In the grand rush to make sure that corporate America pays the price for excessive borrowing and that lenders feel the confinement of that narrow space left between "redlining" and "reverse-redlining," somehow attacking credit card issuers seems to have hit the legislative agenda.
Normally, it would be our tendency to grumble about such things, but in this case, we would be remiss if we didn't offer at least lukewarm support. The reality is that fee structures and back office stuff as obscure as balance processing order is complex enough in the world of consumer credit that a little bit of regulation could be a very nice thing. And, of course, issuers are just going to buoy overall rates up to meet any losses in fees they incur due to new legislation anyhow, so we aren't sure exactly what Congress thinks it is doing here (unless it is simply moving revenues over to the actual interest paid- which, at least for transparency isn't a bad idea anyhow).
The Journal gives us a peek at what to expect:
Existing balances: Issuers cannot retroactively change the rate on an existing balance unless the account is 60 days delinquent.Payments: A consumer payment above the minimum applies first to the balance with the highest rate.
Teaser rates: Issuers cannot raise rates for the first year after an account opened. Promotional rates must last at least six months.
Changing Credit: Highlights of the Senate Credit-Card Bill [The Wall Street Journal]
Posted by guest , May 19, 2009 3:11PM
What about regulation for overdraft fees? That is bound to be most usurious of lending rates -- in some cases, issuers of debit and credit cards bill transactions of as small of $5 or so at a fixed transaction fee while at the same time approving of the transaction. So you may continue to receive transaction approvals at the point of sale while the bank continues to charge the consumer at the fixed $30-40 per transaction fee.
Posted by guest , May 19, 2009 3:13PM
"issuers are just going to buoy overall rates up to meet any losses in fees they incur.." Think so EP? The problem has been that, taking into account the impact of fees, the effective rates being levied are astronomical. Not sure they'll be able to get away with actually charging such rates.
Posted by guest , May 19, 2009 3:17PM
Also in this bill, we can now use concealed weapons permits in state parks, hah.
Posted by guest , May 19, 2009 3:21PM
@1 - Either you are
1.) being sarcastic (I really hope so)
2.) a college kid (second best option)
3.) a moron (take it back to yahoo finance)
I really hope you are not working in finance and worried about overdraft fees...
Posted by guest , May 19, 2009 3:26PM
YOOOOO what's with teh drudgereport headline on GM
Posted by Anal_yst , May 19, 2009 3:28PM
@1/4
I've actually noticed that even now it takes several days for some payments/charges to post. The fact that many banks' payment processing systems are built on 20+ year-old technology is freaking ridiculous, especially when it leads to late/other fees.
Best Buy (HSBC I believe), I learned in college, is especially bad with this; you can't schedule your payments systematically through their website, and heaven forbid you don't schedule it >4 biz days in advance, you can make a "rush" payment for $15. Weird, Chase allows same-day payment for no fee.
I think another issue we need to discuss is how credit card cos decide on interest rates and balance limits, generally, ability, stability, and willingness to pay. In practice, your credit history/FICO score is given a lot of credit here, which brings us to another issue; Fair Issaic's relative monopoly.
Posted by guest , May 19, 2009 3:30PM
@1 yeah, fuck personal responsibility!
Posted by american bandersnatch , May 19, 2009 3:52PM
I'm definitely in favor of clear, simple billing arrangement and fees. If they want to charge people who miss payments or have bad credit more, so be it. Just be clear about it.
Posted by Anal_yst , May 19, 2009 3:56PM
I should preemptively clarify I'm not complaining, just making observations
Posted by guest , May 19, 2009 4:01PM
Yes, what evils the cc companis are leveying on us, here are a few alternatives i've come up with:
1)Read your fucking cardmember agreement. If you don't and something happens that you didn't expect, fuck you that's what.
2)Pay your fucking bills on time. You might find this amazing, but when you don't pay your shit on a timely basis people might get the idea that you are a deadbeat retard and treat you as such. Late/missed payments = higher rates! HOLY FUCKING SHIT BALLS!! If you have fucked credit, then fix it and you will be able to get an interest rate that doens't ass rape you. Till then, STFU.
3)Last but not least, STOP BUYING SO MUCH CRAP. Listen, I know you really want those spinners on your '88 civic and those stupid hooker shoes that cost more than bottle service but seriously, cut that shit out. You are poor, learn to live with it and don't run up your fukcing cards and then whine about how mean mastercard is.
Use your cards for miles/points and pay that shit off. If you have an emergency, I get it but the fact that "average" household cc debt is $10k is insane.
Posted by Anal_yst , May 19, 2009 4:07PM
@10
How dare you imply that people should live within their means?! Damnit, if people didn't deserve flat screen TVs and $600/month C300 leases why the hell did anyone give them the "$" in the 1st place?
/sarcasm
Posted by guest , May 19, 2009 4:08PM
Thank you for your enlightening remarks and advice, @10. Although perhaps you did not intend it so, we are all in your debt, as well.
You can now return to Galt's Gulch, where Dagny is waiting with a relaxing beverage and a soothing foot massage.
Toodle-loo.
Posted by american bandersnatch , May 19, 2009 4:10PM
"1)Read your fucking cardmember agreement. If you don't and something happens that you didn't expect, fuck you that's what."
Sorry, but who reads their credit card agreements and ever other piece of overly lawyered boilerplate they get from the intralinks login through your deferred comp plan down to your car rental agreement and the back of your yankee tickets? There's a lot to be said for basic consumer protection laws.
Posted by guest , May 19, 2009 4:13PM
10 You should have told that to Reagan in the 80's, when changes in usury laws allowed credit card debt to rocket and got us out of the Carter recession. Sort of a prequel to the 00's faux real estate boom and related cash outs and refi's.
Posted by guest , May 19, 2009 4:16PM
@13, 10 here: Really? that's you pathetic excuse? "I'm too lazy and dumb to read lots of words so the government needs to save me". Thanks for making my case for me.
I read that shit because I care.
Posted by american bandersnatch , May 19, 2009 4:16PM
@14 - Wow, that's quite a stretch Mr. Fantastic.
Posted by american bandersnatch , May 19, 2009 4:20PM
@15 - You must have had a lot of fun reading the microsoft license agreement and the warranty agreement for every piece of equipment you've ever purchased.
Posted by guest , May 19, 2009 4:28PM
Woot Woot!
http://www.reuters.com/article/mergersNews/idUSN1943363120090519
Posted by guest , May 19, 2009 4:33PM
Fed Mastercards for low income individuals Act incoming...complete with the Messiah's smiling visage on each card
Posted by guest , May 19, 2009 4:34PM
@15 I think you are part of the problem. You may be the worlds most amazing person. The guy who reads everything in the small print and still signs the dotted line. You are an shining example of how we all should be.
There are many many many people in this country who DO NOT READ A DAMN thing. infact many of them press #2 for Spanish while on hold for 411. Keep in mind who ELSE lives here and how important it is to keep things very simple so we dont end up paying for someone else's VISA paid dinner at Taco Bell.
Oh and we know you dont read an damn thing. if you have a credit card in your wallet or leased a car. you dont read the fine print. No one ever fully reads the fine print!
Did you know your Benz can cause anal bleeding and a rash on your back? Yeah I thought so...
Posted by guest , May 19, 2009 4:38PM
In the late 90's, CA and other states wanted to make it illegal for ATMs to charge any types of fees. Legistlators found that the $2.00 transaction fee charged to non-clients was "taking advantage". Did it matter that banks have overhead?
Now, the same thought process has been applied. Does it matter that the cc industry is highly competitive and, per econ 101, excess profit has moved out of the business?
Unlike the ATM legistlators, Obama is adept at villifying a group. So after casting cc companies as eveil, he will do what he always does and take from them to buy votes from the masses.
Posted by guest , May 19, 2009 4:56PM
@20 - You're reinforcing retard behavior. If people sign agreements they don't read, then they shouldn't 1) carry a balance or 2) complain when hit with fees for living beyond their means.
Posted by guest , May 19, 2009 5:10PM
@22 and you are enforcing the BIG BANK "not our problem we hired 1200 an hr lwayers to write this crap too bad if Mike the doorman doesnt get it." mentality.
WTF is wrong with you? Buyer be ware aint the right way to go right now. We just did that with mortgages for homes. What part of that problem did you not get? I stand by my first opine that you are an idiot and clearly part of the problem. When people are handed free money they are not interested in why they are getting it...there are always exceptions to the rule but it seems based on, ummm, HISTORY. That the few FUCK IT UP FOR THE MANY!
Posted by Anal_yst , May 19, 2009 5:13PM
@22
Nuance, my friend. Things should be as simple as possible, no simpler, no more difficult, in direct contrast to today, where they are as complex as possible, and no simpler.
@ 23
Thank you, Spock!
Posted by guest , May 19, 2009 5:20PM
@23 The problem is the moral hazard created by telling people that dipshit decisions have no consequence. If homeowners, cc debt holders, etc weren't painted as "victims" and bailed out, they would likely show some financial responsibility the next time around. As it stands we're building a generation or two of whining, gov't-reliant morons. btw - 22 here, not 15.
Posted by guest , May 19, 2009 5:20PM
@24 I thought that when I wrote it but clearly we know the line..
"The needs of the many out weighs the needs of the few...or the one."
Spock was not talkin about ACORN or assholes buying Sub Zero wine coolers with a 29% rate Wamu Visa card.
-23
Posted by guest , May 19, 2009 5:23PM
#20, listen, I'm pretty sure you asked me if I wanted fries with my burger last week, so I'll use small words:
What the fuck are you talking about? People that don't read? 411? Taco Bell? Are you fucking autistic?
Fact: If you can't read or speak english you probably aren't rolling with 10 credit cards.
And yes, I read the fine print and yes some of it scarry and basically telling you "you're fucked" but that is a risk we all take. Difference is that I don't wet my panties when something unfavorable happens that I could have alread known about.
Yes, let's lower everthing to the lowest common denominator and placate the idiots of the world. Great Idea. USA! USA!
Posted by guest , May 19, 2009 5:38PM
Connect the dots:
companies not allowed to use risk-based pricng > higher overall credit card rates > less credit cards issued/used > less spending > credit card companies forced to contract & lay off workers.....
you get the idea.....
Posted by guest , May 19, 2009 5:38PM
@27 Not sure why you would think i asked if "you want fries" since i made a clear reference to TB.
I find it ironic I have to clarify a point I made to a guy who "reads everything" but lets move past that too.
The lending crisis we are having is largely based on but not limited to lending assholes money who didnt read the fine print in the agreement. If you at all agree with that statement how can you possible make an argument that leaving the current lending laws in place is a responsible way of answering the issue. Dumbing down america is to allow this shit to happen agian and all along whtach as it does kno wing why and how...
You clearly hold yourself in high regard so let me ask you how many Americans you think are on your level of education and how many review such important info the way you say you do?
I think you are an asswipe and should have gone for that GED while you had the chance. Think outside the box.
Posted by guest , May 19, 2009 5:51PM
@28 ACORN voting mother fuckers take a VISA 0% introductory interest rate that turns into a 29% in rate after the first purchase and suddenly that $10,000 LED TV in their queens walk-up isn't as free as they thought. Guess who pays for that when they cant pay the balance?
Let me help you out- ALL THE OTHER ASSHOLES WHO PAY ON TIME!
Posted by guest , May 19, 2009 5:52PM
The issue is that people are fucking stupid and that douchebags like you defend their poor choices? Why the fuck is it "dumbing down" to literally stoop the level of idiots.
All this will do is hurt lending and the people who are responsible. People are still going to use their cards like free money and fuck up, fine print or not.
What you argue for makes no sense at all. You really want to proect stupid people, take their cards away from them and make them pass a test to get them back. That will be very efficient but is the only way to acheive what you arguing for. Or people can sack the fuck up and honor the contracts they enter into and not spend money like a saudi prince.
Posted by guest , May 19, 2009 5:56PM
I put my secretary's ass lube on the plastic.
Posted by guest , May 19, 2009 6:10PM
@31 i am protecting the good consumer who pays his balance and meets his obligations. Who ends up getting saddled with other people's debt problems. You are looking at things on a very micro level. person by person not 100,000 of thousands of idiots making the same mistakes on their credit cards. We already saw this in housing. How can you make the case we should not make changes to the current lending process?
Say what you want, money should be given based spending and ability to pay back. Not on fooling people with small print legal crap. We need to protect ourselves from what we know is coming down the line if we do not alter our current lending process. The banks got really fat and fucked the country with their small print bullshit. Who ended up holding the bag? Not the assholes who borrowed the money so i dont know who you are calling dumb. they are smart enough to tak ethe moeny and have us pick up the tab!
I am not stooping to low levels. WE ARE AT LOW LEVELS. I can say the
Posted by guest , May 19, 2009 6:16PM
If it takes "dumbing down" our system to keep bullshit like the last 25yrs from occurring, were FUCKED!!! Jeez some of you people are morons... It is utterly depressing to think of the capital being destroyed to pay for this bullshit.
Posted by Joseph di Jersey City , May 19, 2009 9:01PM
I know one person who will probably be troubled by the lack of "teaser rates". He would get offers of $X (typically $500-1000) in cash from credit cards without interest for some time, invest it, and promptly pay it off right before the interest kicked in (typically 6 months or so). It was free money and he was cheap enough to spend the time on the book keeping on many accounts.
An obvious approach for the card companies would be to try and ding the card owners who pay up every month if they are less able to screw the financially illiterate. I doubt this will happen because they still make a lot of money from merchant fees off of big spenders who don't carry a balance and people with cash can just use a debit card or currency.
Posted by guest , May 19, 2009 9:16PM
WaMu branch associate of the month @4, it was when I was in college (yeah, so 2 applies) and it was based on my understanding that a debit card is just like cash; which is exactly what your colleague suggested to me between sipping his muscle milk when I got the card in my freshman year.
The card agreement was tl;dr. One long weekend in New Orleans and I got back with $400 in multiple overdrafts. This, even though I have exactly $0 on their credit card balance precisely because I don't like reading long agreements.
It's ok even if WaMu goes under, you'll always be able to put your Rutgers education to good use at Cash4Gold!
Posted by guest , May 20, 2009 12:19AM
Lets make this simple: bring back usury laws.