Credit Card Follies (Merged Topics)

[sanglant]

And yes, I'm basing the assumption that they don't really understand how credit works, or are irresponsible, on their low credit scores.  That is a generalization, and I know there are exceptions.

that is the better generalization, the other option is they understand how credit works and are thieves there maybe a few that lost there jobs and had no other way, but they are paying the biggest payments they can to get back out as soon as they can :|

[Hawkmoon]

Here's another one of their new tricks to watch out for. There was a time when you had a month to pay a credit card statement before you got whacked with interest and/or late fees. Then it sharnk a bit to around 25 days.

All of a sudden, I've been noticing that the due date is a measly ten days out -- from the date of the statement. Figuring a couple of days for the statement to reach me and a couple or three days for the payment to reach them, that means they have now rigged the system so that if you don't send in a payment within a WEEK of receiving the statement ... you get hit with a (VERY high) late payment charge.

Of course, this may put some folks in a bind because they may get paid only every two weeks, or maybe only once a month, so instead of sending in a large payment they are forced into paying the minimum payment in order to avoid the late fees. Which, of course, means that the remaining balance gets whacked with the usurious interest rates.

It's a win-win for the credit card issuer, and a lose-lose for the credit card customer.

[mtnbkr]

Of course, this may put some folks in a bind because they may get paid only every two weeks, or maybe only once a month, so instead of sending in a large payment they are forced into paying the minimum payment in order to avoid the late fees. Which, of course, means that the remaining balance gets whacked with the usurious interest rates.

Nothing stops you from sending multiple payments in addition to the minimum payment at the due date.  When I'm carrying a balance, I send 2-3 payments a month (as I get paid and when it looks like I have more free cash than I expected).  It's easy if you use online banking, but you can even do it with paper checks and envelopes.  Just put the account number on the check. 

Chris

[Balog]

The thing is, the CC industry is based around the assumption that people will use the product irresponsibly. If no one bought things they couldn't afford then took months to pay it off, there would be no real profit for the industry to survive upon.

[sanglant]

The thing is, the CC industry is based around the assumption that people will use the product irresponsibly. If no one bought things they couldn't afford then took months to pay it off, there would be no real profit for the industry to survive upon.

that's what i like to call "not my problemâ„¢"

[Headless Thompson Gunner]

I'll cheer-lead for the credit card companies.  They provide a useful product that most people in this country seem to like using.  Back in America, we consider it to be a Very Good Thing when people provide useful and desirable services to the marketplace.

The fact that government has now stepped in and made a mess of things for credit card companies and their customers is a major problem.  Get the government out of the way so that the CC companies can get back to providing the kinds of products so many of us like to use.

Whether it's eeevil big tobacco, or eeeevil big oil, or now eeevil big credit, it makes no difference.  Hatred isn't warranted.  In fact, hatred is quite dangerous, as it allows those in power to exert ever more control over matter that are none of their business.

[Headless Thompson Gunner]

The thing is, the CC industry is based around the assumption that people will use the product irresponsibly. If no one bought things they couldn't afford then took months to pay it off, there would be no real profit for the industry to survive upon.

The purpose of credit (any sort of credit) is to allow you to buy something now that you can't afford, and pay it off over time as you can afford it.  This isn't irresponsible in itself.  It can be quite useful and beneficial for both the credit provider and for the borrower.

[Devonai]

I agree that credit card companies should be able to set their own rules, but not as far as raising my interest rate when I've never missed a payment and always pay more than the minimum.

I understood the terms under which my card was originally issued (7.9% as long as I pay 10% of the balance each month), and I played by those rules.  Now they have changed the goal posts on me.

[lupinus]

Was the 7.9 listed as fixed? And if it was, that it could never be changed to adjustable?

It's their company, they can do what they want.

[Devonai]

It was variable in the sense that it would go up to 12.9% if I paid less than 10% of the balance monthly.

I do realize that if it was in the fine print, I agreed to it.  I don't have to like it.

[Headless Thompson Gunner]

Very few credit cards are true fixed rates.  They can't be, not if the card company wanted to be able to offer competitive interest rates.

Variable rate loans represent lower risk to the lender, and thus allow lower rates.  Fixed rates are higher risk and come with higher rates.  Everyone generally understands this.

Well, one of the big problems going around right ow is that FedGov stepped in and made all credit card companies switch from lower-risk variable rates to higher-risk fixed rates.  As a result, all of the card companies are being forced raise their rates on all of their customers, whether the customers "deserve" it or not.  

And the days of 6% and 8% credit card rates are over.  Thanks Barry!

[Jocassee]

Only question is, WHY?

By ALEXIS CHRISTOFOROUS, CBS 2 HD News
NEW YORK (CBS)

Loraine Mullen-Kress carries a Bank of America credit card and religiously pays off her balance.

"Flawless credit," she boasted.

Yet now, her good credit habits could cost her. Earlier this month Bank of America started notifying customers like Mullen-Kress that they will be charged a new annual fee of $29 to $99.

"There is a big segment of their population that they will have never made money on, which is people who pay their bills on time every month," said Ben Woolsey, Director of Consumer Research at CreditCards.com.

Bank of America said in a statement: "At this point we're testing the fee on a very small number of accounts and haven't made any final decisions." Citigroup is also trying out an annual fee with some card holders, and analysts expect more banks to follow their lead.

The banks are starting to charge fees to reliable customers in response to a slew of new credit card industry regulations that will limit when banks can hike interest rates. Cardholders who get a new annual fee notice in the mail will be in a no-win situation.

"They can either pay that fee or they can close the account, and if they have had the account for a while and they close it, they are potentially going to hurt their credit card score," said Woolsey.

Analysts say right now the banks are trying to figure out what their customers will tolerate. Many say they'd cancel cards with a high new annual fee.

"I think it is really bad. They're encouraging you to be a bed creditor or not have good credit," one New Yorker told CBS 2 HD.

Said Mullen-Kress: "An annual fee would not be tolerated."

Credit card companies call the fees an experiment. Whether they stick depends on whether customers are willing to pay for something that's been free for so long.

If your credit card company does start charging you to carry its card, call and complain. If you have a good credit score and you've been a loyal customer, they may be willing to waive the fee to keep your business.

You may also see annual fees go up on cards that offer rewards like miles and hotel rooms. That's when y ou'll have to weigh whether the rewards are truly worth the higher fee.

Reminds me of a timely quote by Mike Vanderboegh...

If you find yourself through the looking glass, where the verities of the world you knew and loved no longer apply, there is only one thing to do. Knock the Red Queen on her ass, turn around, and smash the bloody mirror.

[Gewehr98]

Merged. 

[charby]

Why?

Because they are trying to make money any way they can. Since people aren't borrowing like crazy like they were a couple years ago or enough people have defaulted the money from interest and other fees aren't rolling in like before so they are seeking other means of income. Got to keep those shareholders dividend checks coming!

[makattak]

Why?

Because they are trying to make money any way they can. Since people aren't borrowing like crazy like they were a couple years ago or enough people have defaulted the money from interest and other fees aren't rolling in like before so they are seeking other means of income. Got to keep those shareholders dividend checks coming!

Put simply, a company doesn't survive if it doesn't make money.

See, if a company has to pay employees and overhead some amount of money (let's call that "costs"), then they rely on being paid some money for the service they provide (let's call that... "revenue"). If that money that they get paid is less than the money they have to pay to employees and overhead, that company will suffer. (Let's call that "a loss") If it goes on enough, the company will fail.

On the other hand if the money that they get paid is more than what they pay out, the company does good! (Let's call that "profit".) Companies that do good continue to provide their services. Companies that do bad go away.

So, if the company wants to continue working, it has to keep doing good and get that thing we called "profit".

[FTA84]

I thought that credit cards still made money off people who pay their bill on time every month.  They charge the vendor 8 or 10% or whatever per transaction by credit card.  

[GigaBuist]

I thought that credit cards still made money off people who pay their bill on time every month.  They charge the vendor 8 or 10% or whatever per transaction by credit card.  

It's closer to 3% and if memory serves that was the original plan to make money when credit cards come out.  They didn't actually expect people to borrow money at their stupid interest rates, they just wanted 3% of every point of sale transaction they could get their hands on sounds like a heck of a deal to me for not really doing anything other than letting some computers push electronic funds around.

Don't get me wrong, I don't have a problem with them making a buck at it.  You can't do that kind of thing for free and there are some really great things you gain just by letting them suck up 3% of every purchase.  Once the transaction is done nobody can steal that money.  Well, at least not some two-bit crook with a Jennings .380.  Less incentive for a robbery (not that you'd know it by watching the news) less chance of theft by store employees, etc.

It was really a wonderful idea but then they learned what we'd actually put up with.  Overdraft fees, instant late payment charges, jacking interest rates all around on a whim, etc.  And part of the reason we put up with it is all the nice incentives they give us for using the card above and beyond the short term loan aspect and not having to carry cash.  Sky miles, cash back rewards (AMEX started this and they have always charged a higher percentage of the transaction than MC and Visa, which is why some places won't take them).

Now people are sick of it and used Congress to whack them on the noses.

They can still jerk with people that are irresponsible too.  Miss a payment and all bets are off on new purchases.

[Headless Thompson Gunner]

Now people are sick of it and used Congress to whack them on the noses.

Except effort o whack credit card companies is actually hurting the end consumers more than the credit card companies.

Oops.