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  1. #1
    Suspended markw's Avatar
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    Thumbs down Any prudent credit card users here?

    Well, guess what. We may be screwed.

    "Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups."

    The bank's are gonna rob Peter to pay for Paul.

    http://www.nytimes.com/2009/05/19/bu...t.html?_r=3&hp

    Thanks, Obama, for letting them do this to the good payers.

  2. #2
    I put the Gee in Gear.... thekid's Avatar
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    Quote Originally Posted by markw
    Well, guess what. We may be screwed.

    "Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups."

    The bank's are gonna rob Peter to pay for Paul.

    http://www.nytimes.com/2009/05/19/bu...t.html?_r=3&hp

    Thanks, Obama, for letting them do this to the good payers.
    The state of the economy and administration are attempting in one way or another of shutting down what was a behavior/partial cause of the current crisis-CHEAP CREDIT. And please do not confuse CHEAP CREDIT with low interest rates. Cheap credit is the type that allowed any bank or group of investors to issue credit cards,mortgages and loans to anyone with a pulse. Banks and lending institutions used to make their money by making loans to people with sound credit. They earned a low but steady rate of return from these loans that they were on the hook for and had a vested interest in making sure the loans would get paid back. Fast forward to the late 80's-90's and they were allowed to securitize mortgages etc and the barn door was open to sub-prime loans and all of the junk that got sold around the world under the false assumption that the banks had done their job in qualifying the borrower. Irresponsible lending practices affected us all and we are all paying the price for it now.

    With some of the proposed new legislation the credit card lenders are not happy because it will force alot of them to compete or close up shop. They are threatening to bring back higher rates and annual fees like in the "bad old days" in an attempt to sway public opinion against the pending legislation. I don't have a problem with much of what is proposed because it will mean that people with good credit and financial stability will once again be a group that lenders will chase after with low interest/no fee cards. If you don't have good credit or don't have a job well I guess you might have to get a credit card with a 18%-21% interest rate and a $25-$50 annual fee. Or even worse some people will apply for a credit card and actually be turned down because they don't qualify. If your current credit company is one that jacks up your rates and charges you an annual fee but you are a good credit risk then you will be able to say so long and go with a lender who has lower rates. If not then welcome to capitalism.......

    There was a time in the not too distant past that getting a credit card meant you were qualified to have one based on your financial status not because you opened a cereal box and a credit card fell out or because you graduated from high school. Some people talk about "socialism" in today's economy but I think alot of these lenders are the true "socialists" because they think they have the right to continue to exist in a market that does not foster competition or is based on true economic conditions. In many ways they are no different than the auto makers in their demands and view of the market place but they don't have unions and as everyone knows its unions that brought down the economy......

  3. #3
    Sgt. At Arms Worf101's Avatar
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    Sigh....

    The banks, due primarily their OWN bad behavior brilliantly outlined by TheKeeed above, have been sticking it to card holder's prudent or not. This is just a partial list of the shennanigans they've been pulling on GOOD customers:

    1. Late with a bill (wholly unrelated to your CC) your bill is jacked.

    2. Late with a different card your bill is jacked.

    3. Manipulating the date of your payment. "Our records show that your check didn't come in till after midnight." They didn't go get the effin' mail till after midnight. Your bill goes up!!!

    4. Despite years with a card or good history of payment your rates are subject change at their whim for no reason at all with NO notice at all despite you having a signed contract.

    The CC companies are lying, scumbag bastards and I just paid off my Visa and will live life with my AMEX. I'll NEVER EVER put another dime on a revolving credit card unless I know the giant meteor's about to hit. I hope all the CC companies rot in hell.

    Da Worfster

  4. #4
    Loving This kexodusc's Avatar
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    I have to agree with Kid here...
    “Those that manage their credit well will in some degree subsidize those that have credit problems.”

    This is the purest pile of horse**** I've read all week. Right now the reverse is happening, and the uneducated, irresponsible are subsidizing the so-called prudent and more fortunate. That's not how it's supposed to work either. These products should be based on a level playing field...you are charged accordingly. Right now, the responsible users are not being charged interest because that benefit is being sold as the bait to lure the irresponsible to their product. So yeah, 30% get a pretty good deal, but it's not because the credit card companies want to reward them, it's because they want you to make a mistake and gouge you when it happens.

    I work in finance - not many companies or even banks can borrow unsecured for 30 days truly for 0%. (well this year might be an exception because of low interest rates, but even then in theory it's not free). The overnight market just isn't practical to administer for retail credit cards.

    But only with retail credit cards is credit issued on the basis of pooled profitability rather than credit worthiness.

    Anyway, the industry threats are a bad fear tactic designed to scare the masses into pressuring the government to back off. More stringent credit card regulation already exists in a dozen other countries and their products still offer the grace period. There's absolutely no reason why you can't have your cake and eat it too, and if we don't demand it we're short changing ourselves to the industry at our own expense.

    What the article isn't telling you is that a reduction in issuing credit to the unworthy will lead to massive reduction in write-offs, offsetting considerably (though admittedly not completely) the higher interest rates they need to charge to achieve their target rates of return... Instead of lending 4 deadbeats the money and hoping 2 make the payments, why not just lend to the 2 that can actually make the payments?

  5. #5
    Musicaholic Forums Moderator ForeverAutumn's Avatar
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    Quote Originally Posted by Kex
    More stringent credit card regulation already exists in a dozen other countries and their products still offer the grace period. There's absolutely no reason why you can't have your cake and eat it too.
    The Canadian Gov't just introduced (on May 21/09) proposed regulations in favour of consumers...

    Delivering on the Government’s promise to help consumers of financial products, the Honourable Jim Flaherty, Minister of Finance, today released new proposed regulations aimed at limiting business practices that are not beneficial to consumers and providing clear and timely information to Canadians about credit cards.

    “Close to 25 million Canadians have credit cards, and most of them pay their balance in full, which is a great credit to how prudent Canadians are generally,” said Minister Flaherty. “Through Canada’s Economic Action Plan, we are helping consumers by mandating a 21-day grace period on new purchases made with credit cards during the month, when a full payment is made at the end of that month.

    “As for those circumstances when Canadians don’t pay off their outstanding balance, we want to ensure they are treated fairly, that interest rates and penalties are clearly shown, and that companies use only appropriate debt collection practices.”

    The proposed Credit Business Practices Regulations will:

    • Mandate an effective minimum 21-day, interest-free grace period on all new credit card purchases when a customer pays the outstanding balance in full.
    • Lower interest costs by mandating allocations of payments in favour of the consumer.
    • Allow consumers to keep better track of their personal finances by requiring express consent for credit limit increases.
    • Limit debt collection practices that financial institutions use in contacting a consumer to collect on a debt.
    • Prohibit over-the-limit fees solely arising from holds placed by merchants.

    The regulations also includes new information that must be put on the statement, such as a chart showing how long it would take to pay off the outstanding balance if you made only minimum payments and advance disclosure of interest rate increases.

    http://www.fin.gc.ca/n08/09-048-eng.asp

    Now if only they would legislate a maximum interest rate that credit cards should be allowed to charge.

  6. #6
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    "Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups."

    Maybe.. maybe not. Do the banks really want to cut off their income from the Interchange fees the merchants pay on every transaction? Even those who pay "cash" indirectly pay the fee as a cost of doing business that's passed on to customers in the price you pay at retail. I pay my cards in full every month and get tired of being labeled a freeloader in the media. Not so! The banks collect 2% to 4% depending on the deal they merchant has, on every transaction I put on my card, whether I pay it in full or not.

  7. #7
    Shostakovich fan Feanor's Avatar
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    Good point, Ed

    Quote Originally Posted by Ed_in_Tx
    "Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups."

    Maybe.. maybe not. Do the banks really want to cut off their income from the Interchange fees the merchants pay on every transaction? Even those who pay "cash" indirectly pay the fee as a cost of doing business that's passed on to customers in the price you pay at retail. I pay my cards in full every month and get tired of being labeled a freeloader in the media. Not so! The banks collect 2% to 4% depending on the deal they merchant has, on every transaction I put on my card, whether I pay it in full or not.
    Yes, indeed. The fee charged to merchants justifies the "grace period" afforded the consumer. Thus Canadian governent's mandating of a 21 day grace period is just.

  8. #8
    Shostakovich fan Feanor's Avatar
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    Fear mongering

    Quote Originally Posted by markw
    Well, guess what. We may be screwed.

    "Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups."

    The bank's are gonna rob Peter to pay for Paul.

    http://www.nytimes.com/2009/05/19/bu...t.html?_r=3&hp

    Thanks, Obama, for letting them do this to the good payers.
    Business loves scare mongering.

    As Ed_in_Tx points out, the CC companies charge the merchants significant fees, and this does justify a grace period. Maybe the US gov needs to mandate the grace period as the Canadian gov is doing.

    On a tangent, watching US TV, I notice the healthcare industry is ramping up its fear mongering against helpcare reform. They are callously flogging the expected exagerations, distortions, half-truths, and outright lies about the Canadian and British systems.

  9. #9
    Musicaholic Forums Moderator ForeverAutumn's Avatar
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    Quote Originally Posted by Ed_in_Tx
    Maybe.. maybe not. Do the banks really want to cut off their income from the Interchange fees the merchants pay on every transaction? Even those who pay "cash" indirectly pay the fee as a cost of doing business that's passed on to customers in the price you pay at retail. I pay my cards in full every month and get tired of being labeled a freeloader in the media. Not so! The banks collect 2% to 4% depending on the deal they merchant has, on every transaction I put on my card, whether I pay it in full or not.
    That's an excellent point. I work for a small insurance organization and one of the questions ask most frequently by our customers is whether they can use their credit card to pay their premium. We've looked into it several times over the years and it would cost us almost million in annual revenue if only 50% of our customers chose to pay by CC. So we continue to not offer that as an option.

    I don't feel sorry for the CC companies.
    Last edited by ForeverAutumn; 05-29-2009 at 07:13 AM.

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