primitives discuss credit card reforms

[franksolich]

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4681610

More of this "I demand" stuff from the primitives.

malaise  (1000+ posts)      Fri Dec-19-08 08:12 AM
Original message
 
Why are the new credit card company reforms not going to be enforced until 2010.

These rules should be enforced from January 1 2009.

http://www.ajc.com/services/content/printedition/2008/1...

<snip>

Federal regulators adopted sweeping new rules for the credit card industry Thursday that, among other changes, will shield consumers from increases in interest rates on existing balances.

The rules, which take effect in July 2010, will let credit card companies raise rates only on new cards and future purchases or advances.

It is the most sweeping clampdown on the credit card industry in decades, aimed at protecting consumers from arbitrary hikes in interest rates or inadequate time provided to pay the bills.

John Reich, director of the Office of Thrift Supervision, a Treasury Department division, said the rules “will enhance public confidence in financial institutions and establish a level playing field for institutions that want to do business fairly.”

I dunno where the primitives get this idea that what they "demand" means shit to most people.

supernova  (1000+ posts)        Fri Dec-19-08 08:17 AM
Response to Original message
 
1. Because credit cards are banks' major profit center 

Yeah, like that's a big surprise.

By making it active in 2010, it gives them an extra year of income. It's all about squeezing the consumer for as much blood as they can.

But one can't be squeezed if one doesn't put himself into a position to be squeezed.

It takes two to tango.

[formerlurker]

Actually I think some of these reforms are long overdue.   

[franksolich]

Actually I think some of these reforms are long overdue.

Yes, of course they are, and there needs to be more.

I'm all for it.

But the problem is, restrictions on credit inevitably mean less credit is available.

With easy credit, even primitives get credit.

With restricted credit, primitives don't get credit.

It's six of one thing, half a dozen of another thing.

But in the end I'm all for it, only creditworthy customers getting credit.

[formerlurker]

But one can't be squeezed if one doesn't put himself into a position to be squeezed.

It takes two to tango.

Life does happen, and sometimes very good people have to use credit cards as a means to get critical services (I am specifically referring to parents of children with disabilities).  

When services don't exist, insurance carriers refuse to approve payments for evaluations, and school districts refuse to follow the mandates of IDEA you do not have the luxury of avoiding getting into a "position to be squeezed."    

Neuropsychologist:  $3,500 for eval, $150/hour for observation of school programs
special eduction attorneys: $300-350/hour
advocates: $50-$150/hour   (I am an advocate by the way, however I help parents at no charge for I could not sleep at night taking their money when I know that don't have it to spare and it could be better spent on therapies)
BCBA: $300/hour
ABA therapist: $30-60/hour
SLP, OT, PT:  $60/.5 hour
AAC devices: $3K-12K/device

Your child has one shot in life, with the developmental years of birth through age 7 being the most critical.   Frontloading intense therapies in the early years yields the best long term outcomes.    You as a parent either find a way to pay (i.e. fight for your child's life), or you .... well, I can't even type what the potential consequences are as they scare me that damn much.  

My out of pocket expensives are staggering.   My entire life is dedicated to securing the absolute best services I possibly can for my son -- he attends the best school in the country for autism (which runs $100K/year).    Hells yeah,  a parent of a child with disabilities has some expenses that your typical family does not.  

My point is -- life happens.   You do your best for your children, which may include leaning on credit cards every once in a while.   That doesn't make the person who does that irresponsible by any stretch of the imagination.

I have read several articles on this, and some of the stuff credit card companies get away with is pretty bad.    I watched the treasury meeting on c-span yesterday and agree that the disclosure requirements made of these companies are not sufficient as they are complex and not user friendly.    That I agree with changing -- which should happen sooner rather than later.

[franksolich]

You do your best for your children, which may include leaning on credit cards every once in a while.   That doesn't make the person who does that irresponsible by any stretch of the imagination.

I have read several articles on this, and some of the stuff credit card companies get away with is pretty bad.    I watched the treasury meeting on c-span yesterday and agree that the disclosure requirements made of these companies are not sufficient as they are complex and not user friendly.    That I agree with changing -- which should happen sooner rather than later.

Absolutely.

If one must, one is actually morally compelled to beg, borrow, and steal for the well-being of one's children, if it's honestly for the children, and the children only.

The things the credit card companies get away with is an abomination, such as changing rates without adequate notice, changing due-dates without adequate notice, maliciously imposing fees, and that needs to be stopped.

But with restrictions, credit inevitably tightens.

However, I'm all for it.

[DumbAss Tanker]

It's an economic choice either way, neither inherently right or wrong, to use credit as little or as much as you wish.  Where the 'wrong' comes in is when people do it with a reckless disregard of the costs and ruin their family finances, and then try to blame others for the outcome.

[Traveshamockery]

Life does happen, and sometimes very good people have to use credit cards as a means to get critical services (I am specifically referring to parents of children with disabilities). 

When services don't exist, insurance carriers refuse to approve payments for evaluations, and school districts refuse to follow the mandates of IDEA you do not have the luxury of avoiding getting into a "position to be squeezed."   

I understand your point 100%.  How old is your son and when was he diagnosed?  I have an older brother who is 51 whom we all believe is autistic but has never been diagnosed.  It's a really long story so I won't tell it here but if he had been diagnosed as a child, maybe his life could have been better.  I admire the sacrifices you are making for your son, though I'm sure you don't see them as sacrifices.  To you, it's just being a mom. 

There is a huge difference in how you are using your credit as to how far too many people use them to buy "stuff" and then expect to be bailed out. 


 

[formerlurker]

I understand your point 100%.  How old is your son and when was he diagnosed?  I have an older brother who is 51 whom we all believe is autistic but has never been diagnosed.  It's a really long story so I won't tell it here but if he had been diagnosed as a child, maybe his life could have been better.  I admire the sacrifices you are making for your son, though I'm sure you don't see them as sacrifices.  To you, it's just being a mom. 

There is a huge difference in how you are using your credit as to how far too many people use them to buy "stuff" and then expect to be bailed out. 


 

He was a little over 2 when he was diagnosed, he will be 7 years old in April.   In all fairness to your parents, there really were no services when your brother was younger.   They would just institutionalize them, and I am sure that is something your parents would have avoided at all costs. 

Thanks for your kind words.   I think it is a safe bet to state we would all do just about anything for our children.   

[AllosaursRus]

Yes, of course they are, and there needs to be more.

I'm all for it.

But the problem is, restrictions on credit inevitably mean less credit is available.

With easy credit, even primitives get credit.

With restricted credit, primitives don't get credit.

It's six of one thing, half a dozen of another thing.

But in the end I'm all for it, only creditworthy customers getting credit.

I don't understand. Actually the problem lies with the banks giving credit to people they think are worthy. I know it's a helluva big carrot dangled out there, but for cryin' out loud, should it be the bank's fault you don't know better than to spend more than you can afford?

These asshats want to be forgiven for purchases they know deep down theyshouldn't have made. THEY DIDN'T HAVE THE FRIKKIN MONEY IN THE FIRST PLACE!!!

So the bank is at fault because they couldn't curb their spending?

[formerlurker]

I don't understand. Actually the problem lies with the banks giving credit to people they think are worthy. I know it's a helluva big carrot dangled out there, but for cryin' out loud, should it be the bank's fault you don't know better than to spend more than you can afford?

These asshats want to be forgiven for purchases they know deep down theyshouldn't have made. THEY DIDN'T HAVE THE FRIKKIN MONEY IN THE FIRST PLACE!!!

So the bank is at fault because they couldn't curb their spending?

I don't think that is the issue of the reforms.   The majority of problems lie with disclosure of credit card interest rates (which change regularly) and what your payments will be applied to.   An example they provided was cash withdrawls may have an interest rate of 25%, while purchases have a rate of 15% (which makes sense as the bank gets their kickback from the merchant for purchases made by their cardholder and they don't get anything when cash is withdrawn).    If a member cannot pay their blance in full, they will apply the payment to the purchase balance at the lower interest rate, and will not give the member the choice of paying off the higher cash withdrawal rate first.     

While this may be within the right of the bank to decide how they do business in this regard, they never at any time disclosed those practices in a manner where the consumer is fully aware of those practices -- their disclosure documents are too complex and convoluted for the avergae consumer to comprehend.     The bank's solicitations of their cards to new members are also extremely limited in information on the ramifications of using their card, or innocently being late on a payment -- which is yet another area they explore.   Banks do not give sufficient notice of billing and payment due dates for members to review statements and contest charges.    They want a longer time frame.

There are a great deal of unscruputlous business practices that banks engage in, and that pretty much is all banks.    I think some of these changes are long overdue. 

[FlaGator]

Why are they waiting until 2010? Because software doesn't change itself and programmers can't make and test the changes overnight. If these people had any idea what it takes to change the name on a button in a large corporate environment they'd be happy to wait until 2010.

[Zeus]

I don't think that is the issue of the reforms.   The majority of problems lie with disclosure of credit card interest rates (which change regularly) and what your payments will be applied to.   An example they provided was cash withdrawls may have an interest rate of 25%, while purchases have a rate of 15% (which makes sense as the bank gets their kickback from the merchant for purchases made by their cardholder and they don't get anything when cash is withdrawn).    If a member cannot pay their blance in full, they will apply the payment to the purchase balance at the lower interest rate, and will not give the member the choice of paying off the higher cash withdrawal rate first.     

While this may be within the right of the bank to decide how they do business in this regard, they never at any time disclosed those practices in a manner where the consumer is fully aware of those practices -- their disclosure documents are too complex and convoluted for the avergae consumer to comprehend.     The bank's solicitations of their cards to new members are also extremely limited in information on the ramifications of using their card, or innocently being late on a payment -- which is yet another area they explore.   Banks do not give sufficient notice of billing and payment due dates for members to review statements and contest charges.    They want a longer time frame.

There are a great deal of unscruputlous business practices that banks engage in, and that pretty much is all banks.    I think some of these changes are long overdue. 

That may have been a legitimate excuse 25 - 30 yrs ago . With the vast anount of available information & disclosures nowadays I don't think it is any longer. The reason the Disclosures are too complex and convoluted for the avergae consumer to comprehend is because of the avg consumers bitchin & Moaning "no one told me" until lawyers & politicians got involved. Sure they can write those multiple page disclosures in larger type, if you want a say %30 interest rate.

There are exceptions to the rule but for the most parts consumers put them selves into the situation no one else.

[BannedFromDU]

That may have been a legitimate excuse 25 - 30 yrs ago . With the vast anount of available information & disclosures nowadays I don't think it is any longer. The reason the Disclosures are too complex and convoluted for the avergae consumer to comprehend is because of the avg consumers bitchin & Moaning "no one told me" until lawyers & politicians got involved. Sure they can write those multiple page disclosures in larger type, if you want a say %30 interest rate.

There are exceptions to the rule but for the most parts consumers put them selves into the situation no one else.

     If you're smart enough to have a credit card, you should acquaint yourself with the implications of every contingency shown in the original cardholder agreement, and every amendment to it that might follow. If you don't like what might happen if you're late, you should not take the card, or you should cut in half the one you already have.

     I have noticed that credit cards are the one place where conservatives tend to get very un-conservative. I also think people have a sense of entitlement when it comes to cards. A credit card represents the privilege to obtain a completely unsecured loan, on demand, with no down payment and no oversight. You can borrow money from Chase on the floor of a casino for gambling purposes, for heaven's sake. While there is no doubt that credit card companies will do whatever they can to pump up their risk-adjusted yields, many of those yields aren't as high as people think. For most tranches, an issuer would be very happy to make a 3% return on asset. Three cents on the dollar profit. That's a pathetic return almost everywhere outside financial services and the grocery business.

     

     

[Zeus]

     If you're smart enough to have a credit card, you should acquaint yourself with the implications of every contingency shown in the original cardholder agreement, and every amendment to it that might follow. If you don't like what might happen if you're late, you should not take the card, or you should cut in half the one you already have.

     I have noticed that credit cards are the one place where conservatives tend to get very un-conservative. I also think people have a sense of entitlement when it comes to cards. A credit card represents the privilege to obtain a completely unsecured loan, on demand, with no down payment and no oversight. You can borrow money from Chase on the floor of a casino for gambling purposes, for heaven's sake. While there is no doubt that credit card companies will do whatever they can to pump up their risk-adjusted yields, many of those yields aren't as high as people think. For most tranches, an issuer would be very happy to make a 3% return on asset. Three cents on the dollar profit. That's a pathetic return almost everywhere outside financial services and the grocery business.
     

Well business enterprises can be just as ignorant/stupid and/or greedy when it comes to credit/debit card acceptance and use. Make sure the convience fee charged is just high enough that enough folks go the old fashioned route of check by mail. it increases the odds of a late pymnt therefore a late pymnt fee is due.

[formerlurker]

That may have been a legitimate excuse 25 - 30 yrs ago . With the vast anount of available information & disclosures nowadays I don't think it is any longer. The reason the Disclosures are too complex and convoluted for the avergae consumer to comprehend is because of the avg consumers bitchin & Moaning "no one told me" until lawyers & politicians got involved. Sure they can write those multiple page disclosures in larger type, if you want a say %30 interest rate.

There are exceptions to the rule but for the most parts consumers put them selves into the situation no one else.

I think it is still very much true today.   The application has rather pretty language which is very easy to understand and complete.   The card itself comes with a booklet of small print that is not so easy.

Mortgages come with truth-in-lending disclosure mandates, credit cards should be held to the same standard.

[formerlurker]

     If you're smart enough to have a credit card, you should acquaint yourself with the implications of every contingency shown in the original cardholder agreement, and every amendment to it that might follow. If you don't like what might happen if you're late, you should not take the card, or you should cut in half the one you already have.

     I have noticed that credit cards are the one place where conservatives tend to get very un-conservative. I also think people have a sense of entitlement when it comes to cards. A credit card represents the privilege to obtain a completely unsecured loan, on demand, with no down payment and no oversight. You can borrow money from Chase on the floor of a casino for gambling purposes, for heaven's sake. While there is no doubt that credit card companies will do whatever they can to pump up their risk-adjusted yields, many of those yields aren't as high as people think. For most tranches, an issuer would be very happy to make a 3% return on asset. Three cents on the dollar profit. That's a pathetic return almost everywhere outside financial services and the grocery business.

Sorry, but disclosure that is consumer friendly is hardly anything that would be considered "un-conservative."     Give me a break already.

[franksolich]

Mortgages come with truth-in-lending disclosure mandates, credit cards should be held to the same standard.

My point too.

For some reason, credit-card companies seem exempt from normal and customary rules governing all other commercial contractual relationships.

As many here have said, yeah, sure, it's the fault of careless card-holders spending money with only vague hopes of being able to pay it back--and I agree--but things aren't quite that cut-and-dried.

The credit-card companies are the big boy in all this, and should be held accountable for their careless lending practices, and suffer the consequences of bad decisions that they make, including issuing cards to non-creditworthy people.

This is what the primitives obviously don't understand, though; the primitives themselves have benefited from loose-and-easy credit given out at exorbitant rates and fees, and once restrictions are imposed, the primitives won't find it easy, if at all, to get those plastic things.

Which is fine with me, only creditworthy people should get credit.

[BannedFromDU]

Sorry, but disclosure that is consumer friendly is hardly anything that would be considered "un-conservative."     Give me a break already.

     No, I think conservatives lose their bearings when they forget that they don't have to borrow money if they don't like or understand the terms. And disclosures are more consumer friendly than ever. There are really only a couple of rules: 1) don't use the grace period as extra time to pay your bill. 2) You will be assessed interest charges if your payment arrives after the grace period starts and if you don't don't pay in full; 3) don't allow yourself to go overlimit, 4) take your balance elsewhere if you get repriced for no reason.

[Thor]

One of the stupid things tat CC Companies do and, imo, that's what got them in this mess, is that they give people exhorbitant amounts of available credit. A few years ago, I had a CC with a $23K limit. Who on Earth needs a credit line from a CC company that high?? Something like that just lends itself to problems.

Then we have Joe Biden, whose son was a prominent figure with MBNA. Biden, himself, introduced legislation to protect the CC companies and NOT the consumer.

[rich_t]

Something like that just lends itself to problems.

Perhaps for those that lack financial self-discipline.  In the past I have had credit cards adding up to well over $100k in available credit.

I gradually got rid of most of them.  I have a personal card in my name only that has about a $17K credit limit and my wife and I have a joint card that has, as I recall, a credit limit of about $25K.

When either of those cards are used, they almost always get paid off every month.  Although there have been occassions when that wasn't possible.

I do think that the banks play a little fast and loose in their favor, but most folks that run into credit card related financial distress... the wound is self-inflicted.