New Credit Card Law

[Judi Lynn]

New Credit Card Law
Jan. 3, 2006
Jessica Wheeler

A new credit card law aimed at helping consumers get out of debt went into affect on January first. The law is designed to keep credit card companies from making too much money and it will also help those in debt get rid of it quicker.

Recent college grad, James Walsh says he sometimes leaves a balance on his credit card. "I try not to but its not always possible, I just got our of college so I'm trying to work around everything."

And with 7 million Americans only paying the minimum amount on their credit cards, Walsh is not alone. In fact, credit card companies made about 30-billion dollars in 2004... all from interest charges.
(snip)

This year will be different, a new law now requires consumers to pay the interest and penalties on their bills plus at least one percent of the principal, something that Williams says will initially hurt some people who could be paying 50 bucks more a month.
(snip/...)

http://www.hoinews.com/news/headlines/2148207.html

[bluestateguy]

1. I'm ready

I have been planning for this, and one thing that I did to soften the blow was get my CC company to reduce my interest rate. It took some aggressive negotiations (I had to get a supervisor on the phone with Customer Service). But after some persistence, and reminding them that I had not made a late payment in 4 years (and only 1 late payment in 8 years), my rate was lowered to 13.99%.

[tavalon]

2. I'm readier

I quit using credit cards about 8 years ago.

[hippiechick]

73. Same here.

:hi:

[Occulus]

91. Once I get this one paid off, I'm done with them forever.

I'll have a debit card- much much safer.

[InsultComicDog]

3. I don't know who Jessica Wheeler is...

...other than to say that if she's claiming that the law is designed to keep credit card companies from making too much money, she's got to be incredibly naive.

I do think that for people not already caught in the trap of minimum payment hell (and I've been there and it isn't easy to get out of as it is), this will help prevent some customers from getting as deeply debt-entrenched.

[salin]

4. new 'credit card law' - aimed to help consumers (and hurt credit card cos)

PLEASE - the law is called the BANKRUPTCY LAW - it was passed at the behest of credit card companies. This is probably the ONLY provision that isn't a full give away to the credit industry - because while the bankruptcy laws became more draconian - there were no provisions to limit predatory lending, no responsibility of credit companies to eat up the 'risk' that they sign on for when they give out credit cards to very high risk folks, no limits to the already usurous interest rates (beyond 30% ) that can go into effect once an account payment is late...

Puff piece this "credit card bill... to help consumers" ugh.

[MercutioATC]

5. A question: What do you consider "predatory lending"?

I'm not looking for a fight, I'm just curious.

The way I see it, if you sign a contract you're rightfully bound by it. Most of the instances of "predatory" lending I've seen are simply people who didn't read the contract.

Again, just curious as to your definition.

[salin]

6. Going after very high risk lendees

offering good sounding deals, with very punitive fees hidden in the small print;

sending out gazillions of offers for credit to high school students (or younger);

sending out gazillions of offers to anyone/anything (examples of folks getting offers sent to their pets as if they were individuals... preapproved and all...)

sending out offers for third and fourth refi deals to folks on their homes - offering more than 150% in credit than the equity on the home and promising almost anyone (regardless of former credit history) will be approved in 48 hours (I recieve one of these offers almost every month - but given that I fully own my home so I find the offers laughable... but can see how if a person/family found themselves in sudden dire straights - how it would appear attractive, esp if I had no financial savvy - but terms that make it almost inevitable for folks on fixed income or lower wage incomes to be able to keep terms with - ergo most likely will end in default.)

My point is that for small businesses, nonprofits - and in the past, most businesses - one ascribed "risk" to the ventures and prepared to cover that risk accordingly... it was in the business plan. However in some lending and credit card companies they have exponentially increased their offers to "high risk" lendees/ due to realizing the great profits to be made on those who pay off the least and carry debt. But instead of being held accountable for their corporate practices of intentionally taking risk (and thus covering for such risk in their business plan) they want to increase this business while having the fed govt/courts play enforcer, so to speak, to decrease the degree that they have to cover their "risky" lending practices.

Consider that during the most recent negotiations for this version of the bill, that sadly was passed on into law, there was debate as to putting a cap on the level of interest that could be charged (not just on late balance) once a credit card holder fell late, even a single time, in a payment ... these rates have already in some cases reportedly been increased to more than 30% annually -- some might call that usury. The discussion, if I recall, was to put a cap somewhere in the high 30%s - then discussed in the 40%s - and then dropped altogether.

At the same time there was resistance (and final blocking) of making loopholes for those filing bankruptcies due to sudden medical emergencies (documented as the cause for more than 50% of bankruptcies), or those who find themselves in financial distress due to natural disasters (think - owing on a mortgage of a home ruined in Katrina - losing employment that could help pay for said mortgage, etc.) Suddenly, in these cases, the practice of offering higher amounts of credit - based on income, than in the past would be considered TOO high (eg the formulaes of how much to offer in credit based on income has changed - so now another form of high risk lending is too offer more than is wise based on income... shouldn't the lenders making these calls be subject to cost on that risk? Not according to the new law.)

As the efforts of the credit card/lending industries become more sophisticated... and their business models depend MORE on folks NOT paying full payments (eg the interest rates as the big money maker) it seems ridiculous to put the full brunt of "responsibility" on recipients - who do not have nearly the same level of sophistication in interpreting what various offers really entail.

For some of the worst cases - read up on some of the refi programs in urban areas that intentionally target older, fixed income poor folks... horror stories abound per the companies practices... yet at the state and fed level there have been efforts to invalidate local initiatives/laws to prevent certain fraudulent/or near fraudulent predatory lending practices - by stating that much looser and not enforced state or fed laws supercede local or state ordinances/laws.

Was it Ameriquest that was written up recently per their horrendous track record in urban areas (they blamed it on "subcontractors") that has slowed down (or stopped) the company's head for some nomination by Bush?

[MercutioATC]

26. To me, the lesson is "If you don't understand it, don't sign it".

It's nearly impossible to take advantage of an informed (or, at least, cautious) consumer. I don't understand the view that the consumer bears no responsibility for taking advantage of "predatory" offers...

[redqueen]

38. Oh come on

If/when they make those contracts readable by the average 7th grader, you'll have a point.

Till then, it's fucking deceptive.

[MercutioATC]

45. What ISN'T readable by a 7th grader?

Hell, they use a nice little list that clearly spells out the penalties for violating the provisions of the contract...I don't understand the confusion.

[redqueen]

47. You know 7th graders that could read and understand those things?

That's... um... interesting.

When I was a technical writer, I had to spell out things v-e-r-y s-l-o-w-l-y so that the 'average reader' could follow the instructions. To do this I was instructed to write at about the 7th grade level.

You know, stuff like: "to start the machine, locate the red button on the face of the product" etc.

REALLY simple instructions.

So it's interesting to me that you think a 7th grader could grok all the legalese spelled out in a 6 point font in those contracts.

[MercutioATC]

50. What "legalese"? It's all plain English...

...and if somebody doesn't understand it, why the hell would they agree to abide by it???

[redqueen]

52. If you really think people read contracts,

you're living in a dream world.

I prefer to live in this one, and base my opinions on legal issues on IT, not fantasyland where everyone's responsible and can understand legalese (it's a common term, but you're way more edumacated than us lowly folks so I understand you don't recognize it).

[MercutioATC]

56. Isn't that a consumer issue, though?

Why is it the government's responsibility to protect people who glibly sign contracts without reading them?

[redqueen]

61. Why is it their responsibility

to protect people who glibly have children and then lose their jobs? Why is it their responsibility to protect people who glibly get disabled while not having built up enough savings to take care of themselves? Why is it their responsibility to protect children whose parents can't or won't teach them, by maintaining a public school system... I mean after all, they can read, can't they? Well just let them teach themselves!

Slippery slope there.

This ability of yours to blame the victim and pretend as if the banking industry is all well-intentioned and blameless is offputting to say the least.

[MercutioATC]

64. I'm not pretending that the banking industry is anything but a business.

As to your question, the issue is one of entitlement. We have determined that, in this country, people have certain entitlements. Primary education is one of those. A safety net that provides for the poor is another (regardless of how poorly it may work).

Credit is not an entitlement.

[redqueen]

67. But I'm not saying it is.

However protecting the less well-educated from obfuscating, legalese using predatory lenders SHOULD BE. It's in our best interests as a society to ensure that it is.

[MercutioATC]

71. But the crux of the issue is consumer education, not greed.

If credit card companies were required by law to do away with interest-based penalties and could only charge $1 late fees, we'd STILL have the same problem. Uneducated people who didn't read the contract would STILL sign it. They would still be "unprotected", just by a different degree.

So, your stated goal of "protection" of these people simply can't be accomplished...and I don't feel it necessarily should be. I don't believe it's the responsibility of society to protect people from making bad decisions when they exercise a voluntary privelege.

[redqueen]

78. We would not have the same problem.

A one dollar fee every month would not end up with the consumer unable to ever pay off all their debt without seriously changing their lifestyle, which is what is happening all over this country.

We just disagree about consumer protection is all.

[Zodiak]

103. Watch out for sounding like you are blaming the victim n/t

[SOS]

8. Credit card agreements

can be changed at any time by the card company (not the user, of course).
The "contract" is not a contract since the terms can be changed after signing by only one party.

[MercutioATC]

11. But the consumer KNOWS that...

I just don't see it as predatory if it's known in advanced that the terms of the agreement can be changed.

[susanna]

20. The point is, most consumers DON'T know that.

Frontline (I think) did an amazing piece on this. Most of the "lendees" were unaware that their contracts were unilaterally changeable, with no recourse on their part. In the same piece, specialists in contract law were also interviewed...and they essentially admitted that THEY were confused by the terms they read in these agreements.

I am really intrigued by your stance. For the record, I have no credit card debt, for the precise reason that I do not always understand their terms, and I am NOT stupid. Further, in the interest of disclosure, I do have credit cards, and pay them off every month so I never have to truly understand their bullsh*t terms. That seems safest to me.

I am happy for you that you are so much smarter than lifelong contract lawyers as regards current credit card practices. You must be so proud.

[MercutioATC]

23. If you don't understand a contract, why sign it?

This addresses two issues that are pet peeves of mine, the dumbing down of America and the issue of personal responsibility.

If somebody signs a contract willingly, they should be bound by it, IMO. Claiming that they didn't understand what it said isn't a excuse to break it.

[Gormy Cuss]

33. The language in credit card agreements is written for obfuscation.

Unless you bring a lawyer along, there's no assurance that even with due diligence on the part of the consumer that there isn't some little codicil sitting there like a time bomb. While I share the pet peeves of dumbing down and the lack of personal responsibility, the contract language is intentional misdirection. The credit card companies fought tooth and nail to prevent the provision requiring them to spell out in simple terms how long it would take to pay off the balance and the cost of financing if one chooses to pay only the minimum. That is standard information in mortgage documents or car loans, yet God forbid you'd give this same insight to credit card consumers.

Although the new minimum provision is going to hurt a lot of consumers who are accustomed to paying the smaller minimums it will have the effect of reducing current debt for those who can afford the higher payments and should curb thoughtless new purchases. The consumers who have been using their credit lines to stay out of bankruptcy are in for a rough ride.

[MercutioATC]

37. All of the applications I've seen are written in plain English.

A LOT of plain English, but understandable language just the same. By law they have to disclose any conditions and penalties. It's all there on the application.

[conflictgirl]

100. I did read what I signed, and still totally did not expect what happened

The last time I had a credit card that I stupidly didn't pay off in entirety every month, when the lender got a payment TWO DAYS late (they jacked up my interest rate from 18 percent to 33 percent. For TWO FUCKING DAYS. And that's after they had totally changed the billing schedule...instead of having nearly a month from the time I received my bill until it was due, they shortened that to 19 days. Then they added late fees on top of that. I admit that it was my own damn fault for being so close to being maxed out, but between the higher interest rate and the late fees, I then got over-limit fees. One stupid payment that got there TWO DAYS late cost me almost $300 just in fees.

I can assure you that there was absolutely NOTHING that would have led me to believe that would happen at the time that I accepted the card. I did indeed read everything they gave me before accepting the card. And hell yeah, I think that's predatory lending.

[InsultComicDog]

9. I consider predatory lending to be

...lending with excessive fees, often hidden from the consumer until they read the fine print;
...charging abusive prepayment penalties;
...loan "flipping" to generate more fees even though this delivers little if any tangible benefit to the borrower;
...packing the loans with unneccessary insurance;
...steering consumers - sometimes fraudulently - into subprime loans when they would have qualified for prime loans, or for loans with worse terms than they would have qualified for.

And probably some other stuff.

[MercutioATC]

12. I understand, but nobody's holding a gun to the consumer's head...

They have the responsibility to read the contract fully and the right to refuse the terms of the agreement. They also have the opportunity to shop around for the best deal.

[FlaGranny]

15. How about a right

to not have a credit card company raise your interest rate from 12% to 28% for being a day late with your payment.

[MercutioATC]

17. The penalties for late payments are stipulated in the contract...

...which the consumer signs.

They had the "right" to refuse the contract. They don't have the right to be excused from it's provisions.

[FlaGranny]

19. There should be no right to usury.

Nothing else to say about it. Contract signed on not. They used to put people in jail for charging interest like that - Mafia rates are cheaper. Made no difference if the borrower didn't read the fine print (or even if he did read the fine print and sign the contract), it was still against the law.

[susanna]

21. You know, FlaGranny,

The mafia could undercut these Brooks Brothers dipsh!ts in a heartbeat. And they'd probably be a safer bet, for most folks...they don't report to the credit companies or require you to pass a "Contract Law 601" final exam for the money.

Sadly, I think I am only partially kidding. :-(

[MercutioATC]

25. It's not usury...it's a penalty for violating the terms of the contract.

...and the consumer KNOWS what that penalty will be before they SIGN the contract.

[FlaGranny]

31. No, you can't call usurious interest rates a penalty.

A penalty would be a late charge. You get that too, in addition to usurious rates. States all have their own usury laws, and usury can be interest rates anywhere over 6 to 12 percent or thereabouts. It is only large "national" banks that have been exempted from the law. They are vultures. PERIOD. Repeat - even the Mafia never thought of charging such rates. The going rate for Mafia loans in NJ used to be about 15 to 20 percent. Of course the Mafia penalty was a bit more severe than a late charge.

In addition, such penalties and interest rates make the banks huge amounts of money, virtually guarantee that the borrower will never be able to pay the principle and therefore be a steady income for the bank until death, and increase the bankruptcy rates. The banks do not care about the bankruptcies - because their usury makes them much more money than they lose from the bankruptcies.

I suppose you can put some blame on the people using these credit cards. Anyway, it's always easier to blame the victim, than to blame laws enacted to make corporations rich at the expense of the poor. This exemption of national banks and corporations needs to be repealed.

[MercutioATC]

36. Actually, the law says that's what they are....

Usury laws don't apply to interest rate hikes for violating the terms of the contract.

[FlaGranny]

41. The law is wrong. The law was written

in 1980 for the specific purpose of generating income for national banks out of the pockets of uninformed people who cannot afford it.

[MercutioATC]

44. Were were discussing definitions. These hikes don't qualify as "usury".

Whether they're right or wrong, they're specified on the application. Being "uninformed" on the issue is just carelessness.

[redqueen]

49. So you're backing up a law

that was designed to fatten the wallets of the already wealthy, at the expense of the easily fooled?

And, I'd like to point out, was written by repuglicans.

Why wouldn't you just join Fla Granny in denouncing that *predatory* law?

[MercutioATC]

54. Not endorsing it, I just don't see a problem with it.

Credit is not a right, it's a privelege. If you want to borrow money that you don't have from somebody, I don't see the problem with them dictating the terms under which they're willing to loan you that money. You then have the opportunity to accept or refuse the offer.

Why isn't this acceptable?

[redqueen]

55. You don't endorse it, but don't see a problem with it?

With a law that allows USURY to be used as a punishment?

Are you serious?

[MercutioATC]

57. Would you be happier if they just used $250 late fees?

It's the same freakin' thing. It's a monetary penalty for breaking the terms of the contract and it's all spelled out in the application.

[redqueen]

62. It was called usury before rethugs changed it.

It's more than disturbing that you think it's just fine.

[MercutioATC]

65. I'm honestly interested. Would you be O.K. if they just charged high

late fees and didn't hike the interest rate (eliminating the usury issue)?

[redqueen]

76. I think so, yes.

Telling a person that some rate will be increased, when they have no idea of what the percentage of their balance might be and how that might affect them is a lot more dishonest than saying flat out, "we'll charge you such and such ungodly amount of money if you don't pay up on time".

[MercutioATC]

81. I don't see the difference, but I respect your view.

[spotbird]

104. You are mistaken

The reason most credit card companies are headquartered in very few states is to avoid the various state usury prohibitions. Federal courts have ruled that state laws cannot be enforced against out-of-state credit card issuers, the laws of the state where the cards are issued are determinative of the terms. What this means is the outrageous rates and penalties are usury by definitionin most states, but there is no consumer protection despite that fact.

[AnneD]

93. Credit card co's have been known...

to raise your rates if you have been late on a non related payment such as utilities. That happened to me and frankly, I read the contract and never remember them spelling that one out (it was an obscure phrase about prevailing credit interest rate or some obtuse wording). I bitched and they dropped it.
And think that paying the bill on time in full makes you a good citizen. In the CC industry you are called a 'dead beat' because they don't make any money off you.
I frankly hope the CCC's go under. They ARE usury (and predatory) lenders as are the payday loan folks and the ARM folks. They prey on the poor, desperate, and financially illiterate. I am not talking illiterate as in reading comprehension but in personal finances. It is a rare student that graduates with ANY personal financial skills. I teach (I am self educated in this area) an intro to personal finances in my elementary school but it is an after school enrichment course (parents pay extra for it). I have become a de facto resource for our parents and staff. People aren't stupid, just uninformed and the CCC are devious in their deception.
The Bankruptcy Bill was a shame-help the consumer my ass. It was bought and paid for by the CC industry to maximize their gains and cut their losses. In business that is called risk. If they are stupid enough to lend to those that cannot pay, it is their fault.
Most people that go into bankruptcy go in due to divorce, medical, or job loss. The CCC just wanted to squeeze the last drop of blood from people in trouble.
I have been CC free for 4 years now and am on my way to becoming debt free. It will take time but I have a goal and a plan. I am getting many offers now, but I just shred them. I will never go down that road again.

[Solon]

22. They do, metaphorically...

I can't get so much as a bank loan for a car right now because of one reason, I refuse to get a credit card. I have never had a credit card, I had a debit card for convienence, but that is about it. Because of this, I have almost no credit. In fact, right now, my credit is ruined because I'm fighting the gas company over a mistake THEY made at my last apartment. I moved out of the place last year, and the day my lease was up, I called the only three utilities I had, phone, electric, and gas, and cancelled all of them, and then asked for the remaining balance, and paid it off. Then, a full year later, the gas company sends a freaking bill collection agency after me for, get this, not paying a bill a full six months after I moved out. Hello, I didn't LIVE at the damned place when it was billed, they "forgot" to cancel billing on me, the assholes. And now its going to cost ME money to fix THEIR mistake? What type of bullshit is that?

[MercutioATC]

24. That's a separate issue (the gas company).

As far as credit cards, they're no problem if you do a little research, read the contract, and handle your finances in a responsible manner.

If you need to establish credit, a credit card IS an efficient way to do it. Simply paying off the card every month and paying the bill on time will eliminate any problems.

[mbperrin]

32. Ever get injured and lose income for a few months?

You certainly must have lived an uncomplicated life. Congratulations. I also suppose that since you signed to pay for it, that you would finish making the payments on a totaled car even when the insurance company you paid refuses to do so? Just curious. One final thought - can any contract be valid which involves assymetrical power?

[redqueen]

51. Hey, they shouldn't have gotten sick,

or lost their job.

Tough luck.

Banks win!

[MercutioATC]

58. Your car analogy doesn't work...

...in your scenario, the insurance company isn't abiding by the terms of the contract it has with you.

Nearly ALL contracts involve "assymetrical power". Are you as "powerful" as the bank that issues your mortgage? As the power company that provides your electricity? As the furniture chain that sells you a bedroom suite? Does this disparity make these contracts invalid?

[mbperrin]

99. My car analogy does work, because it's a true story, and the

judge ruled that they were honoring their contract, a standard form in Texas, that basically only promises they'll make an effort to provide service. Sorry....Oh, and banks? Worked for them 1970-1978; that's why I haven't banked since. Refusing to give them my money does indeed equal out our relationship, which is nil. Thanks for responding!

[ellie]

90. That happened to me too.

When I canceled gas service, the gas company gave me a confirmation number. Thirty days later, I receive a gas bill; it was $300! I called and was told the gas company didn't make the change and "this almost never happens." Right. Thank god I had my confirmation number or it would have been my word against theirs. Bunch of fucking thieves.

[InsultComicDog]

34. You might prefer to blame the victims

But I take a broader view on the responsibility of lenders.

[MercutioATC]

35. Fair enough...we disagree.

[FlaGranny]

43. Lenders have the responsibility to fully disclose

in a manner people are likely to read and understand, and stop being so damned sneaky, underhanded, and general shitheads.

[MercutioATC]

46. I think it's more of a consumer awareness issue...

I'll admit that some mortgages can be complicated...you just have to ask questions.

It's the same as buying a car. You make sure you know exactly how much it's going to cost before you sign the contract. If the salesman's evasive or something doesn't dound right, you don't do business with him.

[redqueen]

48. That sounds a lot like the

"nobody's forcing anyone to work for minimum wage at crap jobs" argument.

Yeah, nobody's forcing them to enter into these agreements, but they SEEM LIKE a good idea to those who don't already know.

But I'm sure you're right, we should just let the buyer beware. So what if it assists in the decimation of the middle and lower class. They shoulda learned to read.

[MercutioATC]

59. I realize you were being sarcastic, but I agree with your statement.

People should learn to read before they go around signing contracts.

[redqueen]

60. So the uneducated shouldn't be granted cards.

Gotcha. Maybe we'll get some regulation to force banks to stop taking advantage of them, then.

Or are you more of the mind that we should let the uneducated fend for themselves, and if it hurts them (and their families) to the benefit of the rich, well tough titty. Because I really find that abhorrent and not even the slightest bit progressive.

[MercutioATC]

63. Somebody incapable of understanding a contract shouldn't sign one.

I can't believe this is a point of contention. The law requires credit card companies to disclose the terms of the agreement they are offering. They do that. People who can't understand what's being asked of them shouldn't agree to comply.

What problem could anybody POSSIBLY have with that position?

[redqueen]

66. Think of it this way.

Perhaps those who are incapable of understanding the terms of the contract are unable to understand WHY they shouldn't sign them. It's standard that people sign contracts without reading them, this is just a fact.

Your opinion seems to be that they're fair game for exploitation.

I disagree.

I think that a (admittedly poor) analogy (but it works nonetheless) is consent to sex. If a person is considered too young to be able to consent to sex, then we protect them by stipulating that they're unable to give that consent, simply due to their age.

In the same way, I think we should protect those who THINK they're able to enter into these agreements, when they really aren't understanding the terms / consequences at all.

[MercutioATC]

69. Are you advocating a national IQ registry?

To use your analogy, it's against the law for somebody to offer sexual relations to somebody under a predefined age (usually 18). We can usually tell if somebody is below this age limit and, if we can't, we can ask for identification.

How would you go about legislating similar protection for the uneducated in regard to legally obligating themselves? How does a company know the comprehension level of somebody they send mail to?

[redqueen]

77. They can't.

However they can make their policies much more clear, and they can be forced to stop being so lackadasical about whom they grant credit to.

[MercutioATC]

82. So the poor shouldn't be granted cards?

See, it's a circular argument. If credit card companies are more selective about who they make offers to (or approve), it'll be the poor and financially unstable who are denied. A couple of posts back, this seemed to upset you.

[redqueen]

83. You must have misread.

I do not think anyone who is unable to understand the quicksand trap of credit should get them.

That includes most college students as well, and that group is a favorite target of these predatory banks.

[AnneD]

97. After reading all you responses I can only ask...

what credit card company or bank do you work for? Contracts (that both parties read and signed)are disputed every day, but some of us can't take 'em to court for their underhandedness. If those contracts were written in a clear manner (American spoken English)and in an understandable manner, and if the changes they made at their whim required more notification and consumer signature instead of the implied acceptance, I wouldn't be as upset with them. They cloak their intentions. It is best to not even deal with them-it can be done.

[salin]

114. And they have worked very hard to make the language

hard to understand. That is how they make their huge profits - on interest on unpaid balances - and late fees - esp those that are hiked up. I might agree more with the poster claiming 'buyer beware' if the buyer had the same resources (tons of lawyers and others who write the contracts in order to be complicated, misleading and unclear) that the companies have. This is not an even playing field. And it is shamefully part of the cc industries businessplans (again - while it didn't used to be the case, this is now the major money making aspect of the cc industry).

[OldLeftieLawyer]

70. Where have I heard that before?

Ah, yes.

In my office, when people who fancied themselves "lawyers," without, of course, the benefit of having gone to law school or passed a bar examination or obtained a license, decided, as you obviously have, that all they had to do was "read" a contract, or any kind of document, and they would know everything they needed to know, absolutely, in the same kind of unyielding, hypothetical way that you've been postulating the responsibilities of credit card holders.

I want to thank you.

And, I do hope that you never find yourself in any sort of position, legal or otherwise, in which you're faced with someone as lacking in understanding of human nature and even a scintilla of compassion for the plaints of people who aren't as omniscient as you. I hope you never need to acknowledge that you erred, or that you misunderstood something.

Good luck.

[MercutioATC]

74. Oh, I've erred in the past...and paid the consequences.

I'm also a big fan of getting the advice of those more knowlegable than me when a decision is outside the scope of what I'm comfortable with.

I'm interested...as an attorney you're taking the position that people who don't read contracts or people who read them and don't understand them aren't solely at fault for signing them?

[OldLeftieLawyer]

75. You misunderstood what I wrote

So, chalk that one up to another error on your part.

What I wrote was that people believed, in all good faith and with the proper degree of human arrogance, that they "understood" what they'd read.

Guess what?

Those agreements aren't written for civilians; they're written for us lawyers. That's why your position on this matter is utterly without merit, lacking in a grasp of reality, and really quite heartless.

[MercutioATC]

80. You REALLY feel that only a lawyer can understand a credit card app?

I'll give you certain mortgage contracts...they can be a lot more involved.

I don't see how a credit card application could contain the legally required information and be much simpler.

[OldLeftieLawyer]

85. I'm a good lawyer

I don't deal with "feelings" about legal documents.

[MercutioATC]

86. I didn't ask you for a feeling about a legal document.

I asked you for a feeling about the average person's capacity to comprehend a credit card application.

As long as we're touting skills, let's try to make specificity one of them, shall we?

[MindPilot]

105. application or contract?

I know your comment was not directed at me, but i'm going to jump in here anyway. I only have two cards, one is an Amex (paid every month) and the other is secured with my home. Unless you are doing the minimalist lifestyle thing, it's damn near impossible to live without one.

I mention that to say that I haven't had a whole lot of recent experience with credit card contracts. But IIRC most of us sign an "application" not a contract. The contract is that leaflet in 4 point type that comes with the card. It's deliberately deceptive since without a specific request consumers don't even see the contract before signing. And most people are so grateful to be granted the "privilege" of credit they will agree to the terms. (I disagree with your "privilege" comment since I have as much right to buy credit as I do any other product or service.)

The bottom line is that the credit card industry used to be heavily regulated and worked fine. You are probably not old enough to know this, but we actually used to be able to deduct credit card interest. Now the completely unregulated banking and finance industry is no longer in the business of providing financial services, but are just thieves in suits, or as my dad used to say, "jesse james with a cash register."

[Deja Q]

14. See post #6, and

our society itself IS predatory. A status symbol society can be nothing else BUT predatory.

[redqueen]

53. Aparently all the blame goes to the predated.

Shouldn't have done it. Too bad so sad.

Banks win!

[KansDem]

68. When I was a boy, I would at times go to my stepfather's work on Saturdays

He worked for a shipping line operating out of San Pedro/Wilmington areas of Southern California. Often we would walk through the warehouses that sat on the docks, and he would introduce me to some of the longshoremen working there. After meeting and shaking hands with these polite, cordial gentlemen, we would be walking away when my stepfather would say, "He's a loanshark. He'll loan you $50 and expect $75 on payday. Sometimes the workers here will line up a hot date and need the extra money to wine and dine the lady."

I thought, "Wow! Borrow $50 and repay $75?!?!?" I got the impression this was the standard practice, but certainly outside "mainstream banking practices." Now, however, with "easy credit you deserve" and skyrocketing interest rates and draconian late fees/over the limit fees, I'm not so sure there is much gray area left between credit-card companies and loansharks.

[redqueen]

79. There isn't any gray area...

however apparently we're all supposed to get in line and thank goodness we have the privilege of being able to be taken advantage of, should we be so gullible.

*sigh*

[MercutioATC]

87. Nobody's suggesting gratitude, just responsibility.

Read the contract before you sign...you're always free to decline the offer if you think you're being taken advantage of.

[redqueen]

89. Yes, everyone should read every contract before they sign,

and everyone should floss at least once a day, and rotate their tires regularly.

Please, stop with the 'read the contract' mantra! I *know* that's the correct way to do things, however the *reality* is that many *don't* read the contracts and their failure to do so is costing everyone else, because then those people can't buy needed goods and services (helping the economy), instead they have to pay outrageous interest rates to banks (doesn't help the economy -- in fact it's harmful because it gives them that much more money, i.e. power over congress).

[MercutioATC]

92. But isn't that the CONSUMER'S fault?

We're not advocating legislation to compensate for people failing to floss or rotate their tires. As a result, dentists and tire companies are making more money. Is that "fair"?


Essentially, it's the same as suggesting that tire makers be legally required to lower the price of their tires because some people don't rotate (a rotation schedule is part of the tire documentation that most people don't read).

[redqueen]

94. No, it isn't the same at all.

People not rotating their tires isn't impacting our economy anywhere near as much. The amount of money people spend on dentists doesn't compare, either.

[MercutioATC]

95. You're changing the issue...

I thought we were discussing whether or not the current credit regulations were fair to uneducated consumers.

It's now about the impact on the economy in general?

[redqueen]

98. Why does a subject need to be narrowed to one aspect?

:shrug:

It's both unfair to uneducated consumers, AND bad for everyone else.

[MindPilot]

106. Most tire stores don't charge for rotation

And even if they do, it's probably way less than the average late fee. Nor do they change the rotation schedule after you bought the tires.

[baby_mouse]

107. Responsibility can fall to 2 persons

If persons 1 and 2 both need to do something different to make event X happen and person 1 does his bit and person 2 does his bit to make X happen knowing that the other has done his bit, BOTH are responsible.

The credit card companies are taking advantage of poor fiscal conditions to make a quick buck. Yes, the consumer is foolish to cooperate, but there the credit card companies are exploiting circumstances to increase debt.

[MercutioATC]

112. I actually agree with that.

Both parties could make changes to improve the situation. Ultimately, I believe that is what will have to happen to resolve the issue.

I'm certainly not in big business' corner. If there's a reasonable way to make them pay for increased consumer education, I think everybody would benefit.

[screembloodymurder]

39. Let me guess.

She didn't know anything about the bill so she asked a credit card company to explain it.

I just canceled my AE card after three months of them not getting me a bill. They wanted me to pay online. I told them I don't pay w/o the bill in hand. What a racket.

[pinniped]

7. Does this compute?

--Williams says, "Lets say you have you have $9,200 in debt and you're just making minimum payments its going to take you about 15 years to pay that off."

But, pay an additional one percent... and you could get out of your debt in about 2.5 years and save $7,500 in interest.--

I don't see how this helps the average dude or dudette who can ONLY afford the minimum payment. Many people buy a ton of stuff in anticipation of ONLY paying the minimum payment. Ya, maybe they shouldn't have done it, but they're stuck now and this will seriously mess up a lot of people.

Many people will be in default and more interest will pile up.

Does this law prevent interest from skyrocketing on a missed payment?

Does it prevent CC companies from imposing fatter interest if they find out you missed a payment with another company?

I highly doubt that.

Who was really behind this law?

If this bill is so good, it should have came long ago before that BS CC bankruptcy law giveaway.

[InsultComicDog]

10. It will mess some people up

but on the other hand it should prevent others from digging themselves into that hole as deep to begin with.

[Hotler]

13. Ya think?? eom.

[northzax]

18. yes, this is the intention

frankly, it should have been done before the bankruptcy laws changed, and it will hurt people barely making ends meet right now, but it does help prevent people from getting into the same situation in the future.

And frankly, there are a lot of people who could pay a little more on their cards and only pay the minimum. People who make only the minimum payments on their cards, on average, only make four payments on time in a row. raising the minimums isn't really going to make life any worse for them, it just hastens the inevitable. If all you can make is the minimums, and that's all you are going to be able to make, maybe this will help people cauterize the wound.

If all you can make is the minimums, cut them up and beg for mercy from the companies, they have you by the shorties anyway.

[fishwax]

29. how, exactly, will it prevent that?

:shrug:

credit card companies will still approve credit without regard to whether or not people can afford it.

People who now pay cash for, say, 300 dollars a month on groceries and scrape together their $50 minumum payment will now put 50 bucks of their groceries on the card in order to afford the 100 dollar minimum payment. The net result is still a cycle of payments. I'd love to see how this will help consumers, but I don't see it yet ...

[high density]

16. Heh. People who could pay more already are

This new law is aimed to collect more late fees, returned check fees, etc. for the banks.

[killbotfactory]

27. It won't help people stuck on minimum payments

It will cause them to rack up a lot of other fees, though.

[OldLeftieLawyer]

72. Who was behind this law?

My Congressman, Jim Moran, a Democrat, no less, representing Northern Virginia.

Jim has always had money problems - much like the people who will now be squeezed in ungodly ways by these new credit card laws.

He got in trouble for allegedly taking kickbacks from parking lot companies when he was mayor of Alexandria (my town), and he got in trouble through all of his divorces. This last one was a real scorcher, though, since he was leaving his wife and their toddler daughter (who'd just been treated for brain cancer), and he had considerable debt. I mean, CONSIDERABLE debt.

Enter good old MBNA, which gave Congressman Moran a nice, six-figure "loan," and there weren't any pay-back terms. You know how MBNA loved to help out average citizens in financial trouble, don't you?

Imagine the surprise we all felt when Jim Moran did everything he could to get the new bankruptcy law passed?

And then he married his (I think) fourth wife. Fortunately, this one made a bundle in local real estate sales, so now he's tucked away in her mansion overlooking the Potomac in Arlington, and chances are he won't have to back to MBNA for more $$$, especially since it's not longer there.

I will never vote for a Republican, but I'll never vote for Jim Moran again.

[fishwax]

28. designed to help consumers? I call BS

is this not the same law that credit card companies were lobbying heavily for?

[katty]

110. yes, that's the usual bullshit-'helpful', then you're sent an offer

for another credit card within days. Every offer I am sent goes right to the shredder.

[eridani]

30. CREDIT UNIONS offer credit cards

Get one if you want a credit card. No membership fees, 6.9% interest, and a $15K limit is what I have. And if I don't pay the full balance one month (I almost always do), any interest collected partially comes back to me as earnings for credit union membership.

[catmandu57]

40. They did a news blip on our local

news, the story probably ran a minute thirty. Onr thing they did get across is that many cc companies are changing the billing cycle to catch people with their shorts down, billing twice per month, so that people sending accustomed to sending in payments the first of the month will suddenly find their bill due the 28th of the month.
These people are vampiric bloodsuckers.

[FlaGranny]

42. Just had that happen to me this week. A credit card

I owe a fairly small amount on changed my due date from the 6th to the 2nd. I have regularly paid it on time, electronically, and all of a sudden I'm one day late and got charged 38 bucks late payment. Bastards. My fault for not checking, but they're still bastards.

[HockeyMom]

84. Paid my entire balance off in FULL

I said to them on the phone when I did, "What is the ENTIRE BALANCE to pay in FULL." I paid it online. It cleared in 48 hours. The next month, I got a bill in the mail for $40. I called them up SCREAMING on the phone. The jerk told me it was because I didn't pay in full "2 months before the due date." I LAUGHED hysterically on the phone. She seemed very mad at my laughter.

I told her I wanted to speak to her supervisor. The supervisor simply said, "I can take that charge off immediately, if you wish." If I WISH? DO SO NOW and NEVER send me ANYTHING ever again. CANCEL my CARD. So now, every month I STILL get a statement with a ZERO BALANCE.

What don't they UNDERSTAND? Get OUT of my life.

[barb162]

101. This happens to just about everyone once or twice.

Those late and other fees are getting huge. I also wonder sometimes if the check got there in time and they say it didn't.

[alarimer]

88. I don't think it will change much for me

I already pay more than the required 2%, probably closer to 4.

[melm00se]

96. gonna ask a really dumb question:

the minimum payment amount went UP, so the overall amount interest paid goes down and the time until it is paid off is shortened.

How is this worse than being in debt basically forever with a 2% of the balance minimum payment?

[Bridget Burke]

102. Because some people are in dire financial straits.

They've been struggling to make the minimum payment as it is. This just makes it harder.

Yes, nobody should get in debt over their head. Everybody should pay MORE than the minimum to retire their debts ASAP. Nobody should have sudden health problems--with crappy insurance. Nobody should have been married to a spendthrift. Nobody who did not read the fine print--or who could not fully understand it--should not be allowed the card.

Yet the companies keep sending out offers.

And it just got much harder to declare bankruptcy.

[pretzel2]

108. at least SOME adolescents should get it

New in the room! Enjoyed ALL of the posts on this new law. I teach 6th grade math. Since we were studying percents, I wrote a mini-unit on Credit Cards just before the holidays so the kids could see how percents can trap them with plastic. GOOD news--they are full of "Aha's"--so encouraging; they ARE getting it.

THEN I heard the law changed...so now, I have to write "Part 2--the new law" so we can compare the results. Still, 130 youngsters seem to be made the wiser ("That's dumb!" "This guy should pay more than the minimum!" "When's he gonna' wake up and smell the coffee--well, that is if he can afford it by next month!" "Why not just pay it back the first month? Look how much he'd save." "Credit Cards are evil!").

Oh, by the way, I carefully selected some of your comments to share with them as well--so they could learn from "real" people--not just their teacher. Thank you!

[BlueCollar]

109. as soon as I refinance my house payment

with my credit union I will be able to lift a middle finger at Bank of America, the banking industry, and the credit card industry...

too bad I can't do the same for the f***ing insurance industry...

[pretzel2]

111. crunching the numbers

It ...doesn't do MUCH to help folk.

Working through my revised lesson, we have a fake college kid with Chase's Student Card at 16.74% interest. In three months he gets in the hole about $1400--paying minimums. Reworked things with new law, same spending pattern--and he's about $80 behind (the indebtedness in 2005 laws) when he decides to cut up the card four months in. So with the new minimums--the amount owed doesn't skyrocket like it would have--but he is spending months hovering at $1200-1300, paying minimums around $200 with a decrease in his balance of about $15. SO he IS making progress at paying it down--but what a return!!!--send in $200, realize $15. The win here for the consumer is that one doesn't see the explosive exponential growth of the debt--and if one could acquire the funds--one COULD pay this down--but by far the winner is the credit card company--realizing heaps more of their interest and fees.

Still, the shock of the greater minimums might deter otherwise sloppy thinking--can't get lulled into economic sleep.

[0007]

113. Absolutely nothing wrong with credit cards, if one doesn't

let it carry over to the next month. Why people don't realize that they'll get screwed every time, is a mystery to me.

[michiganbuckeye1970]

115. Necessary to our Evil

Credit card companies do take the opportunity to pile on the fees and higher finance charges to those that can least afford them. Welcome to the wonderful world of capitalism. The fact of the matter is that without the massive amount of debt heaped on the backs of those who can least afford it, our economy would look much different. It would be much smaller. You can't use the argument that the economy would be booming because those people would have more income to spend because without the massive debit, all of the previous spending would not have been done.

I believe all of this debt has the country in quite the pickle.

Bush is running around spreading more lies about how well the economy is doing since he cut the taxes of the very rich, but if you lived where I live, you would see that truth is very different.

Each week on the news, small manufacturing companies are going out of business. Hundreds of unskilled and uneducated workers are dumped out on the streets without any hope of finding a job that will bring in the same level of income.

And yet many of these people will vote Republican because of a god that no one has seen.