passed, like it or not.

Reply
","
\"user-pic\"
Anonymous
May 13, 2009 1:36 PM
Moderate |Flag for review

It doesn't necessarily have anything to do with a person's credit or if they've missed a payment, etc. You can have a great credit score, never have been late, have a low balance - perfect everything, and they are still doubling your interest rate! They can do this to anyone, whether or not you've done anything to deserve it.

Reply
","
\"user-pic\"
Saboth
May 13, 2009 1:37 PM
Moderate |Flag for review

If we aren't allowed to ream our customers, our profits...I mean the customers will suffer! We demand to be able to change any fee, any rate, for any reason, and at any time, and if you fail to pay, use any brand of baseball bat to break any joint.

Reply
2 replies
\"user-pic\"
Firethorn
May 13, 2009 1:57 PM
Moderate |Flag for review

@Saboth: I mean the customers will suffer!


Certainly they will. The CC company closes Joe Minimum Wage's account because they can't charge 32% because Joe doesn't always pay on time and he has that bankrupty.


Meanwhile, Joe needs some money - so he goes to a payday loan place and pays an effective 400% interest rate.


You have to consider the alternatives.

Reply
\"user-pic\"
Blackadar
May 13, 2009 2:07 PM
Moderate |Flag for review

@Firethorn: Or maybe Joe will learn to live within his means.


Anyone who has read the main provisions of the credit card act (conveniently posted on Consumerist) realizes that these aren't severe, punishing regulations. They're simply meant to take the abuses out of a one-sided agreement and help level the playing field again. In reality, the legislation is simply enforcing the terms of the agreement made when the card was issued and not allowing credit card companies to arbitrarily (and often unknowingly to the consumer) change the terms of the agreement.

Reply
\"user-pic\"
ADismalScience
May 13, 2009 2:09 PM
Moderate |Flag for review

@Blackadar:


Joe will not learn to live within his means. Ever. You simply have to accept that.

Reply
\"user-pic\"
m4ximusprim3
May 13, 2009 4:28 PM
Moderate |Flag for review

@ADismalScience: For such a smart guy, you sure are blindly fatalistic.

Reply
\"user-pic\"
trujunglist
May 13, 2009 6:47 PM
Moderate |Flag for review

@m4ximusprim3:

There's a reason that many geniuses end up committing suicide, and also why the phrase \"ignorance is bliss\" exists.

Reply
\"user-pic\"
ADismalScience
May 13, 2009 5:05 PM
Moderate |Flag for review

@m4ximusprim3:


Cause and effect, my friend. Cause and effect.

Reply
\"user-pic\"
Sean Masters
May 13, 2009 3:54 PM
Moderate |Flag for review

@ADismalScience: Ah, yes, the famous \"human beings are stupid\" argument. Works wonders ;)

Reply
","","
\"user-pic\"
tard
May 13, 2009 1:44 PM
Moderate |Flag for review

\"Challenging\" is secret banker code for \"less profitable.\"

The higher interest rates are used to offset the losses from the high-risk borrows who default.

That's why low-risk borrowers get all the perks (lower interest rate, cards with better incentives), as they are a steady source of profit.

Reply
2 replies
\"user-pic\"
CrowMignon
May 13, 2009 3:00 PM
Moderate |Flag for review

@tard: I believe part of jacking up the rates on accounts which might default is to crank up the amount they can write off when it does. I would love to see an investigation into how much inflated interest is written off to reduce the tax burden of some of these corporations.

Reply
\"user-pic\"
xip
May 13, 2009 1:49 PM
Moderate |Flag for review

@tard:

Any more, I think they are screwing over the low-risk borrowers too, because too many high risk borrowers are defaulting.

Reply
","","","","","
\"user-pic\"
HiPwr
May 13, 2009 1:55 PM
Moderate |Flag for review

Credit isn't a Constitutional Right. If the banks aren't making a profit on credit cards, then they should absolutely cut people off.

Reply
3 replies
\"user-pic\"
mac-phisto
May 13, 2009 2:57 PM
Moderate |Flag for review

@HiPwr: actually, not only are banks making a profit on credit cards, but credit card banks are generally TWICE AS PROFITABLE as their non-credit card counterparts. the average ROA (return on assets) for a non-credit card bank is 0.5%-2.0%. the average ROA for a credit card bank? 2-4%. source: [www.federalreserve.gov]

don't ever let a credit card company trick you into thinking they aren't profitable.

Reply
\"user-pic\"
PopulistOutrage
May 13, 2009 4:50 PM
Moderate |Flag for review

@mac-phisto: God forbid we let someone be profitable on a product THAT YOU DON'T HAVE TO SIGN UP FOR. Quick, grab the pitch forks, populists!

Reply
\"user-pic\"
mac-phisto
May 13, 2009 7:23 PM
Moderate |Flag for review

@PopulistOutrage: i don't have a problem with any institution making a profit. i read HiPwr's comment as indicating that the government's bill would somehow constrain their profitability, which it most certainly will not. i've read it a few times since, & i've yet to determine what his point was, exactly.

at issue is not whether a company makes money, it's HOW the company makes money. many of these practices are deceitful, they are the EXCEPTION in lending, & their practice is frequently outlawed on the state & national level in other types of lending (including other forms of revolving credit).

it's in society's best interest to sometimes legislate the bounds of commerce. if that's populist, then i guess you'll have to come to terms with the fact that you live in a populist country (see: u.s. constitution, article i, section 8, clause 3 & 100+ years of supporting SCOTUS opinions).

Reply
\"user-pic\"
HiPwr
May 13, 2009 3:08 PM
Moderate |Flag for review

@mac-phisto: I don't recall ever seeing a credit card company claim that it's not profitable. It's up to them to decide at what point do they cut people off rather than cut into their profits.

Reply
\"user-pic\"
mac-phisto
May 13, 2009 3:26 PM
Moderate |Flag for review

@HiPwr: i'm not sure i understand your argument. no provision in the bill takes that right away from credit card companies - it just refines the marketplace.

perhaps you can point me to the provision that would somehow compromise the bank's choice to cut people off. i think i missed that one.

Reply
\"user-pic\"
HiPwr
May 13, 2009 3:42 PM
Moderate |Flag for review

@mac-phisto: I reviewed my comments to find where I make a reference to the legislation and could not find it. My point is that if the banks want to cut people off because they feel that regulation isn't allowing them to make a profit (or, enough profit [a purely subjective determination that can be made only by them]), they have the choice to simply cut people off and there's not a whole lot anyone can do about it except cry out that it isn't \"fair.\"

Reply
","","
\"user-pic\"
ADismalScience
May 13, 2009 2:02 PM
Moderate |Flag for review

Fact: this regulation will increase the average APR charged to everyone and result in even more drastic credit-line cuts than you see today.


It's not a threat. It's not being made of whole cloth by banker lobbyists. I'm not even against the proposed legislation! But that is the fact. Credit cards will be harder to get, more expensive to use, and much less available as a source of emergency funds. Understand that accepting that reality is a consequence of more consumer rights in this area.


Not that this site considers credit as anything more than devil juice, of course.

Reply
6 replies
\"user-pic\"
m4ximusprim3
May 13, 2009 4:38 PM
Moderate |Flag for review

@ADismalScience: Credit is like alcohol- good when used in a responsible fashion, disastrous when abused. The new regulations are there to prevent abuse, and if that raises the barrier to entry for those of us who are responsible, I for one am fine with that, just like I'm fine getting carded for my handle of jim beam.

Reply
\"user-pic\"
ADismalScience
May 13, 2009 5:04 PM
Moderate |Flag for review

@m4ximusprim3:


Yup, that's why I'm fine with the legislation. The barriers to entry should be higher, and should never have been this low in the first place. I'm just trying to make the argument that all the joy and pomp over this victory of the evils should be tempered with the sober realities of credit constraints. No free lunch and all that.

Reply
\"user-pic\"
Grive
May 15, 2009 2:55 AM
Moderate |Flag for review

@ADismalScience: Especially not at KFC.

That's the point though. Credit should not be for everyone. I fully agree with what you're saying (that credit cards will get more expensive and restrictive). I fail to find why it could be seen as a bad thing. So all this pomp over victory of the evils is definitively justified, as these effects are also good for the consumer... in the same way putting the cookie jar on top of the fridge is good for your children.

Besides, with the ridiculous ease you could get credit cards in the past (And credit in general, I was offered a loan that would basically eat nearly 60% of my paycheck monthly for 5 years... from a \"reputable\" bank), the restrictions might not be too bad. They do want to make money, and lots of it. This might just mean they'll now have to pay attention to how they do their business.

Reply
\"user-pic\"
m4ximusprim3
May 13, 2009 5:35 PM
Moderate |Flag for review

@ADismalScience: Right, so we're on the same page again. Carry on, guvnor!

Reply
\"user-pic\"
consumerfan
May 13, 2009 3:06 PM
Moderate |Flag for review

@ADismalScience: There isn't any final legislation yet, so how can you state any facts about its effects?

Sources please.

Reply
\"user-pic\"
consumerfan
May 13, 2009 3:08 PM
Moderate |Flag for review

@consumerfan: *slaps self* That'll teach me for not reading a previous article (that wasn't linked from this article).

Sorry!

Reply
\"user-pic\"
mac-phisto
May 13, 2009 3:03 PM
Moderate |Flag for review

@ADismalScience: last time i checked, that was happening anyway.

this isn't the first time we've had credit card reform, so i doubt the changes will be as drastic as you claim. give andrew kahr 6 months & i guarantee they'll find a way to double their profitability even with the new provisions & the average APR will still be ~15% - where it's been for 20 years.

Reply
\"user-pic\"
PopulistOutrage
May 13, 2009 4:52 PM
Moderate |Flag for review

@mac-phisto: Please back up this propaganda with facts.

Reply
","","","","","","","","
\"user-pic\"
Mary Marsala with Fries
May 13, 2009 2:25 PM
Moderate |Flag for review

Of course the \"Industry Group\" wants us to act like they're an all-powerful united front that no-one can argue with or out-bid -- monopolies have to be formally illegal for a reason; they're a cushy business prospect.

Fortunately that isn't even remotely the case. This bill will hurt the companies who don't evolve, true -- and that's precisely the point. They SUCK the way they are now, so the government, as a representative of the people, is rightfully telling them \"evolve or die\".

Thankfully the chances are very good that either some of them will evolve (find ways to make money offering credit without using tactics that would make Al Capone blush), or new companies will step in with better ideas.

The big old behemoths who're complaining that forcing them to play fair will mean they take their toys and go home? Are totally welcome to.

Reply
1 replies
\"user-pic\"
ADismalScience
May 13, 2009 2:28 PM
Moderate |Flag for review

@Mary Marsala with Fries:


The \"evolution\" is to cut off credit to risky borrowers. Profit is risk. If legislation remove the profit, banks remove the risk. Have you tried getting a private student loan recently?

Reply
","","
\"user-pic\"
Blueskylaw
May 13, 2009 2:28 PM
Moderate |Flag for review

The credit card industry is the most profitable one in the United States with annual earnings in the $30 billion range. Many people might be surprised to learn that a single credit card issuer -- MBNA -- earned 1.5 times more profit than McDonalds in 2004. Citibank, another major credit card issuer, earns more profit than both Microsoft and Walmart.


If its a difficult lending environment, then maybe credit card companies need to lose money this year like a lot of other companies have. But alas, people live and die by their cards and the industry knows that, thats why they can raise rates, increase fees, create fees, cut credit and a myriad other things and get away with it.


Personally, I wouldnt mind a little collateral damage if it would give the credit card industry a good beatdown and a black eye.

Reply
","","
\"user-pic\"
Urgleglurk
May 13, 2009 2:43 PM
Moderate |Flag for review

HiPwr: True, credit cards are not a right. No one said they were.
OTOH, screwing your customers into the ground with ridiculous interest rates isn't a right either.

Reply
2 replies
\"user-pic\"
HiPwr
May 13, 2009 3:10 PM
Moderate |Flag for review

@Urgleglurk: The little rounded arrow allows you to respond directly (not being sarcastic).


One thing that is definately a right is that I don't have to use a credit card at all if I so choose.

Reply
\"user-pic\"
mac-phisto
May 13, 2009 3:36 PM
Moderate |Flag for review

@HiPwr: ahh, the infamous free marketeer answer to anything that might force companies to play by a fair set of rules.

that's not how the free market is designed to work. \"play by our rules or don't play at all\" isn't a valid choice - it's a hobson's choice.

credit card banks have had plenty of years to self-regulate with little result. no more!

Reply
\"user-pic\"
HiPwr
May 13, 2009 4:22 PM
Moderate |Flag for review

@mac-phisto: I have credit cards. I don't keep balances on them now, but it wasn't always that way for me. It was an excercise in belt-tightening to pay them off, but it was well worth it.


Personal responsibility can be a tough pill to swallow at times, but it's worth it.

Reply
\"user-pic\"
mac-phisto
May 13, 2009 4:49 PM
Moderate |Flag for review

@HiPwr: personal responsibility or not, that doesn't excuse an abusive marketplace.

Reply
","","","","","","","","","","","
\"user-pic\"
AllanG54
May 13, 2009 3:14 PM
Moderate |Flag for review

The fact is, if you need to borrow you have to pay what the market will bear. Learn to be smart, pay your cards in full at the end of the month and don't worry about the rate. What ever happened to \"living within one's means\"?

Reply
","
\"user-pic\"
bohemian
May 13, 2009 3:19 PM
Moderate |Flag for review

Banks are doing anything to avoid actual regulation by the govt. So is the health care industry. With both the standard tactic is to try to get the govt. to let them self regulate. But self regulation simply does not work. It is like asking a crack addict to promise to stop using crack and leaving it at that.

I hope the govt. doesn't fall for the \"we promise to be good\" diversion.

Reply
1 replies
\"user-pic\"
HiPwr
May 13, 2009 4:34 PM
Moderate |Flag for review

@bohemian: It's more likely that government will fall for the \"we will donate to your campaign\" diversion.

Reply
","
\"user-pic\"
cf27
May 13, 2009 3:19 PM
Moderate |Flag for review

Look at this from the point-of-view of a credit card company:

We have a set of customers. Under our current policies, over the next 5 years, around 25% of them will become bad risks and will have their rates increased by 20%, but we can't predict who those will be.

If we are prevented from raising rates later, we will have to raise rates now. Since we don't know who will become a bad risk later, we'll just increase everybody's rates by 5% now.

Reply
","
\"user-pic\"
Tiber
May 13, 2009 3:20 PM
Moderate |Flag for review

So, let me get this straight. Your argument is that if this passes, you'll be forced to do exactly what you've already been doing? And what part of this is challenging anyway? Let's see, removing universal default, removing late fee traps, banning double cycle billing, limiting arbitrary fees, etc. It doesn't make things more challenging, it makes things more simple! Is it that \"challenging\" to operate in manner where the layman can understand everything you do?

Reply
2 replies
\"user-pic\"
m4ximusprim3
May 13, 2009 4:43 PM
Moderate |Flag for review

@Tiber: When your entire business is built on obfuscation of the terms of your contract with your customers, than yes, transparency is \"challenging\".

Hold on while I get out my violin. It's in a thimble I left around here somewhere...

Reply
\"user-pic\"
HIV 2 Elway
May 13, 2009 5:22 PM
Moderate |Flag for review

@m4ximusprim3: I don't think you understand how lender make money. All banks report incomes from fees. Check it out, thats not how their entire business is built.

Reply
\"user-pic\"
m4ximusprim3
May 13, 2009 5:43 PM
Moderate |Flag for review

@HIV 2 Elway: Oh, I understand that it's a large part of their income. The problem comes when the customer is not able to read and understand the terms of the agreement, and the bank leverages this into \"hidden\" fees. Which is often the case.

@mac-phisto: Agreed. As competition has increased, banks have looked to more and more obfuscated fees to make up revenue they've had to sacrifice in other places (\"free checking\", for example).

Reply
\"user-pic\"
mac-phisto
May 13, 2009 5:32 PM
Moderate |Flag for review

@HIV 2 Elway: no, but it's where about one-third of their operating income comes from (on average) & it's the fastest growing segment of their income.

Reply
","","
\"user-pic\"
Anonymous
May 13, 2009 3:21 PM
Moderate |Flag for review

Everyone here is forgetting that in order to build credit, people have very few options. I moved to the United States from Canada in 2007, and my credit score did not carry over. Without the credit card I have right now, I wouldn't have any credit record whatsoever. It can be very hard to get credit without any credit cards, as it's almost impossible to get accepted for loans, especially at this time. Removing credit cards, you might as well remove all capacity for many people to ever get a decent car, or a mortgage, and the credit and banking system will, in essence, kill itself.

Reply
","","
\"user-pic\"
Goatweed
May 13, 2009 3:27 PM
Moderate |Flag for review

How are they in a \"difficult lending environment\" if the gov't - I mean, id WE just ponied up our future tax payments to keep them in business? They're in the lending business, they need to lend but do it RESPONSIBLY and without GREED in the form of crazy interest schemes and/or ridiculous fee structures.

Reply
","","","
\"user-pic\"
Brontide
May 13, 2009 3:40 PM
Moderate |Flag for review

I have always felt that laws should be designed to make business dealings \"fair\". In this case the CC industry has used a number of underhanded tricks in order to increase their profits and now the government needs to step in to make the CC / consumer relationship more \"fair\" moving forward.

I put fair in quotes because it's not something easy to pin down. I don't know what the exact balance should be, but now it's obvious that the CC companies are acting in a way that is not right. The market is malfunctioning as all of the companies race to the bottom of the ethical barrel while increasing their profits. The changes in regulation should help reverse or stop this race to the bottom.

And it's not just the consumers that get the shaft, businesses are basically strong armed into a very difficult situation by allowing any CCs. CC companies have waged a battle to make them the default method of payment forcing businesses to forfeit a percentage of their revenue for the \"discount rate\" that can change unilaterally as well as \"charge backs\" that may or may not be fair. The unilateral changes in business rules over the past 2 decades have been more egregious than the changes on the consumer side IMHO.

Reply
4 replies
\"user-pic\"
mac-phisto
May 13, 2009 5:22 PM
Moderate |Flag for review

@snowmoon: well said. completely agree.

the interchange fee marketplace is...well, it sucks for everyone involved except the networks & the processors. having been on both sides of chargebacks & credit card processing, i can tell you that the only people making out are the networks. both merchants and issuers pay fees to access the system and bear the burden of compliance with laws. meanwhile, the middlemen rake in the dough for playing enforcer.

here we are - merchants blaming issuers & issuers blaming merchants, but both sides are ignoring the elephant in the room. we're all stuck in this network of swiss cheese security & protection payments with our hands tied behind our backs.

i'm starting to suspect that practices i would deem \"processor abuse\" are widely prevalent, but until transparency exists to determine where & how frequent these abuses are occurring, i don't see anyone making headway into that mess.

Reply
\"user-pic\"
m4ximusprim3
May 13, 2009 5:48 PM
Moderate |Flag for review

@mac-phisto: Agreed. I was actually very stoked to see the legislation introduced lately which will allow business to price goods higher for credit card purchases than cash purchases to make up for the processing fees. I would love to see a return to cash based commerce over plastic.

Reply
\"user-pic\"
NeverLetMeDown
May 13, 2009 11:05 PM
Moderate |Flag for review

@m4ximusprim3:


I'm strongly opposed to this sort of legislation. Currently, people paying cash are subsidizing the nice cash back I get by paying credit. Works for me.

Reply
\"user-pic\"
PopulistOutrage
May 13, 2009 5:06 PM
Moderate |Flag for review

@snowmoon: The government has absolutely no business in legislating \"fairness\" except in transactions that are not optional. No one forces anyone to get a credit card, and having one is completely optional.

Reply
\"user-pic\"
Brontide
May 13, 2009 5:17 PM
Moderate |Flag for review

@PopulistOutrage: So as long as a transaction is not \"necessary\" we should allow any sort of lying, cheating, stealing, or unsavory practice? Oh, the \"market\" will automatically make things right... like in housing perhaps?

Reply
\"user-pic\"
NeverLetMeDown
May 13, 2009 6:01 PM
Moderate |Flag for review

@snowmoon:


There's a huge gap between \"not fraudulent\" and \"not fair.\" Banning fraudulent is clearly correct - banning unfair is a heck of a lot tougher.

Reply
\"user-pic\"
Brontide
May 13, 2009 6:51 PM
Moderate |Flag for review

@NeverLetMeDown: Free markets only work when all are on a *relatively* even playing field. Maybe \"fair\" is not the best word, but non-regulation is not an option in some markets where one or more players obviously wield far more power and whose interests are not in the long term best interest of all.

My previous point was only to stress the absurdity of a complete non-regulation stance.

@m4ximusprim3: It would be nice to see customers behavior when plastic and cash ( or debit ) are different prices. CC companies have been working for years to make sure the prices appear the same to consumers. I can walk into a gas station and buy the smallest pack of gum and it's probably costing the gas station far more than the item is worth, but according to contract they *must* accept CC's for any sized transaction or net cost to the business.

Reply
","","","","","","","","","","","
\"user-pic\"
PopulistOutrage
May 13, 2009 4:49 PM
Moderate |Flag for review

The irony of Consumerist accusing someone else of using FUD is delicious. Consumerist fear mongers all the time when its to its advantage - particularly when overhyping economic stories.

And as usual, the inferred story here is that because \"bankers\" point out the obvious consequences of subsidizing dead beat consumers, we must hate them because they are bankers.

Please fire some of these bloggers, its the same ones who pull this overt political propaganda day after day.

Reply
2 replies
\"user-pic\"
m4ximusprim3
May 13, 2009 7:37 PM
Moderate |Flag for review

@PopulistOutrage: Who are you addressing that last comment at? The god of bloggers?

Maybe I should write sears customer service and say \"You should fire your customer service people! They're assholes!\"

What a response that would get, I'm sure.

Reply
\"user-pic\"
PopulistOutrage
May 14, 2009 12:02 AM
Moderate |Flag for review

@m4ximusprim3: Please read and don't make hysterical responses. Its the same person promoting one side of this issue - the author of this article. This isn't pro consumer, its pro dead beat consumer.

Reply
","","","","","","","","","","","","","","","
\"user-pic\"
chris_d
May 13, 2009 5:52 PM
Moderate |Flag for review

I'm not surprised to see a few astroturfers here. Most of their arguments are bogus, especially when talking about \"risk\". I'll give you an example. I had a promo from Discover card for 0% on balance transfers. You had to use the discover card at least 2x every billing cycle to maintain it, and the fine print said that payments may be applied to either the balance transfer or the purchases, but did say what would really happen. The payments ALWAYS get applied to the low interest (in this case 0%) balance first. That is the trick. I couldn't find anywhere it said that. Then I was 1 day late on a payment and they hiked my interest rate from 11% on purchases to 21% and charged me a $39 fee. I had just recently gotten a full time job, and didn't have all that much on the card -- about $1000. How was I a big risk? I tightened my belt as much as possible, and paid the card off as soon as the next statement came (right after I got paid). I haven't used discover since then and I don't intend to. That company is evil; hell, they're all evil.

Reply
3 replies
\"user-pic\"
PopulistOutrage
May 13, 2009 6:29 PM
Moderate |Flag for review

@chris_d: These talking points brought to you straight from the Democrat National Committee.

You signed a contract, you knew the terms - dont like it? Don't sign up for it. Stop spreading your political propaganda.

Reply
\"user-pic\"
m4ximusprim3
May 13, 2009 7:40 PM
Moderate |Flag for review

@PopulistOutrage: Yep. you are a jackass.

All you're doing is encouraging the credit provider to mask the true content of the lending agreement in further legalese, to make it even harder to understand. This is totally contrary to the good of the consumer - and, eventually, to the industry at large.

Reply
\"user-pic\"
trujunglist
May 13, 2009 7:10 PM
Moderate |Flag for review

@PopulistOutrage:

Excuse me, but you're a fucking jackass.

*This message brought to you by Americans Against Douchebags*

Reply
","","","","","","","","","","","","","","
\"user-pic\"
MooseOfReason
May 14, 2009 3:31 AM
Moderate |Flag for review

Wait a minute...

\"Reform\" means to improve.

Reply
","");