Congress and Fed Take on Credit Card Industry
May 3rd, 2008 by Ana
I’ve been highly critical of the Fed over the past several months in regards to their interest rate cutting spree and what it does to my purchasing power, calling them not-so-nice names of which I can only print bonehead, idiots, and stupid on this blog due to my self-imposed no-cussing rule. The things I say out loud when reading such news rival my parents’ vitriolic descriptions of former presidents Nixon, Ford, and Carter.
But, yesterday the Fed did something that deserves a solid pat on the back (the harder the better, maybe we can knock some sense into them on other subjects!). The Federal Reserve has proposed rules to prohibit unfair credit card practices! This is only a few months after House Representative Carolyn Maloney introduced the “Credit Card Bill of Rights” bill in Congress (pdf summary here).
Needless to say, credit card issuers aren’t happy with either of these proposed rules changes. Apparently they think they should be the only ones to change the rules of the game. They claim the proposed new regulation from the Fed and the pending bill in Congress will A) make credit harder to get and B) more expensive.
What’s the down side to this argument? LOL Most of y’all know my “extreme” view on credit cards. I’m not convinced they are necessary, and absolutely detest the practices of credit card companies.
A) “Make credit harder to get.” Well, that means credit card companies may actually quit sending offers to dead people and dogs … or maybe they’ll quit sending credit offers to dead dogs first! I would love to get my hands on the envelope Dave Ramsey held up at the FPU tapings last year that was addressed to “Mr. Toby Cocker” with the note scribbled on it: “Dave, this is my dog, Toby the Cocker Spaniel - and he’s been dead for 4 years!” Heck, my dead ex-2nd-husband still gets credit card offers, and because they are presort standard mailings I can’t seem to have them returned to sender with the note “addressee deceased” on them. Maybe, just maybe, credit card companies will stop sending card solicitations to underage minor children while they are at it! Think of the hundreds of thousands of dollars Crapitol One could save on postage…
B) “Credit could get more expensive.” Hmmm, considering all the recent rate-jackings and the 34.99% max interest rate, I am wondering just how much more expensive credit card companies can get. Perhaps they are considering moving into payday loan interest rates of 300-800%?
Speaking of those blood-sucking payday loan parasites, they used the exact same argument (and in some cases the exact same words) when they tried to stop Congress from putting a 35% interest rate cap on their active duty military customers. In fact, they cried about how they would go out of business if Congress put that restriction on them (really, where is the downside to THAT argument?).
I am sad to say that two weeks ago when I drove up 41A past Fort Campbell, the payday loan places were all still open with signs about tax refund anticipation loans in their windows. Obviously, the payday loan parasites have figured out how they can stay in business even with the 35% interest rate limit to their military customers.
I have a feeling the credit card companies are blowing just as much smoke up everyone’s 4th point of contact when it comes to both the Fed’s proposed regulations and Congress’s Credit Card Bill of Rights. I have just as much sympathy for them as they have shown me in the past (and continue to show their current customers): NONE AT ALL.
It’s not rocket science to realize the credit card companies are going to fight both of these reforms tooth-and-nail, with a powerful multi-million dollar lobby as their weapon of choice. Do we “little people” stand a chance against this? If enough of us speak up we do! That whole “for the people, by the people, and of the people” thing can sometimes work if enough of the people make their opinion known!
Call every representative and senator you have and tell them to support the Credit Card Bill of Rights. Use the phrase “I am a registered voter, and this is a decisive issue for me,” and make it true. Make sure the person on the phone with you understands you WILL vote against the politician if s/he caves in to the lobby. If you have your own story about unfair credit card practices, be sure to throw that in for good measure.
Of course, when it comes to credit cards themselves, the most powerful vote you have against them is with your scissors! Cut them up, pay them off, and refuse to use them again! Take your ball and go home, because credit card companies don’t want to play fair and they don’t want anyone to force them to play by set rules. If enough people voted this way, they would have much more to worry about than the Fed or Congress trying to place fair limits on their unfair practices.
Posted in credit cards |
May 3rd, 2008 at 2:43 pm
In general credit unions are organization that care quite a bit more about their customers than banks do (not hard since most banks actively try to trick customers out of money). As any smart business would do, credit unions try to take advantage of the horrible behavior of their competitors (the other credit care issuers). The National Credit Union Administration has supported the rules that the America’s Bankers Association fights: http://www.ncua.gov/news/press_releases/2008/MR08-0501.html
Not only is this a smart move in general, it also shows how out of touch the majority of credit card issuers are. Everyone knows their lobbyists are just trying to make it seem like continued horrible behavior by their members is somehow acceptable. Which is completely untrue. The behavior engaged in by credit card companies is despicable. They sometimes stay within the law, but as I would guess people at about 10 years of age know, not breaking the law is not the same thing as behaving ethically.
May 3rd, 2008 at 3:32 pm
I have watched for a long time and have asked the banks and all other members of the lending community, whats up with the 3 reporting agencies??? They are still making money on their credit score scam and have gone unscathed by the powers that be. When talking about credit scoring they talk about Moody’s as an average guy I really don’t care about Moody’s, who is responsable for the big 3 reporting agencies? Their whole niche is to circumvent Federal Banking law and allow banks to talk to each other, the same with cell phone companies, insurance companies. Thay sell your info to anyone that pays but are not goverened by Federal Banking law. They are culpable in the credit score scam wich has nearly destryed some and ruined others and people keep doing buisness with them,plus the tax payer pays for their errors???????????
May 3rd, 2008 at 5:34 pm
I agree. Completely.
May 3rd, 2008 at 8:52 pm
I think if you pay credit cards off every month, you can actually make money off of them - especially the ones where you get cash rewards or gift card rewards. But, you must be disciplined enough to pay them off. BTW, just discovered your blog today… looks like a good one! My husband also writes a debt free blog. Feel free to check it out at http://engineeradebtfreelife.blogspot.com
May 3rd, 2008 at 10:16 pm
I generally hate government regulation. The politicians almost *always* screw things up.
The best thing would be people taking responsibility for their own actions. I don’t think government should protect us from ourselves. If we make the decision to use credit then we must deal with the repercussions.
However, I am sick of credit card companies. Mine aren’t so bad and I’m looking forward to my Starwood points from my Amex helping me go on vacation. But we do our damnedest to pay off all three credit cards every single month. So far so good!
It’s too bad that people are so irresponsible with their money. There was a time when people only bought things when they could afford it - like my grandfather. I guess those days are long gone.
May 4th, 2008 at 8:33 am
Finally! I’ll let my circle know about this, too…
May 4th, 2008 at 3:25 pm
Anna, I see that you sent me a message, but can’t access the forums - can you send it to my gmail account? rocketfinance at gmail?
rocketc
May 4th, 2008 at 10:32 pm
casto, while I too share your faith in the government’s ability to FUBAR just about anything, this one seems reasonable and sensible (gasp!) as hard as that may be for us cynics to believe. LOL Personally, I’d love to hear someone try to defend these practices listed in the bill. Most credit card companies prefer to suspend these practices, since they really can’t defend them.
May 4th, 2008 at 11:43 pm
[…] from Debt-Free Revolution posted her opinion on the latest debt related news from Congress and the Fed. Ana is not a friend to or a fan of credit card […]
May 5th, 2008 at 1:24 pm
I support the idea of a Credit Card Users Bill of Rights and will call my Congressman and Senators urging them to support it. The credit card industry is rapacious, greedy, unprincipled, and manipulative and they rig everything in their own favor. It’s Robber-Baron capitalism at it’s worst!
I really got fed-up this year with the high interest rates and the manner in which credit card companies mistreat even their best customers who revolve balances and are never late with payments. This year, several of my creditors sent me letters in my billing statements telling me that they were going to change my credit terms - mainly to allow them to charge me higher rates and fees in the event I should ever start having problems paying them.
My response? In each instance, I sent the credit card crooks a letter opting-out of the proposed changes, (yes, they can change the terms, but only if you AGREE to the changes - it takes 2 parties to agree to a contract, after all), and then I tell them to CLOSE my account.
I also tell them WHY I’m closing it - because they are being GREEDY and are trying to penalize customers with good credit histories who do not deserve to be subjected to such nonsense!
Well, needless to say, I’ve had to close just about every credit card account I have, because the banks are sending out these blasted notices to EVERYBODY - hoping to make money off of a higher rate of delinquencies during the recession/depression we are undergoing. Why are they doing this? Because they just lost a heck of a lot of money in the sub-prime debacle and are now looking to make the money back by fleecing their credit card customers.
Well, my response to this theivery is to JUST SAY NO!
In a way, I’m almost thankful they are doing this, because it enabled me to convince my credit-card addicted spouse that the time had come to close down our credit-card habit and start paying as we go with cash.
Now that we no longer charge anything on our accounts, we just put as much money as possible towards paying off our existing credit card debt. When it is finally gone, that will be the end of our credit card usage. From here on out, we intend to pay by cash or debit card for EVERYTHING.
Our feeling is that ENOUGH IS ENOUGH and that carryign debt on credit cards is STUPID! No doubt, millions of other Americans are waking up to this fact, just as we have.
It is so much fun watching our balances decline with every passing month.
May 7th, 2008 at 12:37 pm
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May 8th, 2008 at 11:12 am
I’m also a big fan of the Credit Card Users Bill of Rights - its long overdue and its pretty clear that its an issue thats not going to fix itself. I’m not usually in favor of government regulation, but the way that the credit card companies have gone overboard with interchange fees, variable rates, etc is too much and something needs to be done.
Unfaircreditcardfees.com and groups like them have been pushing for this much needed reform for a while and its about time Congress started to notice. I’ve worked with them and the credit card companies ripping into consumers and merchants alike needs to end.