Credit Card Reform - You Think?

Friday, May 2, 2008
I read in the Washington Post this morning that the Federal Reserve is planning on cracking down on credit card companies for some of their more unsavory practices. According to the Post:

"The proposed regulations, which could be finalized by year's end, would label as 'unfair or deceptive' practices that consumers have long complained about. That includes charging interest on debt that has been repaid and assessing late fees when consumers are not given a reasonable amount of time to make a payment. When different interest rates apply to different balances on one card, companies would be prohibited from applying a payment first to the balance with the lowest rate...'Disclosure has been the tool of choice for regulators. Now they are saying that unfair practices are out of control and they need to ban those practices,' said Edmund Mierzwinski, consumer program director for U.S. PIRG, a consumer advocacy group. 'This is surprising coming from banking regulators.'"

You think?

Credit card companies have to be the most sleazy, manipulative, greedy asshats in our society. Seriously. Can you think of a legal industry that preys more on the uninformed and uneducated in order to line their pockets? And if you don't believe that they have nefarious motivations, feel free to watch Frontline's "Secret History of the Credit Card".

And their K Street cronies keep the wheels greased for them. The new bankruptcy laws were heavily supported by the credit card companies, since it placed limits on whether or not someone could file Chapter 7 (liquidation) rather than Chapter 13 (repayment). Because really, when someone has to file bankruptcy due to a medical event, the credit card companies shouldn't have to forgo payment. That's just crazy talk.

While I realize that I'm a liberal wackadoo and that influences my opinion, I'm glad the Fed is taking an interest in this matter and more heavily regulating credit card companies. Whenever I hear about how profitable credit cards are, I always think of the tirade uttered by my favorite Boston Legal character, Jerry Espenson, when he was discussing the "terms and conditions" of a credit card agreement. I can't find the exact quote, but he essentially says, "I have a law degree from Yale and an MBA from Harvard, and even I can't figure out what this means!"

Just so.

15 comments:

The Mechanicky Gal said...

Sleezy manipulative Asshats? I thought you were talking about the INSURANCE INDUSTRY.
Legalized extortion, that.

Janiece Murphy said...

po-TAE-to, pa-TAH-to...

Jeri said...

Can you think of a legal industry that preys more on the uninformed and uneducated in order to line their pockets?

Since I live near military bases - I'd say the payroll loan industry is even more sleazy and rapacious.

But the credit card folks suck too. I can't wait (sarcasm) until the 18 year old starts getting credit card solicitations for credit that he can't afford - and what those conversations will be like. He's not so good with money or impulse control.

John the Scientist said...

While I despise their practices, people who take out de facto loans via those cards ought to be beat up a bit so they learn to pay off their balances in full every month and not to be such dumbs@%ts.

That being said, the credit caps ought to be a lot lower so that people can learn that lesson without getting into a lifetime's worth of debt in a short amount of time.

I think that cards ought to have to consider the credit line of all the other cards owned by the person (they can check that easily), and the total line of credit available via cards should be no more than 10% of a person's total annual income.

Michelle K said...

They can be a nasty business.

Couple years ago when our furnace died, I used one of the "convenience checks" so I could 1) get the reward points on my card and 2) keep the money in savings a couple weeks longer.

Lo and behold when I get my bill, they started charging interest *immediately* on the checks.

I was pretty pissed off, since I never pay interest since we never carry a balance unless it's 0 interest for 6 to 12 months.

Stupid credit card companies.

Janiece Murphy said...

I certainly don't abdicate personal responsibility. If you borrow money through a credit card, you should pay it back, as a general rule.

I just think these people should be horse-whipped for their predatory behavior.

Janiece Murphy said...

That should of said, "I don't encourage the abdication of personal responsibility."

Multi-tasking...

MWT said...

I shred all those checks as soon as I get them. They're scams. Also, you have to be careful about balance transfers too - make sure they absolutely are the no-fee version.

Credit cards are great as long as you're fully aware that they're as dangerous as lit firecrackers.

Michelle K said...

MWT,

Since we don't carry a balance, we don't have to worry about balance transfers.

The other thing to look out for? Those 0% interest for 6/12/whatever months? If you fail to pay off the bill in whole by the expiration date, they often slap you with the interest that would have compounded during the grace period.

We usually have ours paid off long before the grace period is over, but I keep an eye on them anyway, especially if it's a card with multiple purchase on it (i.e. Lowes, where any remodeling project gets two, if not three, really expensive trips.)

MWT said...

I don't generally carry a balance either. However, I did spend some time where income was a bit ... limited... and there were some unexpected large expenses... so I had to get creative. In retrospect I'm glad I paid everything off before the end of the grace period - that would've been unpleasant to discover if I hadn't. o.O

cory said...

I believe the credit card companies are getting exactly what the deserve with all the bankruptcies. It is time for the legal loan sharking that goes on to stop.

Janiece Murphy said...

Welcome, Cory.

Yes, I agree. Couldn't happen to a nicer bunch.

Unfortunately, I suspect their remedy will be to lay off the $9.00 an hour call center specialist rather than cut their profits.

Asshats.

cory said...

These oganizations prey on the weak and when they see blood in the water, watching the feeding frenzy they create makes me sick.

Janiece Murphy said...

Me, too.

cory said...

Hey Janiece-You know what pissed me off the most was once I ran into a little trouble(my divorce)the cards started bumping my rate and playing with the fees to the point I stood no chance of catching up. So I wish them all the best and when I hear the news on wall street about the financial institutions and their woes I stand and cheer.