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Well at least I don't have to worry about the $131 of available credit left on my card anymore :) BSG on Blu-Ray here I come!!!!
Well at least I don't have to worry about the $131 of available credit left on my card anymore :) BSG on Blu-Ray here I come!!!!
I can smell another bail out.
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I'd love to see each & every one of these credit card companies go down in bankrupt flames. It's my dream.
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@Skin Art Squared: Amen to that. I am paying down medical debts, but decided loan sharks would have charged me less interest when Chase took over my WAMU cards. We will NEVER use credit again. Cash only FTW.
Indeed. Loan sharks are much less than 31.99% from Bank of america as well.
Another thing people probably don't realize, is that if you stop paying your card payments, (assuming you give a damn about your credit reports), within 6 months the account will be written off and be sold to collection agencies. The good part of that is, the interest stops cold, forever. If you're facing insurmountable bills with no way out, this can actually save you money in the long run. Yes, they will jack your interest to the maximum rate they can during that time, but once it goes to collection, the interest is done. After that, you're dealing with a fixed number. (whether you decide to pay it or not).
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@Skin Art Squared: the interest may stop but i've seen situations where collection agencies tack their own fees onto the collection amount. i'm not sure how legal it was or what the resolution was, but i've seen a letter where they asked for an extra $500
@johnfrombrooklyn: wouldn't you think that if it was my own situation then i would know what the resolution was?
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@Skin Art Squared: I respect that you practice what you preah, more power to you but, I would imagine you'd have trouble getting a car loan or a mortagage and other things of that nature but to each his own.
@Skin Art Squared: Would you also cut your nose to spite your face? Hopefully you dont use credit cards then because that would make you an enabler and a hypocrite
@metsarethe...: \"Would you also cut your nose to spite your face? Hopefully you dont use credit cards then because that would make you an enabler and a hypocrite\"
Yes, I would. Goddamn face had it coming.
No, I don't use credit cards, or the credit system in any way. I am a very vocal anti-credit advocate. Destroy your cards, freeze your reports, and live in the CASH system.
@Skin Art Squared: A true patriot. The way credit is used in America should be illegal. Tyler Durden has the right idea.
Fine by me. If you want to give up cash back and purchase protection, be my guest.
@NeverLetMeDown: Why do I give up either of those?
I often get a discount for cash. I never have to pay interest on cash, so that's \"cash back\" right up front. Purchase protection is built into my receipt.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-436259-100x100.png\")
So... how does it work exactly?
AmEx will still let spendthrifts exceed their credit limits, but they will no longer charge for privilege.
Whats the point of the credit limit then? Are there some special things that kick into action at this point? Like higher rates for whatever amount you spend over your credit limit? Or that it limits your chances of being approved for credit or something?
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-25844-100x100.png\")
@MostlyHarmless: There's a stratosphere of credit offered where limits aren't set. It's not that you so much as go over your limit, as you don't have one. We're talking mid-700's (FICO) to get one of those.
And some cards simply have a carry-balance limit; for instance, if you have a carry-balance limit of $15,000, you can charge as much as you want each month as long as you keep your unpaid balance under $15K. Very handy for people who pay off their credit cards every month.
@humphrmi: I know about those cards. But this is about the cards which DO have a limit, but people are still allowed to go beyond it.
@MostlyHarmless: So my point is that I'm going to bet that credit card companies are going to reserve this \"feature\", if you will, for their best customers, kind of like those non-limit cards.
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@MostlyHarmless: Aargh-comment go \"poof\" into the ether. My BofA has this setup. essentially they approve or deny each overlimit charge based on rish, history, sheep entrail readings, whatever. There's no fee and no higher APR, but you have to pay the overlimit amount plus the minimum at your next bill.
@MostlyHarmless: My B of A card has this setup-no overlimit+credit limit. I've never gone over limit, but from my cardholder agreement they will approve or decline each overlimit charge based on their magic 8-ball or whatever they use. You have to pay any overlimit amount in addition to the standard minimum at the next billing cycle though. (This doesn't mean AmEx et al. will do the same.)
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@MostlyHarmless: I was wondering the same thing. I don't own a credit card, so I don't know a ton about them, but if there's no fee for going over then what sort of motivation is there for people to not go over their limit?
@ohenry: They can deny a transaction to keep you under. Or if you go over they can reduce your limit. If they wanted to they could close your card. They would still have ways to keep you within your limit. It just won't be profitable for them to let you exceed it.
I just got a letter from Amex about this today. But while they're eliminating the over limit fee, they are upping the late payment fee and some APRs (maybe all? I didn't pay close attention as I always pay in full & don't use credit line etc)
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@probablykate: Count me in as another letter receiver. Along with the aforementioned \"great news\", my fixed interest rate of 9.99% is now a variable rate of 11.99%+APR. I also have two AmEx cards, and of course the letter applied to the Blue card that I've had for seven years that has never had a late payment.
I am, thankfully, a deadbeat in the eyes of the credit card companies, and will be using my credit-union-issued Visa exclusively from now on. The card will be left open to keep my credit score from dropping, but otherwise they lost me as a card-using customer.
@probablykate: yep, got my letter as well. I laughed because after they tell you they are raising your interest rate and late fees, they say \"we are pleased to tell you we've eliminated over the limit fees!\" Shucks, thanks guys! awesome news!
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@probablykate: Got my letter about this on Saturday, too. I kind of knew what it was after reading this post. Laughed a bit when I saw it.
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@probablykate: Same here...got the letter telling me they're jacking up the APR. I'm disappointed...This card had the lowest APR of the couple of cards I have. I was going to consolidate them all onto this one card yesterday. Glad I didn't...
@probablykate: I got that same letter. It kinda scared me because it looked just like the letters they sent a few months ago when they cut everyone's credit lines.
Oddly, I have two Amex accounts and only got one letter. Dunno if it applies to both. But in any case, it won't apply to me because I am never late or over the limits. Shrug.
\"Since overlimit fees, which can reach $39, aren't very profitable for creditors, they decided to ditch the fees altogether.\"
Were you being sarcastic? How can a $39 fee for a computer to allow a transaction to go through not be profitable?
I think it won't be profitable under the new law, with the opt-in. They will have to set up a computer system to determine who will be allowed to go over their limit and who won't be. Since not many people will opt-in to this program, the costs associated with setting up the database and approval systems will be so great that the income from the few customers who opt-in won't be worth it.
@wrjohnston19283: System? Doubt it, more like a database flag. They already have systems to deny transactions, they just have to modify it a little.
@wrjohnston19283: Actually I disagree, they have salaried tech people working for them, so the addition of this new change will prob be no extra cost, since the salaries are a fixed cost.
Because they have all those salaried tech people sitting around twiddling their thumbs. IT costs are substantially variable.
@NeverLetMeDown: No they probably dont, but I'm sure for every new tech initiative they dont run out and hire more tech people to take care of it. Im sure there is some scale there.
Some people are irresponsible with their credit already, and some are borderline. Will this empower them to spend even more than their credit limit and dig themselves even deeper in debt (more interest, higher payments)? Just wondering if that is maybe one of the CC companies reasoning. Whatcha think?
@smarty: I think in some respects it is more fair to not penalize just for going over a limit . As long as the individual pays or keeps up with that credit card even if it's the minimum payment I say more power to them . As long as you had good credit with someone and they report that to credit agencies then go ahead .
The flip side of the coin is that there are golf balls out there that fail to realize paying the minimum every month will take years if not decades to pay off . But if it helps that individual rather than pay by cash go ahead .
Then there are those that say by letting the financially stupid go over their limit is nothing more than predatory lending . But is it or are they . There have been times in my life I had 5-8 cards going at one time paying minimum payments . It got me stuff and through some thin times . I did pay them down/off and I have been using 1 card for years now .
There are people that can raise their limit without catastrophic results and the credit card companies get to make money this way rather than with fees and penalties .
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@smarty: As a former irresponsible credit card user, the old me would have taken full advantage.
but if you're that in over your head, saving the $39 overlimit fee isn't going to affect much. once they reach their limit, then the interest hits, $39 is a drop in the bucket.
I would hope that they are unable to purchase above their credit limit... even though that seems to be questionable.
\"the first concrete examples of how a new law will restrict issuers' abilities to turn a profit.\"
Funny, card companies had NO problems with turning a profit in the 50's-80's before they started the fee-wagon.
Well, this looks like a double win for the consumer: no over-limit fee and if the credit card issuers do what they should they will now decline charges over the limit. The declined charges will help consumers stay in check of their finances & pay more attention. I bet the \"convenience\" that card issuers used as the excuse to let people go over limit will end now that the gravy train is over with the fees. Also it is funny how the issuers have argued for years that this was a practice for the consumers' \"convenience\" so that charges wouldn't get declined: if so, a lot of people would opt-in, the banks know better than to invest money (programing/implementing the opt-in process) in that being true.
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@wvFrugan: I would opt in to overlimit fees specifically because I never charge anything without knowing my balance and credit limit. This is not exactly rocket science.
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For people who keep a balance on a card, the rewards are very... rewarding... considering all the interest you're paying. You'd be better off ditching the card and saving money every month for that plane ride.
Amen - credit cards are wonderful financial tools, so long as you're paying them off every month.
@NeverLetMeDown: \"credit cards are wonderful financial tools, so long as you're paying them off every month\"
They are anything BUT \"wonderful financial tools\". Credit cards are designed to put you in debt. Nothing more, nothing less. All the rewards and miles and bribes they offer up on a silver platter is intended to get you to spend money you don't have, put you in debt, and keep you there paying interest for life. This is the ONLY reason credit cards exist. They do not exist to \"help\" you.
If you have the militant discipline to stay on top of them and avoid 100% of the interest charges, then you are in the minority. Feel proud that you have gamed their own system, because that's not what it's designed for.
Nobody should ever be \"promoting\" credit card use. Consumer debt is in the TRILLIONS. Most of that will NEVER be paid back. Lives are ruined over credit cards. So you can't sit there and tell me that credit cards are a wonderful financial tool for the consumers using them. Maybe for the companies handing them out they are.
@Skin Art Squared: Lives are not ruined over credit cards, they are ruined over bad financial self-control, failure to understand the system, failure to monitor your finances, and failing to tell yourself NO when it is necessary. All of the above are symptoms of self-entitlement rather than responsibility.
Credit cards ARE a useful financial tool when USED AS A TOOL. That is the key issue. If you're using it to avoid responsibility then obviously it will be a liability not a resource... but if a consumer is not managing their resources responsibly, then they are going to get into financial trouble with or without credit cards.
I promote credit card use proudly. Use them responsibly as a tool.
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@Skin Art Squared: It's apparently not a huge minority who pay off the balance, though--it's about 40% of credit-card holders. That's not too shabby.
@floraposte: Sorry, I meant \"teeny minority\" and, of course, used an adjective that meant the opposite.
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@Skin Art Squared: He said they are \"wonderful financial tools, so long as you're paying them off every month\".
That's true - they are wonderful tools. You get some cash back, and are spending someone else's money for a month, all without paying anything for the privilege (so long as your card doesn't have an annual fee, you pay the statement balance in full, etc.)
They are not wonderful if you don't know how to properly use or if you have a tendency to abuse them, but if you know what you're doing, they're great.
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There is NOTHING worth celebrating here. Amex sent me a lovely letter this morning about how they're going to screw us all to make up for their \"unprofitable\" overlimit fee.
They're going to raise APRs on purchases and advances, raise penalty APRs and increasing their late fees. It's not speculation now, it's fact.
So now, a $39 fee that rarely happens to any of their customers is going to be replaced by higher APRs and more common fees. I've never been overlimit on any card, but now they'll get what they were missing from me within a couple months!
As for the APR hike? I had excellent credit with something like 12% utilization. In the past yr Amex has consistently knocked down my max limit though I've never been late on any payment anywhere, and never spent a dime on their card over the initial balance transfer some two+ yrs ago. Because their card line went from something like 10k down to $3600, my utilization has \"jumped up\" and now I'm on the cusp of good/excellent.
That means they could conveniently push up my APR from the 9.99% it was supposed to be \"FIXED\" at to 11.24%. Now it will jump to 15.24% to make up for the new \"law.\" Explain to me how this ineffectual Credit Card \"Law\" dance is doing anything but let corps have an excuse to charge us MORE?
Here's the letter front and back for anyone who hasn't gotten theirs yet:
front - back
(I love how they're \"pleased\" to let us know about these fantastic changes.)
Consumerist, pleasepleaseplease return to the good guys I know you are and don't give the credit companies even a fraction of \"good publicity\" that they DON'T DESERVE!
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Explain to me how this ineffectual Credit Card \"Law\" dance is doing anything but let corps have an excuse to charge us MORE?
right now it looks like it's hurting us more than it's helping us, but that's only b/c the law hasn't taken effect yet. what amex did to you (reduce your limit so your utilization increases so they can charge you a higher APR) is exactly the type of practice that CARD is supposed to stop.
sure, this all sucks right now, but once the law goes into effect, you'll start to see pro-consumer changes. already, customers are closing accounts en masse at their displeasure with what cc cos. are doing & within 5 years, they will have to change their rates/terms for the better to bring those customers back into the fold.
credit cards are an extremely profitable business (2-4x more profitable than most other types of banking) - if the existing companies don't make the changes necessary to appeal to consumers, someone else will.
@goodfellow_puck: You can always call them, explain your distaste at the current changes and your reasons for being disappointed given you have an excellent payment history with them... then inform them that you are shopping for better rates and will likely stop using the card if they cannot do better for you.
Keep in mind anyone who received those letters would have done so as a blanket mass mailer. If you've got good history, they will still work to keep you...
The credit market just got harder for the credit companies because of this bill, not easier.
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I think they will just start denying charges. I hope this will apply to debit cards too.
@Rugbydan: I paid off the only credit card I ever had two years ago, I'll never get another one. Now that my student loans are under control, I've been able to purchase my first car (all others were gifts from parents - think 1983 Buicks and 1985 Hondas, I was not pampered when it came to cars). The wife and I still make large purchases - well researched and paid with cash.
Credit cards are great for record-keeping, getting reimbursement from the employer, and to avoid carrying large amounts of cash. I use them for almost everything and when the bill comes it is paid 100%. No late fees, not interest.
Amex supposedly has no pre-determined limit on their T&E card (Green, Gold, Platinum and Black) and I've used the card to buy a car so they probably mean what they say. Their other cards, Blue, Optima, have limits and are run just like Visa and Mastercard with interest and fees.
The overlimit fee is asinine. If there is a limit on the card, going overlimit is the same as requesting an increased limit. The card has the right to approve or disapprove. They will likely approve because they will be able to charge interest if the entire card balance is not paid, and they have a one-month risk window since the overlimit charges have to be paid in full. I would expect that the deletion of the overlimit charge will encourage people to go over limit and that makes no sense at all.
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Breaking news: in a paired announcement, the Black Market Organ Reseller's Association announced they'll stop harvesting kidneys from chloroformed victims waylaid in alleys, citing pesky new laws outlawing mayhem and kidnapping.
\"Regrettably, we'll no longer be able to service needy patients because of horrible Washington bureaucrats,\" they announced mournfully.
This is BS. Amex just sent me a letter outlining some of the new terms they will be adopting, including penalty interest rates for over limit or late payments, and the over limit fee and what it will cost.
I guess their version of \"opt in\" is that I can either accept the new terms or close my account. I will accept them because I am never late or over the limits anyway so this really does not apply to me.
But Amex is not your friend and is not doing a THING for customers these days. if they do something, it's universally for their benefit somehow. It may not be clear how but you can bet it is.
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Personally, I wouldn't mind having overlimit fees removed. All it really means to the end-consumer is that his credit cards now have a slightly higher credit limit before it gets denied.
But wasn't the point of credit limits to protect the creditor (i.e. banks) from borrowers who would end up not being able to repay the loan? This smells like the whole subprime mortgage thing again.
Though, I wonder how much over your credit limit you can actually go.
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The only good news that the credit card industry could ever give us was Big Daddy Oil called and said profits have been so fckng toke-a-Benji amazing, they've paid off everyone's debt.
Hello? It's a business (i.e., they exist to profit.) With the gaping divide between the utopian IDEA of regulation and the real thing in practice (thanks to the corporation-driven US government), you can bet your pretty little bank-owned home and vehicles there will never, ever be a chance in hell the credit card companies are acting in your best interest.
Credit limits? I clearly don't understand the concept. But my amplifier goes up to 11.
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Well, yeah, the law eliminated a number of ways in which the companies used to make money. In order to remain at their current profit-levels, they're going to need to compensate in other areas. This wasn't surprising to anyone, was it?
@RumorsDaily: Actually, yes it is surprising. The rewards are funded by the extremely high percentage fees that they charged retailers. As long as those fees are intact, it makes no sense for rewards to be cut. If rewards are being cut, congress needs to pass a new law to protect businesses from these high fees.
@RumorsDaily:
Not really. What is going to be interesting (to me) is how the companies that choose to do this make up the shortfalls.
@RumorsDaily: Thanks for rephrasing the sentence.