A Highly Charged Relationship (credit card companies)

[cal04]

Americans Can't Do Without Their Credit Cards, But the Card Companies Are Another Matter


Call it a love affair with a dark side.

Consumers today can't get enough of their credit cards, slapping them down with a passion to pay for everything from fast food to plane tickets at a rate of 10,000 transactions a second worldwide.

But while Americans love the convenience of plastic, they often hate the credit card issuer. Credit card complaints outstrip all other bank-related grievances filed with federal regulators in recent years.

The avalanche of gripes generally boils down to objections about a half-dozen practices, according to congressional staff and consumer groups. The complaints mostly center on what consumers see as unfairly high interest rates and penalty fees; confusing policies that constantly change, almost always in the lender's favor; and near-insurmountable hurdles to getting help when a consumer falls into trouble or when a company makes a billing mistake.

(snip)
Regulators are listening to the complaints and preparing to issue stronger consumer protection rules. The Federal Reserve proposed new, long-awaited regulations on Wednesday that would require credit card companies to make disclosures clearer and easier to understand. But some lawmakers say they think that the Fed rules, which could become final by year's end, may not be enough and that new law might be needed.
http://www.washingtonpost.com/wp-dyn/content/article/2007/05/26/AR2007052600152.html?hpid=topnews

[Donnachaidh]

1. New RULES? How about a massive ROLLBACK on CHARGES?

Rules are just blowing more smoke. How about rolling back those double-digit charges, and putting a ceiling CAP on anything above 10%?

And how about a BAN on credit card advertising?

[EV_Ares]

2. How about going back to the days when you could deduct your

interest as well as the interest you paid on vehicles. That wold help.

You could file your deduction with your taxex and if you were in a certain income bracket, you would be eligible.

Let the rich pay.

[Donnachaidh]

4. yep -- that would certainly aid quite a few in the middle class

We give tax cuts to the upper 1 per cent, and shit on the consumer.

[depakid]

5. That would just subsidize the industry

and make it even harder to gain support for putting a stop to abusive and usurious practices.

[Donnachaidh]

6. exactly HOW would that subsidize the industry?

Allowing double-digit charges now ISN'T subsidizing the industry?

[depakid]

7. A tax break on interest paid to credit card companies

Means that people will be willing to carry more debt than they would if they had to pay it all out of pocket- which translates into higher profits for the industry.

That's econ 101.

[Captain Angry]

8. Another way to look at that.

Look at the Pharmaceutical industry.

We can either try to get them to lower prices universally, which benefits all pay brackets.

Or we can give some people money to buy medicine at the higher price, which excludes some people.



By allowing tax deductions for credit interest, you keep people spending and let the card company charge the high rate to all.

If you cap their rates, they have to determine who it is profitable to extend credit to. That can hurt people who would like access to credit as it certainly does add flexibility to a budget. However, a credit card company whose rates are capped would then look at potential credit risks, and keep the maximum borrowable down to a minimum.

[Donnachaidh]

9. But that's just it -- there is NO cap on the rates now

So your argument, which might well be in an economics class, doesn't really fit.

When you have Senators (I think it was Kennedy) who think it's OKAY for banks to charge rates of 36 PER CENT on loans to military families? That's a CAP?

Not too long ago anything above 10% or so was considered usury, and people charging those rates were arrested as racketeers. Exactly when did we cross the line and allow the wholesale rape of the american public?

When did this become OKAY?

[depakid]

3. Democrats could make a LOT of political hay if only

they weren't beholden to an industry that gives the vast majority of its politcal contributions to Republicans.

Yet another of the reasons that they were out of power for the past 12 years- and why so many people see so little difference between the parties.

[One Sweet World]

10. interchange is another fee

We can't forget the interchange fee. It's getting bad when gas station owners have stopped selling gas.
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=114&topic_id=25218&mesg_id=25218

The House is holding a hearing tomorrow to examine some of these credit card policies and practices.

[Lydia Leftcoast]

11. Credit card rates DIDN'T USED TO BE in the double digits

They snuck up their during the "stagflation" of the early 1980s and never came down.

It used to be considered loan sharking to charge the interest rates the credit card companies charge. I recall a cartoon from about 1980, two convicts sharing a cell. One of them says, "I'm in here for charging 15% interest."