Credit Card Companies Are About To Drive A Stake Through Consumers' Hearts....LINK

[Blackhatjack]

Consumers already pressed by loss of home equity, impending foreclosure, and job uncertainty, now are facing what will likely push them over the financial brink... increased credit card interest rates, fees and onerous practices.... even for those who have never missed a payment.

When all of this is over the American consumer is going to be left barely alive, like a victim who has had almost every ounce of blood sucked out of him by a financial vampire that moves on from one troubled consumer to another.

Senator Menendez is right --if they want government taxpayer assistance they should have to abide by reasonable business practices.

http://www.huffingtonpost.com/robert-menendez/the-gathering-credit-card_b_144626.html

The Gathering Credit Card Storm
by Sen Robert Menendez

"Our current financial crisis is a case study in ripple effects. A lot of bad mortgage loans, bad loans between organizations, bad evaluations by ratings agencies and bad oversight by government collectively toppled big Wall Street firms. This caused our credit markets to freeze, leading to business contraction, massive job losses, and deep economic pain on Main Street.

First came the crisis over bad paper, now the crisis could get worse because of bad plastic.

Consumer credit card defaults are a gathering storm. At the same time it's becoming harder to get new credit, Americans have almost $1 trillion of credit card debt outstanding. Defaults are rising. Delinquencies are at a six-year high.

And the credit card debt itself is only part of the problem. While consumers are struggling, credit card issuers haven't let up on some of their most questionable practices, including exorbitant penalties and rate hikes. To make matters worse, just recently several credit card issuers have announced plans to raise interest rates, even for people who've paid their bills on time."

MORE

[elocs]

1. What's funny for me is that Capital One lowered my interest rate from 7.99% to 6.65%. n/t

[lunatica]

25. Capitol One sent me a no minimum payment saying they would charge the

normal minimum the next month.

And Chase contacted me to say I had gone over the limit but that they were giving me three months to pay it and get back under the limit without raising my interest rate. Ttey said if in three months I hadn't reduced the amount they would institute the higher interest rate.

This is the first time I've seen any indication that they get it. It's to their advantage to help us out. Otherwise they will end up losing much more.

[TheKentuckian]

2. The greedy credit card companies will about kill themselves

by increasing default rates, though I reckon they assume Uncle Sam will clean it all up for them so they have license to squeeze what they can and take the rest from the taxpayers.

[JAYJDF]

3. I just opened my cc statement and saw the rate is at 30 fkn percent

I dont have much on it but where the hell do they get off!

[ecstatic]

27. If you haven't already, you should call and demand

a lower rate. If your score is decent they will probably change it.

[Hekate]

41. Sometimes when I get offers from other cc companies I call my Visa carrier and chat about rates...

I've been with them since the 1980s and pay in full nearly every month--as I point out to them. I say things like: "Can you match this offer, or should I transfer to them?" Strangely enough, this seems to work. If I'm going to buy Christmas presents or something that takes more than a month to pay off, I don't want to be gouged by their interest rates.

Interest rates should never--and I mean NEVER--be equivalent to having your legs broken by a loan shark.

Hekate

[ecstatic]

45. That's a great tip! Thanks nt

[K Gardner]

57. I've never had this NOT work. Its good advise. Remind them of your FICO score (if its good!) and

they'll usually lower the rate.

[ChiciB1]

66. I Got My Visa Down To 7.74% By Calling Them... Don't Know What

this new law will do to it, but it would be a real bummer if they raise it. Don't use cards too much, but if I'm traveling you almost NEED to use a card.

[Hekate]

70. I'm planning a trip for next spring: my first & probably only trip to Ireland & the UK...

You can't do that without credit cards. You can't rent a car in the US without a credit card. We're in a credit society, and no matter how little I like it about all I can do is make sure I know how to use it so I don't get hurt. The "trip of a lifetime" will come out of my savings, but holy cow, the thought of being dinged by multiple digits before I can even get home is not a pleasant one. Fortunately Mr. H will be at home and I plan to leave him some signed blank checks to keep ahead of this. (I'm planning this with an old college friend, since Mr. H doesn't travel well. :D )

Hekate

[JAYJDF]

4. At least when we could deduct the interest on our taxes there was a little giveback n/t

[eleny]

5. I'll go back to writing checks

I've never missed a payment nor have we paid a penny of interest. We not good to them unless they charge me a fee for the convenience. At that point, I drop them and write checks or use cash.

If most people have to start doing that it will hurt commerce. Oh well.

[Hawkowl]

6. We are so f*cked

We have less than two months of shrub and it appears that the corporate/cronyism is hell bent on destroying our economy once and for all. Accelerating layoffs, bankruptcies, foreclosures and a rapidly shrinking tax base is enormously increasing the length and severity of this recession.

These last two months could be the difference between a recession and a depression and there is nothing we can do about it. At this point it would be better to not bail out anyone until after Obama takes office with proper oversight. Otherwise we will just end up flushing trillions of dollars down the toilet in corporate fat cat welfare--and then we will be out of money. There will be no money left for any bailouts.

[question everything]

7. Posted about this yesterday

but with no link

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x47923

[sui generis]

8. hey guys: if you don't like it, get in front of your congressman

that's what they are doing.

Demand congressional hearings. Demand credit industry reform.

But if you really really really want to hurt them, get rid of your credit cards and stop being a consumer of anything you can't afford.

It is that simple.

If you hate that your cocaine dealer is charging you more for less . . . :shrug:

[JoDog]

9. And if you're in too deep

And are missing payments, or may start to soon, take a look at the bankruptcy laws in your state.

[BonnieJW]

10. FYI

Closing your credit card accounts lowers your credit score. Keep the accounts and keep them empty. I once knew someone who worked for a cc company. They referred to those customers who paid the entire balance each month as "deadbeats" because they used the service without making any money for the cc company.

[ITsec]

12. I am a deadbeat... and godamm proud of it.

Fuck 'em. I pay my CC in full each month, so they get Zero interest, yet have to pay me on my interest bearing checking account before I send off the payment.

I so love being a "user".

[Ninga]

13. Not entirely accurate. Each time a consumer uses his/her credit card, the retailer or

restrauant gets charged.

So any business that takes payment by credit card, has to pay for each and every charge.

So credit card companies DO make money on those consumers who pay their entire cc bill, they just make it one way, instead of two.

[Frank Cannon]

16. Thanks for that. I forgot about that.

I actually felt kind of guilty about taking the free services and not "giving back", but fuck that.

[old mark]

43. Businesses that take credit cards pay a fee per use of 3 to 5 %.

Some smaller businesses are starting to do business cash only, or offer discounts for cas instead of credit cards.

mark

[No Elephants]

47. Cash only is fine. Offering a discount for cash is usually illegal, though.

[old mark]

60. I have been seeing this as small businesses - usually gas stations -

for some time.

mark

[Gormy Cuss]

67. IIRC it's not illegal, just a violation of agreements with credit card companies.

Merchants can offer a discount for cash but the cc companies may choose to stop dealing with them altogether. It is illegal to charge a surcharge for credit card purchases.

It's also a violation of credit card master agreements to require ID as part of the transaction. Merchants are allowed to ask for ID but not to refuse the sale if a legitimate credit card is presented.

[sui generis]

15. I did a run as a senior veep in a cc company

what the little inbound and outbound people think doesn't matter.

They now poll Experian et al once per week to see if new credit derogs have posted so they can have an excuse to jack your interest. They are absolutely utterly pure vile evil - no quarter given there.

Your credit score matters less if everyone has a lower credit score across the board.

Also, now I'm in another segment of the industry at a c-level and it turns out that the big three are losing traction over other scoring mechanisms.

Get rid of your credit cards. Don't make excuses. When you need credit your existing clean record of car and house and utility payments will be the ONLY thing you need in the absence of other risk.

[No Elephants]

46. The merchants pay a percentage of each charge to the credit card company, so they still make

money on people who pay in full every month.

[CakeGrrl]

14. There's the big problem - they RELY on Americans' propensity for living beyond their means

It's a huge racket.

Retailers push people to spend, acquire, and consume. Marketers tell people how they have to look and what they have to buy to be 'successful'.

Enter credit cards. What a relief that you can buy those high-end kitchen gadgets and dinner/party outfits and school supplies and Christmas gifts and still take your vacation without having to pay it back all at once.

When you max one out, open another and keep on going.

Unfortunately it went on so long a lot of people didn't give it much thought, but now the wall is about to be hit. Hard.

[Fired Up Democrat]

28. i work in the mortgage industry

and believe me when I say the credit card companies are just as responsible for the housing crisis as banks and lending institutions. I constantly see people with debt to income ratios close to 100 percent.

[tigereye]

38. isn't that amazing?

When we got our mortgage, we were told that we lived within our means, like it was shocking, or something. I never could understand how folks could afford all that stuff - houses, expensive cars, etc and surprise! They couldn't without massive debt!



It's scary, really. I remember when my parents had to save for stuff, they couldn't just go out and get it whenever they wanted...

[8 track mind]

65. this is why i buy

used stuff. i can't see spending $28k on a new vehicle or dropping 150k for a house that was slapped together with the cheapest materials they could find. A lot of my co-workers did just for bragging rights.

[tonycinla]

18. BINGO!

That is the answer.Just hunker down and watch every dime you spend.There are probably not 10% of the people on this post who could not cut their expenses by at least 20%.You just have to make some tough decisions.Start out by cutting a lot of red meat out of your diet and also junk food etc.etc.etc.

[Patiod]

24. Easier said than done

We don't use anything but cash or AMEX, and have 2 cards at 30%.

We pay 2x the minimum every month (more if we can afford it) and at 30% interest, the balance is hardly budging, even without any new charges.

30% is usurious. Both cards were below 12% when I got them, and I've never been late on either, but HAVE been in dispute with a department store (long story) which allowed both of the other credit cards to jack the rate up from 10% and 12% to 30%.

[No Elephants]

48. The Bible forbids usury. Isn't it funny how selective Pubs are when it comes to legislating

the Bible? The Bible forbids usury, so just re-define it so that usury means a rate of interest not permitted by law.

[Patiod]

56. Yeah, and they wear cloth of mixed fibers, too

but the homosexuality stuff in the same paragraph? THAT we have to take seriously. Grrrr.

[sui generis]

52. you have two AMEX cards at 30%?

the point of Amex was to float until the end of the month, which is a reasonable cash-flow tool provided you pay off your balance every month and are comfortable with any annual fee.

Nonetheless, nobody is suggesting that it's possible to get off altogether in a couple of months if you already have balances. I recommend that you rationalize every expense you have. Go to a credit union (or USAA or Navy Credit or whatever you may have special access to), set up an account and ask for a balance transfer offer. Shut down your 30% cards, and sit down and write out your budget in excruciating detail. Do NOT put anything other than emergency back on Amex, and only if you are able to pay it all off by the end of the month. Pay down your credit union account as quickly as possible - 2X minimum is not good or fast enough. If you want it, you have to work really hard to get it, but once you have it, you will be significantly ahead of the game, and you will find the habits you didn't think you could live without are no longer important.

The main thing is if you aren't flowing cash out to credit card payments every month, you will be accumulating some savings. You should be able to pay for most "extras" easily out of that at 0% interest.

Become your own banker and credit card company, and it's good practice to do now before you are in crisis.

[Patiod]

59. No, I have a VISA and an AMEX Blue at those high rates

and the AMEX Green I need for work. I put everything else I spend on the AMEX Green, and pay it off in full promptly each month as specified. I find the AMEX statement helpful in reviewing my own expenses, whereas S.O. operates on a purely cash bases, and I have no idea where he pisses it away.

The Blue was my S.O.'s and he ran it up, and he no longer uses it. The VISA got run up when i was unemployed several years ago - I stopped using it as soon as I got a job, but have not paid down the balance.

Your suggestions are good - S.O. is the son of a union member, and can join the Teamsters Credit Union, so we'll look into that. Thanks.

[raebrek]

68. You can help cut that down

If you make that payment twice a month or every two weeks if you will, even though it is the same payment amount in total, you can save on the interest that you are paying. Save a little money.

Raebrek!!!

[Blackhatjack]

11. They are going to the Government asking assistance but drilling the consumer taxpayer...

I think the mentality is that most of these consumers will eventually default, so we need to bleed them for all we are worth today, right this moment, and not worry if it will push them over the brink financially.

This is all about wealth transfer anyway --from the working class and poor to the ultra-rich, corporate entities.

A few individuals and corporations will come out of this financial crisis even more wealthy than anyone could have imagined a few months ago.

[HouObamaChapter]

17. There's a simple solution

Pay off the debt and don't over extend yourself. The interest rates could skyrocket to 30% but if you have a $0 balance, it won't matter.

[Blackhatjack]

19. When it comes to paying medical bills for medical service, or other essentials...

You won't likely find individuals that will place their children and breadwinner at risk by not using the available credit to get them the care they need.

Not everyone who carries a balance on their credit cards has been unresponsible in handling their credit.

Most people who end up with 30% credit card balances would never have made the purchase if that had been the rate they were offered. It is all about 'bait and switch' when it comes to the terms.

[HouObamaChapter]

21. Sure but that represents a small minority of CC holders, IMO.

How many have to carry an outstanding balance due to medical bills/services? And I'm pretty sure most people that have a 30% outstanding balance would still be making purchases, rather than paying down their debt, regardless of rates.

This, of course, is all speculation on both of our parts. Unless you have documentation to show that my assumptions are wrong.

[regnaD kciN]

34. Can the sanctimonious bullshit...

Yes, everyone should live within their means and not rely on credit.

But, in case you haven't noticed, finance companies aren't stupid. When they raise rates, they do so based on an analysis of that person's debts, income, etc. that tells them there is no way that person can repay their existing debt for years, even if they stop charging anything right away and never use plastic again. Repayment rates are such that, if you pay only the minimum payment, it will take around ten years to pay it off. And, in case you want to invoke the obvious answer "pay more than the minimum payment"...surprise! Finance companies calculate interest increases so that their victims customers can only pay the minimum. If you're paying, say, 12% interest, and decide to be financially-responsible and double your monthly payment, and the company raises your rate to 30%, you know what happens? You wind up having to pay more than that doubled payment just to meet the new minimum payment (that assures you won't pay off your debt for a decade).

As I said, finance companies aren't stupid. They aren't going to jack up their rates on a customer who can respond to it by paying off their debt in a few months or less, and then take their business elsewhere, thus costing the financiers the bonus they get from vendors on every transaction. No, they're only going to hit those who "owe their soul to the company store," to make sure they get kept in bondage for as long as possible. It's the loan-shark mentality at work, thanks to big-business capitalism.

[HouObamaChapter]

37. So what's your point?

Sure, it borderlines usury but it's not.

That leaves two options in your scenario: (1) People should pay off their outstanding debts in a prompt fashion prior to getting steamrolled by interest or (2) the CC companies forgive irresponsible long term debt and/or not penalize and treat them as if they do clear their monthly balance.

Which, in your perfect world, would it be?

[SOS]

64. It's usury in New York

In NY, anything over 21% is loansharking.
But because of the 1978 Marquette Supreme Court decision, the usurious interest is legal based on the state of bank incorporation.
South Dakota and Delaware don't have usury laws and that's why every big bank in America is incorporated in those two states.

A bank chartered only in NY would be charged with a crime for charging 30%.
Like the mafia gangsters they are.

[Hawaii Hiker]

20. What about when you have a credit card bill that's say 3.9, 4.9% etc.

for the life of the loan?....

I have a couple cards where I transfered from a higher rate to a significantly lower rate, & it's one of those loans that stays low UNTIL its paid off as long as the card stays in good standing...

Many posters here probably received the same type of offer: transfer your higher balances to a lower rate, blah blah.....

Also, I constantly get the offer for the American Airlines (Visa i think) credit card....After you spend $750, you get the 25,000 bonus miles....(Remember when you use to get mileage bonuses by just making ANY purchase on a new card, now you have to spend $750)....I keep throwing the offer form away, yet they keep sending me it about monthly....

[regnaD kciN]

35. Very few of those are offered nowadays...

Instead, you'll get transfer offers that guarantee that low rate for six to eighteen months, then lift it to whatever they want.

The only "for the life of the loan" offers I know of are the ones people get from existing credit accounts where they already owe a balance. And there's some financial trickery about those that make them less of a deal than they might seem. For example: most of them will say that your payment will go toward the lowest-interest part of the debt first. What the consumer might assume from this is that every monthly payment will first go toward paying off the finance charge (monthly interest), then go toward the lowest-interest principal. However, what they find out too late is that the payment goes entirely toward the low-interest principal, meaning that the interest keeps accumulating as part of their balance, and they start getting interest charged on their interest (at the higher rate, of course). What that means is that, if someone gets one of those loans, they can be diligent in paying off their bill for months, and discover that, while the principal on the lower-interest part is predictably going down, the total balance is actually going up, and will continue to do so until the lower-interest loan is paid off, by which time they will have accumulated interest upon interest upon interest, all at the higher rate, and all part of the balance they have to pay off at that higher rate.

[tridim]

22. I'm a few months away from having zero credit card debt.

At which point I'm cutting my last card in half and never using one again. Knock on wood.

[Chulanowa]

23. That seems a very backwards way of doing it

After all, by the "market logic" that justifies these guys crying for tax breaks, wouldn't a lower interest rate on the cards be better for the company? People spend more and so more revenue is hgenerated and the company can collect more?

Oh? What's that you say? It only works when it's the government cutting their expenses, not them cutting hteir consumer's expenses? Ahhh, the magical invisible hand at work, no doubt!

[mucifer]

26. wow that must mean I'm a vampire.

sorry, I couldn't stop myself.

:rofl:

[Cleita]

29. You mean 30% isn't enough for them? n/t

[MadHound]

30. Once again, cut up the cards,

Go to a cash, check, debit card system. It's good for your budget, good for your wallet, good for your life, and screws the credit card corporations.

I've been card free all my life, and have never had a problem.

[Thickasabrick]

31. How do you rent a car?

[riderinthestorm]

42. Debit card. Works just like a credit card.

Personally, we don't have credit cards. We use our debit for everything including for things like airline and theatre tix, and car rentals.

I own a farm (small business), and that carries about $7000 plus or minus at any time that we pay off monthly since several of our suppliers (shavings, hardware, tack shop, feed store etc.) charge to that card whenever we need those supplies - this way I don't have to physically go to those shops, or personally call in. They just have a standing number they use. It's much more convenient - I never have to worry about the checking account balance, there's always enough credit to purchase supplies and the staff can phone in the orders without me having to do it - but worrisome since they charge an exorbitant interest fee.

We pay it off monthly (and it's one of "points" cards so we've used it to apply towards other necessities) but what if we ever fell behind? I can see it snowballing - especially in a bad economy.

I can totally see how people with medical issues or small businesses in a cash crunch get squashed by cc companies. They are merciless.

[K Gardner]

58. I'd never use my debit to rent a car. Read the fine print on how much they "hold".

[jeffrey_X]

61. You can still keep a regular credit card for renting cars.

Just use your debit card when you return the car. Ask to have the charges applied to the debit card instead of the original credit card used to rent the car.

I do this all the time.

[regnaD kciN]

36. Well, bully for you!

:eyes:

As I said above, if you've remained debt-free, you deserve congratulations.

But those who are going to get hit with this are those who are already deeply in debt. They can cut expenses to the bone, rely only on cash, and attempt to pay more than the minimum monthly payment, but they're still going to be trapped in the system for years.

Cutting up their cards isn't going to do a damn thing to help them.

[Waiting For Everyman]

32. Menendez, "reasonable practices" isn't nearly enough - they should

have usury limits of no more than 5% for at least several years... we should get a mass buydown for the bailout we're giving them. This is total BS.

[CBGLuthier]

33. fortunate to be free of those evil fucking things

lost a debit card the other day and while arranging for a new one the CS rep offered me a CC. She was lucky I didn't verbally assault her for assuming I am a fucking idiot (ala James Garner in Support Your Local Gunfighter when offered to play roulette) but I just politely declined with a derisive laugh instead.

I truly believe the credit card is one of the chief causes of the decline of this nation.

[Hassin Bin Sober]

40. LOL. I thought of Support Your Local Gunfighter before I saw the ( ).

One of my favorites along with Sheriff........

[depakid]

39. If the Dems hadn't wilfully abandoned progressive consumer protection laws

It's unlikely that they'd have been in the minority for 12 years. DINO's are every bit as much to blame for the current mess as Republicans, and it will be interesting to see what, if anything they've learned from the experience and whether or not they'll go to bat for Robert Menendez's bill (and others like it).

If not, look for 2010 to be a lot like 1994.

[Lydia Leftcoast]

44. I have one department store credit card, and my bill came in the mail today

The due date for payment has been the 12th of the month since forever, or at least the nearly 20 years I've had the card.

But it's a good thing that I opened the envelope to look at the bill--because the due date has been changed to the 6th without warning. I wonder if the store, which has been doing nothing but holding "sales" for the past few months, is trying to catch people in late fees.

I know that my Visa card company is constantly changing the due dates.

[MilesColtrane]

49. They'll also change the submission address without warning.

So that bill you pay that usually takes 5 days to get to them now takes 8 days.

Bam! Late payment, and instantly your interest rate goes up 10%.

Bastards.

[Lydia Leftcoast]

55. That's why I've taken to paying my Visa bill online and the dept. store card

in person (it's payable at the Customer Service desk of any branch--so far).

[dascientist]

50. hmmmmmmmmmmmmmmm

[RebelOne]

51. Glad not to have credit cards anymore.

Credit cards got me into a heap of trouble, as I am now under a Chapter 13 bankruptcy for the next 4 years. I am not allowed to have any credit until that time is up.

[a kennedy]

53. Am working my arse off to get our two cards paid off.....sould be out

from under in January. Just have Nov, Dec & Jan payment left, then scott free of any credit cards!! :bounce: :bounce: :bounce:

[AZSlacker]

54. I'm not sure why the CC companies are fretting. I'm sure they'll have a prominent place

At the bail out table. But don't let that stop them from tightening the noose around the neck of the US consumer.

I guess the fact that my credit is so bad that I can't even get a credit card is a blessing in disguise.

[grace0418]

62. I'm one of those people the CC companies hate. I use my card for everything but I

pay it off completely every month. I'm careful to only charge what I can afford to pay off, and I get loads of American Airlines miles to boot. But I feel people's pain, when I was younger I carried cc debt and it sucked.

[Skwmom]

63. Dont' worry. The Democrats will control the Whitehouse and Congress. They'll protect the consumer

[indepat]

69. A corrupt, venal, self-serving, mendacious , duplicitous, and disingenuous Congress has given credit

card companies the green light to, imv, racketeer in a heretofore unfathomable fashion. :P