Keep paying them on time and carry no balance Bill. Of course these guys want you to carry a balance but if you can avoid it you negate their unscrupulous practices. I just use American Express.
That's exactly what I am doing MCG. I have Amex also but those other two cards give me considerable things with the 3%. I get a rebate from Amex also at 1% but I have to cash it at Costco and there is not one near me.
WASHINGTON (AP) — The Federal Reserve and other regulators initiated steps Friday to end "unfair and deceptive" credit card industry practices assailing consumers who are already struggling to cope in a bad economy. The proposed rules would be the biggest clampdown on the industry in decades, aiming at protecting people from credit card companies that arbitrarily raise interest rates or don't give borrowers adequate time to pay their bills. The proposals would also restrict such lender practices as allocating all payments to balances with lower interest rates when a borrower has balances with different rates. The Fed board voted Friday to approve the recommendations. Federal Reserve Chairman Ben Bernanke said the proposed rules "are intended to establish a new baseline for fairness in how credit card plans operate." Consumers using credit cards "should be better able to predict how their decisions and actions will affect their costs," he said. Lawmakers who have demanded tougher controls on the credit card industry were generally positive about the proposed rules, as were consumer groups. But some questioned whether the changes would be strong enough and soon enough to help the millions of households struggling with credit card debt. The Fed drew considerable criticism for its slow response to abuses that contributed to the subprime mortgage crisis. "These steps are a significant improvement," said Sen. Charles Schumer, D-N.Y., a member of the Banking Committee and a leader in legislative efforts to make credit card companies more forthcoming about the interest rates they charge. "While they can still go further, the Fed deserves credit for acting, particularly for banning some awful practices rather than relying solely on disclosure." Last year the Fed proposed rules that would make credit card bills and solicitations easier to understand, but Friday's proposals go well beyond those in tightening interactions between the industry and consumers. "At first blush, this does seem to be good news for credit card holders," said Sen. Robert Menendez, D-N.J., author of pending legislation addressing some of the same credit card abuse issues. "However, it remains to be seen if these proposals will go far enough." "The problems are mounting and the last thing consumers need is to have credit card companies ripping them off with late fees and charges through no fault of the consumer at all," said Senate Banking Committee Chairman Christopher Dodd, D-Conn., who is also pushing reform legislation. The banking industry opposes the changes, and says they could lead to higher interest rates. The rules could be finalized by the end of the year. The proposed new rules would prohibit: —Placing unfair time constraints on payments. A payment could not be deemed late unless the borrower is given a reasonable period of time, such as 21 days, to pay; —Unfairly allocating payments among balances with different interest rates, with lenders crediting payments to balances with lower rates so they can continue to charge interest for balances at higher rates; —Retroactively raising interest rates on pre-existing balances; —Placing too-high fees for exceeding the credit limit solely because of a hold placed on the account; —Unfairly computing balances in a computing tactic known as double-cycle billing; —Unfairly adding security deposits and fees for issuing credit or making credit available; —Making deceptive offers of credit. The agencies said the proposed rules also would require federal credit unions to give consumers a chance to opt out of an overdraft protection program. And they would prohibit those institutions from charging a fee for an overdraft caused by a hold placed on consumer's funds when a person uses a debit card. Ken Clayton, senior vice president of card policy for the American Bankers Association, described the proposed changes as "aggressive regulatory intervention in the marketplace that will result in higher prices and less consumer credit." "If card companies cannot fully reflect risk, then millions of consumers with good credit histories will end up with higher rates," the ABA's president and CEO, Edward L. Yingling, said in a statement. "It's unfortunate that the industry continues to buck the immense groundswell of support that is building for credit card reform," said Rep. Carolyn Maloney, D-N.Y., who has introduced consumer protection legislation in the House. She said the Fed endorsement of provisions in her bill "puts to rest the credit card companies' assertion that reform will somehow harm consumers or the economy." The Consumer Federation of America estimates that credit card debt held by consumers is about $850 billion, some four times what it was in 1990. The group says the average debt for those 58 percent of card-holding households that do not pay their balance in full every month is about $17,000. Travis Plunkett, legislative director for the federation, said the rules were a "good-faith effort by the Federal Reserve to curb some of the most significant abuses that have been hurting credit care users for over a decade." He singled out the practice of lenders increasing interest rates on a borrower because of a supposed problem with another creditor or a drop in the borrower's credit score. But the CFA and other consumer groups also complained that the "opt-out" proposals for overdraft plans were insufficient and there should be an affirmative "opt-in" right for such plans. Banks routinely allow consumers to overdraw their accounts and then charge overdraft fees, the groups said. The Fed is acting in conjunction with the National Credit Union Administration and the Office of Thrift Supervision. ——— Associated Press writer Laurie Kellman contributed to this report.
He's probably right. A lot of those rules are good rules for sure, but will probably result in it being a little tougher to get credit cards and those affected will complain that they are being discriminated against.
Wrong! You idiot. Your last name is appropriate. Consumers with good credit simply will stop using the cards that charge the highest rates. Can you spell C-O-M-P-E-T-I-T-I-O-N? I spent enough years in the banking business on the front end of my career to know that bankers are not very smart. They make decisions that allow them to make money in spite of themselves. The position they are taking on this issue shows how ignorant and how unaware of public sentiment they are. Their position insults the intelligence of even the average bank customer. Give me a break! Consumer credit is to banks as oxygen is to breathing. There ALWAY will be consumer credit available, and there always will be competition within the banking industry for the consumer borrower. Idiots! All of them.
Sid, You don't think tightening of the rules such that clients who represent the higher risks, and who are frequently the ones who default or in general get in trouble with their cards, will still be offered credit cards? I would think that Banks will continue to compete for clients who maintain their credit cards in good standing, but stop competing for the lower end of the credit score spectrum since they can't match up risk with an appropriate interest rate. In the end that might be a blessing in disguise to those people, but I doubt if they will see it that way. Much like high risk area's that used to be redlined because they were in area's with high risk of default. Terry
Terry, No question that the lower tier of cardholders, wherever that break point is, will be lopped off, as it should be. I didn't address that in my rant, but I agree with you that it is likely to happen. Think about it. Banks represent themselves as protectors of our deposits, a responsibility which requires prudent credit decisions to prevent losses. Yet they put credit cards in the pockets of folks who should not have them. They know they are going to have huge losses, but they project net income based on very high interest rates overcoming the huge losses. Is that really the way to run a business that purports to be the protector of your deposits?
Problem I see is that those lopped off are, like those redlined, going to be disproportionately black or brown. There in lies the rub, politically.
Going back to the title of this topic and applying it to the issuers as opposed to the users, they dug their own hole, and they deservedly can face the consequences of their decisions......or.......they can continue to extend credit to the lowest tier knowing that they are not allowed to bait with lower rates then ambush with usurious rates. This is a case of regulatory correction to a broken system. I believe that when you apply for a credit card you do so with your eyes open, and if you do not spend wisely you bear the consequences. I do not believe in banks being allowed to make money by ambushing the least aware and the most economically ignorant segment of society with usurious rates. If the card users get in trouble, let them work out of it. Don't pile on the interest so much that they can never climb out of the hole they've dug themselves, which is what is happening now.
Sid, You brought us full circle back to the original premise of this thread. You mentioned competition which is the key ingredient of a free market economy. Unfortunately, there is a another "C" word; collusion. And it has the exact opposite impact.
Pretty broad brush there Sid....there are some awfully bright bankers in this world I guarantee you, indeed, some of the brightest people I've ever met in this world are bankers. I was a banker for a lot of years....I musta got too smart for 'em. It is an over-regulated business that objects to more regulation because they are already overburdened with regulation and incremental overhead is not something to be welcomed. Perhaps there are some societal benefits to be new rules contemplated, but there are costs as well and unintended consequences to be certain. Look on the back of your next credit card statement and tell me that you would conclude from that bit of evidence that we need more disclosure.....it is quite obvious from this topic and the intended rulemaking that people already don't read what is disclosed currently and providing them more disclosure to not read is going to do what exactly? Good God.... I just don't believe that it is an appropriate or efficient role of government to regulate people from the consequences of their own bad decisions. Can you say moral hazard?
A friend sent me this.... MASTERCARD (TICKER: MA) went public in the middle of 2006. The offering price was around $50 or $60. The stock closed on Friday (5/2/08) at $285. It's up over 500% since the offering date and it was up 126% in 2008 alone! Compare that to the 2 - 4% you get in your savings account or a CD. How much credit card interest did you pay to help those stockholders? Or late fees? Or application fees? Why not be one of those stockholders instead of the sucker who continually funds their bottom line with high interest and late fees? VISA (TICKER: V) went public in March, 2008. The stock is up 33% since that date. Again, do you want to reap the same rewards as the stockholders and the company? Or would you prefer to pay the interest on the cards instead?
I amy not be proud of it anymore but I work for a company that issues 100's of credit cards under various names.... the interest rate is how they make they money ..... It also covers the loses and defaults of consumers who walk away from there bills or file bk the numbers are stagggering // Also about raising rates it is based on credit scores.. not missing 1 pmt by 1 day .... most credit bureuas wouldnt even pick up 1 day to report a 30 most companies review every 6 mos ... then it the scores drop the rate goes up also depends on the bank or company if it is taking a hit *ex mortgages) they may just raise rates on all cards,,, they can do that ... My recommendation then dont use the card .. cancel it //I a company loses enough of it's good payers trust me they relook at their decissions .. But to say 1 30 isnt going to cost you, it doesnt, there has to be other reasons adding new accounts only making min pymnts but 1 hit will not make a company raise it rates . I have been doing this for over 30 years and trust me it doesnt matter what politcal party is in control ultimately it it the banks and they are not controled by either the democrats or the republicans They have there own rules .. the government has in place many rules and regulations but they always find a loop hole .... If they get fined the billions they jst pay it, The only ones who have the true control would be the consumers .. its your choice. but most will not choose correctly because the need to spend,have and play who has the best and most toys ... is the American way .... You the consumer give the banks the strength to do what they do ... By the way .. you can have a 30 day removed from the credit bureau by disputing it .. w/ proof they will remove and fix it by law they have to do that ..Companys have 30 days to respond to a dispute some dont even try ..... the information is on the internet under ea credit bureaus there are 3
"Consumers with good credit simply will stop using the cards that charge the highest rates. Can you spell C-O-M-P-E-T-I-T-I-O-N?" Sid and the Mrs. Jo'Co I think are missing the real point of the regulation. This is not about how credit card companies USED to operate but more about the interest gouging loan sharks they have evolved into today. I think the numbers George illustrates about MC's financial statements over the last two years is a good example. The credit card companies have been employing dishonest, unscrupulous practices over the last 3-4 years and it was just getting worse and worse. If this regulation had been bypassed or defeated I can absolutely guarantee that you would have seen a consumer bloodbath develop in unbelieveable proportions. Good thing the Feds probably recognized that would happen and are trying to send the situation in a better direction.
B-Terry, Nothing personal. I'm sure there are bright people in the banking industry. I've known some. But I stand by my earlier comments. Your portrayal of the regulatory environment begs the question, why is the industry regulated in the first place? Because it's necessary. Why? History shows that the banking industry left unregulated and to its own devices eventually trips over its own feet and brings down the economy with it. Witness the current subprime mortgage crisis and the current credit card fiasco. You lament that cardholders do not pay attention to the disclosures. I do also, but the cardholders in question are not like you and me. They are people who never should have qualified for unsecured credit in the first place. It's a chicken and egg thing. Banks know that there is exceptionally high risk in the way they issue the cards to the lower economic tier, but they assume that exceptionally high interest rates will help to offset the exceptionally high losses. Hey, if we print the disclosures on the card and in the correspondence, we are off the hook, right? I repeat what I've said earlier, that those who get in trouble because they did not use the cards responsibly or did not read and understand the disclosures deserve the consequences. No argument there. What I don't like is the banking industry's collective decision to knowingly reach so far into the quagmire of risk and loss that it is putting the security of everyone's deposits at risk. If this kind of activity is limited to private capital with the resultant losses being borne only by the investors, no problem. But when they are messing with their quasi-public deposit bases, including my deposits, there is a big problem. They (banks) are like the kid whose mom (regulators) decides to trust him not to get in trouble, but when he lets her down she needs to ratchet up the rules for the sake of order in the household. You cannot disagree that banks are quasi-public institutions. As such, they must be regulated for the good of people like you and me. Whether or not they are "over-regulated" is a matter of opinion on which we will have to agree to disagree.
Sid, I agree with a lot of what you are saying but I contend that a lot of the problem is not falling on risky borrowers so much as it is coming down on the average American consumer who usually pays his bills on time. Just because someone chooses to carry a credit card balance which in reality these revolving accounts are designed for, it doesn't mean that particular consumer is a high risk borrower who should be the first to fall prey to the gouging tactics now so prevalent among the card companies. The pricing tactics have become nastier ond non-discerning and that is the reason for the new regulatory action by the Feds.
Here is a good link: http://articles.moneycentral.msn.com/Banking/CreditCardSmarts/CrackdownOnUnfairCreditCardPractices.aspx The items listed that are being regulated indicate what has been transpiring lately and it is not just about highly compromised borrowers. There are other good news links in the article as well.
Don't stop there, the rest of the story would be along these lines....she ratchets up the rules for the sake of order in the household only to see the household collapse around them thereby consuming the entire household and its neighbors...only then did she realize that in the grand scheme of things they were better off before the unfortunate rulemaking. Sid, you and I can argue the place of regulation in banking and the appropriate role of public policy forever, but I sense that we would end up having to agree to disagree and just be friends. So I suggest we skip a step and just agree to disagree and just be friends! :wink: George, neither Mastercard nor Visa recieve any of the interest that accrues from credit card balances. Only the banks that issue the cards benefit from the interest rates on those loan balances. Mastercard and Visa get paid based on the number of times somebody uses the cards and the $ volume of those transactions. The reason that MA has been extraordinarily successful is that consumers find the cards to be very convenient and easy to use as a payment vehicle and an invaluable part of their lives.....vendors find happy consumers and fast, efficient methods of payment to be a very good thing for their enterprises. Card and electronic transactions are far and away the fastest growing part of the world payment system. They are a very good thing to be sure and an indispensable asset to our economy. Seek to constrain its usage at great peril....the vast majority of those consumers that have made the decision to use the product, use it in a very prudent and responsible manner. There are those that do not and I will not agree that the fault of irresponsible use and resulting hardship lies anywhere but at the feet of the foolish consumer. I suspect we will have to agree to disagree on this one as well....so be it. I still think you're a good guy - if not occasionally misguided!!! :wink: