Why Credit Card Companies are so Mean

[Malthus]

So card issuers have to consider the consumers ability to pay before they issue the card - isn't that the consumers job?

Don't lenders usually measure the credit-worthiness of people they lend cash to? I fail to see the objection.

Young consumers

    * Before issuing a card to a person under 21, the issuer must obtain an application which contains either the signature of a co-signer over 21 or information indicating an independent means of repaying any credit extended.
    * Card issuers may not raise the credit limit on accounts held by a person under 21 who has a co-signer without written permission from the co-signer.
    * No prescreened card offers can be made to people under 21 unless they have consented to receive such offers.
    * Card issuers cannot provide tangible gifts to students on campus in exchange for filling out a credit card application.
    * Colleges must publicly disclose any marketing contracts made with a card issuer.

What a load of horseshit. Mostly.

Young people are too stupid to think for themselves, so lets make sure that even those who CAN think for themselves are hamstrung!

Requiring a co-signer is horseshit, agreed.

Disclosure of marketing contracts and restrictions on gifts and marketing initiatives I could live with.

Credit card agreements will be posted online and the Fed must keep a public Web site providing them to the public.

Oh my, another pork barrel project, coming through! I wonder who gets that little multi-million dollar deal?
[/quote]

Disclosure of card agreements is unobjectionable; a some form of centralized repository makes sense; a gove't website is likely to be a pork barrel project.

[Malthus]

Cheap shot Malthus - I've been talking about teh evils of government in the context of this particular issue the entire thread, and nothing I have said has been off base or incorrect in regards to the particulars. It's not like I've been going off and bitching about something that wasn't even happening, just because I didn't post a link to a summary of the law - which I thought we all understood already.

Just because you want to argue before you know the facts doesn't mean you should assume everyone else does the same.

Maybe you don't realize how you sound - like Ayn Rand on PCP.

And I partly *agree* with you, which is the funny part.

[Admiral Yi]

The changes would make the creditors eat a lot of interest rate risk.  They'll respond by either going to variable rate or by increasing the premium on fixed rate accounts.

[Berkut]

I can live with disclousre of course (although I am not sure what the point is - is there some kind of problem with schools not disclosing that they have marketing agreements?).

Why restrictions on gifts? I like free T-shirts, so why should it be illegal for a company to give me one?

What about other companies - why aren't they restricted from giving me free stuff? What about a really low priced t-shirt?

I find this kind of crap objectionable just because it is so fucking petty and stupid. Who freaking cares? Are 20 year olds really in dire danger because MBNA gives them a free t-shirt, so Congress needs to step in to protect them from free t-shirts?

Whew, our long national nightmare of college students getting free things is finally over! Thank god Nanny Dodd is there to protect our adults from making bad choices and getting free stuff!

[Berkut]

Cheap shot Malthus - I've been talking about teh evils of government in the context of this particular issue the entire thread, and nothing I have said has been off base or incorrect in regards to the particulars. It's not like I've been going off and bitching about something that wasn't even happening, just because I didn't post a link to a summary of the law - which I thought we all understood already.

Just because you want to argue before you know the facts doesn't mean you should assume everyone else does the same.

Maybe you don't realize how you sound - like Ayn Rand on PCP.

And I partly *agree* with you, which is the funny part.

Around ehre anyone who doesn't drink the Nanny State kool-aid is labeled as Ayn Rand. Congrats.

[Berkut]

The changes would make the creditors eat a lot of interest rate risk.  They'll respond by either going to variable rate or by increasing the premium on fixed rate accounts.

Or just figure out some other loophole to screw the stupid.

[alfred russel]

The changes would make the creditors eat a lot of interest rate risk.  They'll respond by either going to variable rate or by increasing the premium on fixed rate accounts.

You mean the companies that now give a fixed rate, and use their flexibility to change the fixed rate upward if interest rates rise?

How does that really differ from a variable rate card anyway?

[Malthus]

Cheap shot Malthus - I've been talking about teh evils of government in the context of this particular issue the entire thread, and nothing I have said has been off base or incorrect in regards to the particulars. It's not like I've been going off and bitching about something that wasn't even happening, just because I didn't post a link to a summary of the law - which I thought we all understood already.

Just because you want to argue before you know the facts doesn't mean you should assume everyone else does the same.

Maybe you don't realize how you sound - like Ayn Rand on PCP.

And I partly *agree* with you, which is the funny part.

Around ehre anyone who doesn't drink the Nanny State kool-aid is labeled as Ayn Rand. Congrats.

I guess you missed my second sentence. 

[Admiral Yi]

Or just figure out some other loophole to screw the stupid.

Are you suggesting increasing rates is a loophole to screw the stupid?  Credit card companies don't get their money for free.

[Admiral Yi]

You mean the companies that now give a fixed rate, and use their flexibility to change the fixed rate upward if interest rates rise?

How does that really differ from a variable rate card anyway?

Frequency of and warning needed for resets I would think.

[Berkut]

The changes would make the creditors eat a lot of interest rate risk.  They'll respond by either going to variable rate or by increasing the premium on fixed rate accounts.

You mean the companies that now give a fixed rate, and use their flexibility to change the fixed rate upward if interest rates rise?

How does that really differ from a variable rate card anyway?

So as long as a company gives you creit at a given rate, they must continue to do so forever? even if the agreement you signed specifically said they could increase those rates and you signed said agreement stating that they could?

That is what I don't get about all this faux outrage. If the deal they are offering is so terrible, just don't accept it. You don't need Congress for that. If the deal sucks, then pass on it.

It is pathetic that people are actually arguing that they should not be allowed to make business arrangements that are to their own satisfaction. And when Congress passes a law limiting the ability of a credit card company to extend you credit, they are also passing a law limiting YOUR ability to make that same deal.

[DGuller]

Regret already forthcoming.

Oh please, what a bleeding heart bunch of nonsense. What are these "predatory behaviors"? how is it predatory to offer someone a deal different from what they have now, when they can simply refuse that deal whenever they wish?

I think credit card companies scouring colleges to sign up students is predatory.  Free market or not, they are in effect crack dealers getting people prone to addiction hooked.

It is only predatory if you buy into the assumption that people MUST HAVE MORE CREDIT ALWAYS. Like it is some kind of Constitutional Right to borrow money.

Where am I making an argument for more credit?  I'm closer to the opposite, in fact.

How can a law that restricts the ability of credit card companies to make business deals with their customers be spun as a way to ensure full disclosure? If you want better disclosure, you do not need to pass a law restricting anything, by definition. You just need a law demanding the disclosure.

Actual disclosure, and effective disclosure, are two different things.  Just because information is out there, somewhere in the middle of large tomes of fine print, does not make for disclosure.  I'm more concerned about people actually understanding the terms.  Sometimes having less things to disclose about ensures better overall understanding of what people are getting into.

[viper37]

Young people are too stupid to think for themselves, so lets make sure that even those who CAN think for themselves are hamstrung!

well, actually, that's the reason we forbid a whole lot of things to underaged people, or ask for parental consent for some other things.

I disagree with the last two points, and we could argue on the 21 years old majority instead of 18, but basically, I think it's allright.  You can't drink before 21, you can't smoke before 18, you can't have sex with someone of 17 y.o. when you're 19, so really, why should you be mature enough to have a credit card?  Because you can own a machine gun at 12?  I'm not sure that's a good reason...


Now onto the rest of it...
First year of new card
I disagree with all of it...


Existing balances
I agree with everything there.

Notice of future rate hikes
seems sensible enough, even for the first year.

Paying off on old terms
Agree with the general principle, can argue about the details

Limits on fees and penalties
No over-the-limit fees may be charged unless the consumer has asked for the account to be set up to allow transactions that will exceed the credit limit.This I agree with totally.  It's fucking unfair that they charge you for going over the limit when you don't want to.  Ask it on the initial form or something, but don't fucking charge me for something I did not ask for. Giving the customer an option to sign out would be nice.Two-cycle billing is prohibited. An issuer cannot reach back to an earlier billing cycle when calculating the amount of interest charged in the current cycle.




Sensible due dates, time to pay

1- Credit card issuers cannot set early deadlines for payments. Payments must be received by 5 p.m. at a location set by the issuer.
2- Due dates will be on the same day each month.
3- Card issuers must deliver the bill at least 21 days before the due date.

#1 Isn't that a problem with the bank, more the credit card issuer?  I recently discovered that my bank with always consider a withdrawal at the ATM before a deposit I make, no matter the time at wich I do it... I was really pissed off...

#2, yes, I agree, the 31st or each month

#3 I kinda agree with this.  I have a corporate credit card with a fuel company and the due date is already passed by the time I receive my bill...  That's sort of... unfair practice imho.


Credit reports

Disagree with this.  It's up to people to find their info.  It's like saying Microsoft should avertise "A free OS is available at www.ubuntu.com".  Duh.


Issuance fees
Issuers cannot finance fees and charges for opening a credit card where the fees and charges total more than 25 percent of the credit limit.

I think it should be told/written clearly to the customer, but not forbidden.  If I want that über special Amex card with these nice shiny gift they offer me and I'm willing to pay 500$ a year for this and 1000$ upfront, it's my fault if I'm stupid.

Credit card agreements will be posted online and the Fed must keep a public Web site providing them to the public.
Bullshit...  I'm glad to see the US Congress people have so much times on their hands   They must work extra fast to solve all your other problems before this minor issue
EDIT:  The formattingis all fucked up!

[alfred russel]

The changes would make the creditors eat a lot of interest rate risk.  They'll respond by either going to variable rate or by increasing the premium on fixed rate accounts.

You mean the companies that now give a fixed rate, and use their flexibility to change the fixed rate upward if interest rates rise?

How does that really differ from a variable rate card anyway?

So as long as a company gives you creit at a given rate, they must continue to do so forever? even if the agreement you signed specifically said they could increase those rates and you signed said agreement stating that they could?

That is what I don't get about all this faux outrage. If the deal they are offering is so terrible, just don't accept it. You don't need Congress for that. If the deal sucks, then pass on it.

It is pathetic that people are actually arguing that they should not be allowed to make business arrangements that are to their own satisfaction. And when Congress passes a law limiting the ability of a credit card company to extend you credit, they are also passing a law limiting YOUR ability to make that same deal.

Congress is responsible for passing reasonable consumer laws. These make sense because 1) monitoring credit card rates is a pain in the ass, and it isn't unreasonable for congress to lessen that burden since changing the rates can be lucrative for the banks (and a failure to notice ruinous for consumers), 2) consumers can't negotiate credit card terms, and 3) there is a sizeable segment of the population that is unfortunately unable to manage their credit card debt and are financially breaking because of it.

[viper37]

Congress is responsible for passing reasonable consumer laws.

it goes beyong reasonable...

These make sense because 1) monitoring credit card rates is a pain in the ass, and it isn't unreasonable for congress to lessen that burden since changing the rates can be lucrative for the banks (and a failure to notice ruinous for consumers),

Why get 300 credit cards, then?  Having only 1 or 2 is more than enough.

3) there is a sizeable segment of the population that is unfortunately unable to manage their credit card debt and are financially breaking because of it.

But it's not the responsibility of the State to nurse such people.

Otherwise, you can extend that very far.  All adults are presumed to willingly enter a contract verbal or written, unless proven otherwise.  They are presumed to be able to make such choices.  If they are not able to make such choices, then there are a lot of things they can't do...