New federal regulations on credit cards

Discussion in 'Politics' started by Salty, Dec 19, 2008.

  1. Salty

    Salty
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    The federal govt has put new limits on companies raising credit card interest rates.

    See this link from CBS News

    Basically, a credit card company will be able to only raise rates on future purchases, not on a current balance. This will take effect in 2010.

    Good, bad or indifferent.
    I normally say, there is too much govt regulation, what do you think my thoughts are about this one :confused: :rolleyes:
     
  2. JustChristian

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    Credit cards are a good example of an area thast requires regulation. When the prime interest rate was about 7% they were charging 14%-18% interest plus a $30 late fee. I suspect illegal collusion.
     
  3. StefanM

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    It is unfair for a credit card company to modify an interest rate on past purchases without cause.

    I agree with additional restrictions.
     
  4. moondg

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    I was counting on a bail out before 2010. Does this meen I am not going to get one.:tear:
     
  5. Salty

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  6. carpro

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    Agreed.

    But in the case of credit card companies with their greed and one sided "agreements" they could change any time they please, I feel they brought it on themselves.
     
  7. windcatcher

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    A recent PBS program documentary on this entitled "Card Games" or 'Game of Cards', can't remember which...

    Anyway it went into the lending practices, interest rates, and add on fees of credit cards, debit cards, and pay day loans.

    The credit card companies defended their practices of hooking a person by an offer of 0% interest on transfer of balances.... and then jacking up the interest, details disclosed well hidden in the small print which tells applicants that the actual interest rate offered an applicant is based upon an excellant credit rating (doesn't disclose what is considered 'excellant' to qualify) and adjusted upward for those who apply but don't qualify for the 0%.

    The bank defended its practice of luring customers in with the promise and protection of 'no fee banking' and offer of debit card. Many customers are lured by the no fee checking offer.... and accept a debit card thinking it adds security against identity thieft and overdraft protection.... promised them as a 'courtesy'. What they (customer) aren't told..... if they should make a small purchase... unaware that their balance is critically close to overdraft, they aren't warned at the point of purchase what their balance is and that the purchase will create an overdraft. What follows next is worse than loan sharking...... The bank covers the overdraft as a 'courtesy' and charges a service fee for the courtesy coverage.... and may proceed to charge each additional purchase made under the overdraft provision and charge a separate transaction fee for each purchase over balance.... without warning the debit card user that he is overdrawn and is accumulating transaction fees for each additional purchase.

    At least in some cases the credit card companies might notify the customer of over limit or offer a choice at the time of purchase that the purchase would carry their balance over the limits with additional fees for exceeding limits and perhaps a change in interest rate. But the debit card holder might find himself being charged a 'courtesy fee' for using this protection and that without immediate notification..... the fee at the bank being interviewed was $39 per transaction over the limit. The problem, discovered and questioned by the investigative reporter (a rarity in our day) was that the bank may also have practices of patterns in debiting bank accounts which worked against the interest of the customer. An example cited was if a customer had several automatic payments or large debits occurring with enough regularity such as an insurance payment, or house mortgage...... instead of the bank using the accounting practices of first in first out..... the bank would bundle these large payments at the top of its priority..... then, the naive customer.... even checking his balance and not realizing the pending debit which hasn't entered against his account... believes he has more leaveway in his account for small purchases before that large debit might carry him over the limit.... in which it is just a one time fee for the courtesy at a time he unexpectedly comes up with a need to extend.... But he opens his statement and finds the large debits were taken first... and a series of smaller debits.... maybe a $8.50 for a pizza when unexpected company visited, a $20 purchase for a office party gift, and a $25 gas purchase..... counted as three (3) separately charged fee for the courtesy of over extending his account.... the first maybe only by $3 over balance....but each fee was $39 in addition to the 'red money' owed the bank to pay the over drafts.... As one can see in this example..... the amount he could be charged amounts to $117 in fees for the courtesy of covering an overdraft of $48.......all of which are now debited against a balance he doesn't have until replenished by a deposit which covers that amount... and may have automatic drafts coming due. $117 fee charged for extending overdraft credit under the guise of a 'courtesy' for a period which is less than a month of extending credit!

    True, the customer has a reason to beware. But the bank sees it as a 'courtesy' being offered the customer, who is not being charged until he uses it..... and is offered no protection under the truth in lending laws for the bank to bring this to his attention as the bank skirts the question of this being a loan by presenting it as a 'courtesy' for customer convienence and not a loan under the laws of lending.

    Under the loan practices of the companies offering credit cards..... even a customer who regularly pays his bills and has a great record of credit but depends on his credit card to balance out brief but regularly occurring fluctuations in business expenses and income.... may suddenly find himself informed that the credit company has lowered the cap on the balance he is permitted. This can occur in the notice with his statement or under a separate disclosure. Should he fail to notice this.... or sees it and trys to negotiate with his company because he's in a cycle in his business where he may have to carryover a balance and was already counting on the preapproved limits of the recent past as being there.... the companies play hard ball..... realizing it is a cash cow for them if they hold to the new limit and can charge him for over the limit.... due to their own lowering.

    I remember, years ago, going into a bank and suddenly realizing how much that building .... with trophies on the walls, the shine of granite, the tall ceilings, the overlooking balconies with office staff above, the sparsely but well appointed furniture and separation of service desks with much room between various stations such as account applications, loan officers, customer specialized services.... and then the clerks stationed behind jail like bars with a distant cave like entrance with a huge metal door.... the vault.... How much, in a way, with its design, its stately appointments, the gleam of polished brass and chrome with structure of marble or granite.... it ressembled what I might envision as a temple of sorts. How appropriate.... a temple where many who are the masters there are worshippers of mannon.... and the serfs who are dependant on their services enter in and make deals somewhat akin to deals with the devil, having to disclose the nakedness of their most intimate desperations and offering up their futures with the hopes they can gain over the appetite of this pariah, making weekly or monthly pillgrimage and sacrifices heavy with usury unto its gods of excess and dominance.... hoping that the value of their life in terms of labor will remain constant enough to pay the next bills, purchase the next groceries, shelter and clothe their families, cover their obligations to the national debt..taxes.... and, hopefully, cover the tithe of the faithful to the one true God who condemns the ususry and false weigths and enslavement and appetites in the corruption of these false institutions of mammon.

    Our congress hasn't gone far enough in regulating these institutions of credit, nor in insisting that the customer is counseled or carefully informed... nor in bearing its own obligations concerning the example of budgets and debts.... and controlling the structure of monetary supply and standards beyond control and manipulations of the private international lenders, nor protecting the sovereignty of our country in such matters.
     
    #7 windcatcher, Nov 28, 2009
    Last edited by a moderator: Nov 28, 2009
  8. Mexdeaf

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    Funny that you should bring this up because I just got a new "Customer Service Agreement" from my bank yesterday and it was rife with threats of closing my account. I fully expect them to close my account soon in spite of having a good score because they make no money on me- I pay off balances monthly and pay no interest.
     
  9. pinoybaptist

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    this may or may not be connected to this topic, but isn't there supposed to be a law or something also about banks charging their insufficient funds and other fees ?
     
  10. windcatcher

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    Unless I'm mistaken, it has been my experience when opening an account that these fees are mentioned in the literature which is given or offered to a client who opens an account... that is, the current schedule of fees according to the type of account. There is also paperwork he's asked to sign.... and it has been my experience that the fine print which is the disclosure is written in so much legalizee...that it would take a slow reader like me considerable time to read and digest just what it is saying. I like to read everything before signing.... which takes time... and since such transactions are often attended by an official acting in the capacity to witness my signature, answer my questions, and qualify my application.... I'm frequently interrupted during the reading with the offer that they will explain any questions, or to offer a summary statement explaining what the lengthy jargon is saying. A less literate person or a person experiencing time constraints.... between appointments or on a lunch hour trying to do business.... is likely to fall for the summary which is offered.... and his understanding then is dependant on the truth and scope of the summary and his own retention skills of remembering what he's told. Oft times a summation of charges accompanies the literature specific to that account... which the person may read. It is then up to him to determine if he understands the terms or needs definitions.... and so asks questions.

    However, in the instance i cited regarding the 'insufficient' funds which would normally create a charge AND a bounced check which might be held or re-deposited.... by the recipient... and charged an additional fee for the person to pick up and make good..... these are fees customaririly disclosed upfront. But the example of this particular bank was the practice of luring customers to open an account with 'no fee checking' no matter how much they use the account.... with the convienence of a debit card to use at points of purchase.... great and small... with no fee..... and overdraft protection ...... as a courtesy service in the event of insufficient funds. The customer assumes ''Wow. This is great and safer than keeping cash or risk losing check book or having each check charged a service fee of maybe $0.50 each, and no interest charged if I overdraft account...... Just settle with bank by next deposit or statement." If the customer reads the print concerning the charges for this service... he is not informed that the fee charged is for each specific transaction, however small, once his limit is exceeded instead of being a one time fee to carryover a debit until the next statement or deposit. It is not so much that the banks are lying but that they are presenting the information in such a way that it is designed to sell the customer the services which he feels are favorable to him and his habits.... without disclosing that the banks have already figured out what weaknesses are held by many customers... and have designed their sales pitch and their sevices in a way to take advantages of these weaknesses and gain their fees to take advantage of the customers' ignorance and false assumptions. Futhermore, they are essentially offering a no-interest loan to carryover a debit balance, with a service charge attached (which in effect recoups their 'interest') without the charge being in a form which might give the customer a choice at the point of use.... the purchase transaction.... and it cost real money to miss a speed sign and think you'll never get caught.

    Many years ago, I made the mistake of transposing figures in my checkbook and the math thereafter was wrong until I had a statement to reconcile: As a result, I wrote a check which bounced... yes, rather embarassing. The grocery store resubmitted the check before informing me (I concede they had no obligation to inform me.) The grocery store could have charged me separate charges for each return of the check for insufficient funds... but they were gracious and only charged me once when i picked it up in return for cash. The bank took each attempt to deposit the worthless check and charged me their fee for insufficient funds twice against my account on the same check. Needless to say.... I don't remember what the total charges were then... but I think there is little difference between what i paid for the overdraft and the service charge by a bank at $39 per each transaction for over draft 'courtesy' service on a no fee checking account. If anything, the latter may have its advantage in less total charges.

    Some people seem to be born wise and behave almost instinctively regarding these instruments of money and debt. For me..... I had to learn the hard way....through experience..... after leaving home: a credit card where the balance builds and the minimum payment required covers interest and barely principal if balances get carried over and the discipline to pay it off after developing habits of using it....; buying a car... where the contract has add-ons so the price quoted for the sale is less than the price of the package before financing...and includes some charges for financing besides the interest ...and that including the insurance in the financing is a big no-no if one can pay separately...; that once insufficient funds check and the difficulty of recovering when my budget already had little discretionary room.....; building a house where the ownership of one's land and its appraised worth isn't recognized as collateral interest of the buyer in the financial instruments.

    Some other consumerisms I've begun learning...... when a product goes on sale dirt cheap.... its likely to either be junk or a product which will soon be obsolete by technology updates....... The VHS recorder/ players; the t.v. which is neither cable ready nor accepts digital signals, the computer whose os is no longer supported by the well known company which made it, the floppy disc, ice cube trays with no flat freezer space to balance them without spillage.... and where buying lids and buying produce and electricity to process and then canning it yourself cost as much or more than buying can goods off a shelf....... dress making where one can pay half the price of ready made on sale for just the cost of a pattern which may or may not look like the pretty one pictured on the front.... and the cost of fabic and other needed notions add to that cost and the labor doesn't count .....except in the quality of the product, .......and gas bought cheaply and stored does get stale even with sta-byl.... and it can cost more to prepare the land, buy the seeds and fertilizer and plant a small gardern and pay the water bill, then it does to buy at the market in season, and that you can buy a cleaned chicken at the meat market for the price of a hatchling to raise for eggs and meat. This may not be true in all cases... but have seemed true for me.
     
    #10 windcatcher, Nov 28, 2009
    Last edited by a moderator: Nov 28, 2009
  11. pinoybaptist

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    thanks for the reply, windcatcher.
    I know about the Deposit Agreement.
    It's just that my wife and I have been so used to viewing things online, and the information about our account is so vague with this bank we have like they have this available balance tab and another kind of balance tab which carries basically similar information it's just confusing on which you base your expenses on, and we look at both and our account is on the black and so we use our credit card or debit card and three days later the account is on the red with insufficient fund fees and then they point the finger at the debit card merchant and the ACH clearinghouse it's gotten to be frustrating I could understand why the old folks cheer people on like Billy the Kid and John Dillinger.:laugh:
     
  12. billwald

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    It is up to the card holder to keep track of his own money and not charge more than he can pay off every month.

    In general, I should have sympathy for people who buy toys on credit? Work tools, that's different.
     

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