New York Times:
Credit cards have long been a very good deal for people who pay their bills on time and in full. Even as card companies imposed punitive fees and penalties on those late with their payments, the best customers racked up cash-back rewards, frequent-flier miles and other perks in recent years.
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Ok, I am just furious, so I will vent and warn (for what it is worth)
I have a pro bono client in chpater 7;
an SOB CCcompany that know they have filed; garnished his wages, from another state, on a default judgment, they went ahead and took to court in another state (a state whioch the client has NEVER lived in)
and so my client goes to the bank on payday (no warning) and there 1/3 of their takehome paycheck missing.
And IF we ever get the court to return it, it will not go to the client but the the trustee
these 2005 revisions just suck; thanks Congress for bending over to the lenders
meanwhile these people check bounced and they have no money for groceries or anything else for two weeks. I hope they enjoy that 500 bucks; knowing children will do with out, so they can pay their bonuses
I ha eight them
It's a lie that the people who use credit cards to earn rewards and pay them off every month are deadbeats. They just don't make as much money off them, but they're still making money. I firnly believe if all of the people who can afford to pay off their cards every month, stopped using them, that the cc companies would be hurting.
They're going to charge more to A-rated creditors because they have adopted the "Because, we can" motto. Actually, if my theory in the 1st paragraph is right I don't think they'll follow through. After all, they offered these perks. I don't think they would have offered them if they would lose money on them and if they needed to depend on those who pay monthly interest to subsidize it.
Someone wrote that they "have it rigged that if you close an account it negates your credit score". True, but if enough people who would be good credit risks close their credit cards, they'd have to change the scoring profile to sell prime AAA -rated loans.
Sure, for awhile they would charge higher interest because of a poor credit score that should really be a stellar score. But then people would not buy at those rates and they'd be forced to change. And maybe some local banks and credit unions would go back to the old fashioned way of determining your credit risk.
Heck, if our government can't force these changes, let's do it grass roots.
I wonder what would happen if everyone pulled out all their money from the banks, put it into credit unions, and only did loans with credit unions.
Oh wait, bad idea. The stock market would crash.
credit card companies have such a stranglehold on the economy, that they can reap profits from all sides. they get money from the businesses for accepting the cards, they get money from the interest accrued by borrowers, and then they have to go for the jugular and assess fees for every single thing you do.
breathe with a cc in your hand, that's a fee! it's disgusting, and i want regulation to protect the consumers, now!
also, these comments from whiners with GOOD CREDIT make me laugh.
it's been ok to gouge the h*ll out of us poor people unfairly for years, but now they are threatening to use the same tactics on you and its so unfair! how's it feel? hah!
Why the bitterness in your posts? It minimizes your otherwise great comments, for me.
Bitter? I read anger; read mine, that might give you a clue.
Buy mastercard and Visa stock
maybe Geithner, Obama, and bernanke are doing a good job. Is the recession over??No more financial crisis?
More regulation will hurt the economy
The stock market keeps going higher
http://iamned.com/blog/ agree completely...interesting
No problem. The credit card companies all start charging annual fees and eliminate any grace period, and I'll cancel all but one card. I'll use cash and checks like I did in the olden days. They'll lose the merchant fees they now get, and also the float they benefit from on the money I pay them, which eventually they pay to the merchant.
They don't want "deadbeats" like me who pay their bills on time and don't carry a balance? Fine. Then I don't want them, either. I can live without the convenience if I need to. I'll save and the merchants I deal with will be more profitable. Win win, the only loser being the cc companies.
you sound sore that you're realizing you're not "one of them", you're "one of us". so sorry you have to join us as just another victim of corporate greed.
no i'm not.
I have no idea what you are talking about.
Rewarding customers who are good risks? What a concept.
Here is how the credit-card industry is SUPPOSED to work: you actually make your money on merchant fees, which every store pays you every time a customer uses your card. You don't try to make money from the customer himself. It is, therefore, a classic example of "the Gillette Principle: give 'em the handle, sell 'em the blades."
It's supposed to be easy: the added availability of credit gives the consumer more liquidity, which means that he "uses your card more often." (NOT that "he spends more," although he does do that, too.) This means that you collect more merchant-fees from the very happy store owner.
All that a bank has to do, from the consumer side, is to make sure that the credit-line is not unnecessarily high, so that the risk is not excessive. And oh yes, one more important point: ABSOLUTELY -DO- -NOT- PENALIZE THE CUSTOMER! "If you start trying to screw the customer, you insipid fool, you're killing the goose that lays the golden eggs!"
But "the twenty-odd banks" got greedy. They saw effective interest-rates in the (literally) hundreds of percent through "fees and penalties" and crooked bookkeeping. Title-pawn shops, payday advance, you name it! And what happened? In less than ten years, their golden goose was cooked.
Nice post!
Not only do card companies make money from the vendor but they get to keep my money for up to 2 months before they pay off said vendor. That's a lot of interest.
Clearly this is fear-mongering. The banks want Congress to back down by making their constituents panicked and fearful. We won't fall for it. Capitalism does not equal usury, and profit does not equal gouging. You can make money in the credit card business without destroying the economy and the lives of the citizenry at the same time.
These same banks took billions in taxpayer money--our money--and now they have the gall to act like they're doing their best customers a favor by raising fees on them while bothering to even issue them any card whatsoever under any terms whatsoever. These same TARP-loving banks have the gall to say that Congress is making their businesses difficult--hello?--Congress saved your butts! You'd all be bankrupt and out of business entirely if it wasn't for Congress bailing you out, and your precious shareholders would have nothing. So spare us. Threaten and harass your customers and watch them flee in droves. Go ahead...kill your own businesses. We OWN the banks now, and you'll either treat us well or we'll close our accounts. If the banks penalize their good customers, they'll lose them as they migrate to smaller no-fee local banks, credit unions and newer leaner startup banks who will see an opportunity; the megabanks will start eroding their own business model until all the good customers are gone. Play nice, Citibank, Capital One et al. or oversee your own demise. You've been warned.
Yes, you can make EXCELLENT money in the credit-card business, and it can be a huge benefit to the consumer and the merchant alike: literally a "win-win situation." There are thousands of banks out there who are doing just that, or trying to.
But what, exactly, happens when you allow about twenty banks (sic...) to grow so enormously large that they monopolize about 80% of the industry, AND THEN "they turn rogue?" Greed gets hold of them, they pay-off everyone in Washington to play along, and they promptly drive their multi-billion dollar "too big to fail' business straight into ... failure?
Well let me put it this way: have you ever seen a circus elephant "poop?" As in, "he just walked off the truck and he's been holding it all in all this time and now he's outside and ..." Yeah, THAT kind of elephant-poop. (You haven't? Good! I have. And I -seriously- hope that you never do.)
All right, now that you've got that mental-image firmly fixed: multiply it about 25 times, and grow the elephant to a million pounds each. Park that circus-train on Wall Street and lead 'em outside. And all that crime and greed and corruption just comes pouring out.
That problem is CRIME. Even though Washingtonians still love their bribery and still stuff their eyes and ears and mouths when there's money in it, we CANNOT IGNORE this much "poop."
I've had two cards with B of A for years and always paid on time and B of A just raised my interest rate on new transactions and transfers to 23.5% and 28.5%. of course I'm done with B of A and will move all my monies and accounts to another bank. B of A after getting the bail out and never having to worry again about failing, when the have access to all our tax dollars can do just as they please and raise their interest rates way above usuary rates.
What was missing from the credit card bill was a limitation to the amount of interest they can charge. Just shows that the banks still own Washington and the Congress.
I would like to encourage everyone to write and call their congressman and insist that they limit interest rates at 12.5 %. If the banks want more of our tax money they will have to comply.......
5% on late accounts and 2 or 3% on installments would be plenty.
This Bill will NOT stop the Banks from more skimming of the Consumer to offset their losses from being caught in their own Toxic Debt TRAPS, that they could not sell when the housing market went down!
No it won't stop them. But if we all stop banking there, we have some power.
Well, the moment my cards start charging an annual fee, I'll consolidate down to one -- for the just-in-case situation. I'll be debit carding everything else. Credit card issuers are paid a fee for every transaction they process, so it's not like they get nothing when a "dead beat" uses their card. I think many thrifty and sensible consumers will do likewise, limit their credit card accounts, and spend out of their checking account -- same as paying off your card accounts every month, just more transactions to track. The silver lining is that consumers will become more aware of how much they're spending, which may lead to more thrift. Personal virtue, I have heard it said, is bad for the economy.
Its ridiculous to penalize you for paying on time. Our governor in Michigan is penalizing small business owners for suceeding. I don't get it, this is not how i was taught by my dad. Ronald Reagon is rolling over in his grave!
My husband and I are the ones charging large amounts each month and paying them off each month (except when we go on vacation; it may take 2 months then).
We've had the same flight-miles acruing credit card for 10 years. Never been late in 10 years.
For 10 years we received the statement by the 7th of each month, andi it was due by the 3rd of the next month.
Three months ago they changed it so it was due on the 27th of each month. We didn't catch it the first month and got charged a late charge AND interest on the stuff charged to our card for that month.
We got boh charges reversed.
Credit card companies make the fees charged their vendors regardless of whether we even pay or not. It would seem to be a good business model to give the breaks to the people who are virtually no risk for default, who dependably pay their bills in full on time.
If our credit card company decides to start charging us an annual fee, we'll close the account and open a new one someplace else. IF this is a trend in the industry, we simply won't pay with credit card anymore, except for emergenices.
I don't know who the credit card companies think they're *hitting here, but it ain't me.
Your very excellent financial discipline is a classic demonstration of just how stupid these "twenty-odd banks" are.
Every single time you "charged large amounts each month," the merchants with whom you did business paid the issuing bank a percentage of your purchase as a fee ... and they were happy so to do. To the bank, you were both an excellent credit-risk and an excellent producer of (fair and justifiable) merchant-fee revenue. This is "win-win."
The stupendous folly of these banks is: (a) they tried to start gouging money from the customer, and (b) because their uber-banks were "so d*mned big," they thought they could just wallow along and do it because they were, you know, "too big to fail." Which is precisely why they DID fail, every one.
The banking industry must be regulated, and "banking" and "speculation" and "insurance" must all be kept an arm's-distance apart. Those were the sensible laws that were put into place in the 1930's and wiped-out in the 1990's ... and in less than ten years' time "a gang of fools" managed to blow it.
I firmly believe that it is THEIR CRIME, and WASHINGTON'S CORRUPTION ... magnified to this enormous size ... that is the TRUE root-cause of this "financial downturn." The way out is clear: put the laws back, and enforce the ones you now have.
Against everyone.
These big-banks ARE insolvent and HAVE failed, utterly! "Undertaker, do thy duty."
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Posted: 05-19-09 12:53 AM