Senate slams abusive credit card practices

[mzkhadir]

Consumer affairs

 

[FoBoT]

who is forcing people to use credit cards, that is what i want to know

 

[Brainonska511]

Good. CC companies are like legal loan sharks (without the breaking of the legs) and need to be reigned in.

 

[Greenman]

Yup, time to slaughter those pigs.

 

[ScottFern]

They should be forced to make their terms and conditions much clearer and not use a 6 point font. How hard is that?

 

[mugs]

Originally posted by: ScottFern
They should be forced to make their terms and conditions much clearer and not use a 6 point font. How hard is that?

They already are required to put key information in the disclosure box. The things I hear many people complain about with regard to credit cards are in that box.

 

[DainBramaged]

Originally posted by: Brainonska511
Good. CC companies are like legal lone sharks (without the breaking of the legs) and need to be reigned in.

*loan sharks

 

[jjones]

Originally posted by: FoBoT
who is forcing people to use credit cards, that is what i want to know

No one, but that is an extreme point of view. For one, although definately not impossible to live without a credit card, having one opens up a great deal of everyday convenience to the average person that the CC companies use to their great advantage. Two, CC are passed out like candy these days with all kinds of enticement to accept and use them, but understanding the exact terms and conditions of use is just about comparable to understanding current tax law. It's very convoluted and reading through a CC agreement will bend just about anyone's mind. Yet the CC companies say, hey don't worry, trust us and life is good; just sign on the dotted line.

If anything comes out of this, one thing I'd definately approve of is simplification of the lending agreement so more people will be able to understand exactly what they will be charged and when.

FWIW, I've never had any CC problems and I understand just how they should be used, but even I get lost when trying to figure out exactly how much I might be charged if I allowed my cards to to have an ongoing balance. Fortunately, except for brief periods, I've pretty much always lived by the rule of paying them off in full each billing cycle.

 

[BigJ]

Originally posted by: Brainonska511
Good. CC companies are like legal lone sharks (without the breaking of the legs) and need to be reigned in.

I wonder if all these people who complain about legal loan sharking have ever encountered an actual shylock. There may or may not have been a guy I knew who used to be into this and he was getting 20-30% per week and had enforcers that literally took baseball bats to people.

 

[lupi]

Originally posted by: mugs

Originally posted by: ScottFern
They should be forced to make their terms and conditions much clearer and not use a 6 point font. How hard is that?

They already are required to put key information in the disclosure box. The things I hear many people complain about with regard to credit cards are in that box.

I don't know if they have the universal default coverage in the box, but that's a fairly shady practice to me.

 

[Vette73]

Originally posted by: FoBoT
who is forcing people to use credit cards, that is what i want to know

CC companies are. They are the ones that marketed themselves to hotels, car rental agencies, etc... Try to rent a car or check into anything other then a roach motel without a credit card.

 

[BigJ]

Originally posted by: Marlin1975

Originally posted by: FoBoT
who is forcing people to use credit cards, that is what i want to know

CC companies are. They are the ones that marketed themselves to hotels, car rental agencies, etc... Try to rent a car or check into anything other then a roach motel without a credit card.

Forgive me if I'm in correct, but unless you want to nothing is ever charged to those cards. Isn't the CC strictly for liability purposes and damages?

 

[drinkmorejava]

I never knew they could charge interest on the entire amount even if you paid most of it off. I'd say any judge would let you sue their asses off, but I bet it's in the contract somewhere.

 

[Vette73]

Originally posted by: BigJ

Originally posted by: Marlin1975

Originally posted by: FoBoT
who is forcing people to use credit cards, that is what i want to know

CC companies are. They are the ones that marketed themselves to hotels, car rental agencies, etc... Try to rent a car or check into anything other then a roach motel without a credit card.

Forgive me if I'm in correct, but unless you want to nothing is ever charged to those cards. Isn't the CC strictly for liability purposes and damages?

For the most part but they will not let you check in most hotel, rent most cars, etc... I remember you had to have a CC just to sign up for AOL. OK maybe its not all bad

 

[spidey07]

Originally posted by: mugs

Originally posted by: ScottFern
They should be forced to make their terms and conditions much clearer and not use a 6 point font. How hard is that?

They already are required to put key information in the disclosure box. The things I hear many people complain about with regard to credit cards are in that box.

That is very true. VERY true. First thing I look at is "that page" before even considering an application. So whatever law forced that disclosure is a good thing. But apparently it wasn't enough.

I am so torn on this issue. As much as I want gubment out of it and as much as I don't want gubment protecting us...................I think this is a good thing. People just don't read the fine print. The problem comes from this being "accepted practice". "If they are doing it, why aren't we?". So people sign up for credit cards with no real knowledge on what they are getting into, not reading the fine print, just assuming "WAHOO! I got more credit!"

If one was in control of a credit card company you would not engage in these practices and advertise yourself as such. Over time you would gain more customers and able to increase your revenue. I hate to say it....but I am in favor of this legislation.

I have my own story to tell about being in tremendous CC debt (40K+), it wasn't the CC companies that did it, but it did compound it....it was a myriad of other things and circumstances.

 

[Soybomb]

Mmmm nanny government. Who needs personal resposibility.

 

[spidey07]

Originally posted by: Soybomb
Mmmm nanny government. Who needs personal resposibility.

I completely agree.

But have you ever read your credit card agreements and all the fine print? Even an intelligent person can not understand it.

Personal responsibility is one thing, deceptive practices are another. How many on this board know that their rate and terms/conditions can be raised at any time for any reason?

I deal with corporate attorneys/law everyday. These kinds of terms and conditions aren't acceptible. The problem is a good 97% (pulled from my posterior but probably true) of card holders don't know what they mean. It takes a freakin' skilled attorney just to dissect them.

 

[BigJ]

Originally posted by: spidey07

Originally posted by: Soybomb
Mmmm nanny government. Who needs personal resposibility.

I completely agree.

But have you ever read your credit card agreements and all the fine print? Even an intelligent person can not understand it.

Personal responsibility is one thing, deceptive practices are another. How many on this board know that their rate and terms/conditions can be raised at any time for any reason?

I deal with corporate attorneys/law everyday. These kinds of terms and conditions aren't acceptible. The problem is a good 97% (pulled from my posterior but probably true) of card holders don't know what they mean. It takes a freakin' skilled attorney just to dissect them.

If you don't understand the terms and conditions of a contract, you should never, ever enter into that contract.

 

[spidey07]

Originally posted by: BigJ
If you don't understand the terms and conditions of a contract, you should never, ever enter into that contract.

Then 99% of the population shouldn't have credit cards.

Or change the laws so they can't rip people off.

 

[Wheezer]

Originally posted by: spidey07

Originally posted by: BigJ
If you don't understand the terms and conditions of a contract, you should never, ever enter into that contract.

Then 99% of the population shouldn't have credit cards.

fixed

 

[Aharami]

"Suppose a consumer who usually pays their account in full, and owes no money on December 1, makes a lot of purchases in December, and gets a January 1 credit card bill for $5,020," Levin said. "That bill is due January 15. Suppose the consumer pays that bill on time, but pays $5,000 instead of the full amount owed. What do you think the consumer owes on the next bill?

"If you thought the bill would be the $20 past due plus interest on the $20, you would be wrong. In fact, under industry practice today, the bill would likely be twice as much. That's because the consumer would have to pay interest, not just on the $20 that wasn't paid on time, but also on the $5,000 that was paid on time.

"The consumer would have to pay interest on the entire $5,020 from the first day of the billing month, January 1, until the day the bill was paid on January 15, compounded daily," Levin continued. "In our example, using an interest rate of 17.99 percent ... the $20 debt would, in one month, rack up $35 in interest charges and balloon into a debt of $55.21."

That is shady as hell! Is that really how CCs do business? I've never encountered this in person since I always pay by bills on time and in full...but im shocked!

 

[Strk]

Originally posted by: Aharami

"Suppose a consumer who usually pays their account in full, and owes no money on December 1, makes a lot of purchases in December, and gets a January 1 credit card bill for $5,020," Levin said. "That bill is due January 15. Suppose the consumer pays that bill on time, but pays $5,000 instead of the full amount owed. What do you think the consumer owes on the next bill?

"If you thought the bill would be the $20 past due plus interest on the $20, you would be wrong. In fact, under industry practice today, the bill would likely be twice as much. That's because the consumer would have to pay interest, not just on the $20 that wasn't paid on time, but also on the $5,000 that was paid on time.

"The consumer would have to pay interest on the entire $5,020 from the first day of the billing month, January 1, until the day the bill was paid on January 15, compounded daily," Levin continued. "In our example, using an interest rate of 17.99 percent ... the $20 debt would, in one month, rack up $35 in interest charges and balloon into a debt of $55.21."

That is shady as hell! Is that really how CCs do business? I've never encountered this in person since I always pay by bills on time and in full...but im shocked!

Amex has a card that doesn't do that (one of their cards that allow you to carry a balance)

 

[pontifex]

Originally posted by: Wheezer

Originally posted by: spidey07

Originally posted by: BigJ
If you don't understand the terms and conditions of a contract, you should never, ever enter into that contract.

Then 99% of the population shouldn't have a lot of things.

fixed

really fixed

there are tons of things that people buy that have convoluted contracts and such.

 

[CountZero]

Originally posted by: Aharami

"Suppose a consumer who usually pays their account in full, and owes no money on December 1, makes a lot of purchases in December, and gets a January 1 credit card bill for $5,020," Levin said. "That bill is due January 15. Suppose the consumer pays that bill on time, but pays $5,000 instead of the full amount owed. What do you think the consumer owes on the next bill?

"If you thought the bill would be the $20 past due plus interest on the $20, you would be wrong. In fact, under industry practice today, the bill would likely be twice as much. That's because the consumer would have to pay interest, not just on the $20 that wasn't paid on time, but also on the $5,000 that was paid on time.

"The consumer would have to pay interest on the entire $5,020 from the first day of the billing month, January 1, until the day the bill was paid on January 15, compounded daily," Levin continued. "In our example, using an interest rate of 17.99 percent ... the $20 debt would, in one month, rack up $35 in interest charges and balloon into a debt of $55.21."

That is shady as hell! Is that really how CCs do business? I've never encountered this in person since I always pay by bills on time and in full...but im shocked!

Credit card companies are modern robber barons. Its about time the government is looking at their practices instead of the previous years where they gave them exactly what they wanted (ie the new bankruptcy law).

The problem is that they give far to much credit too easily and too quickly. It should be significantly harder than it is. I don't feel sorry for a company that will give $3k to someone that has no income at all. But that is where they make their money. They only give CCs to people that have plenty of money and pay on time to keep up the illusion of being legitimate.

 

[TraumaRN]

Would that explain how as a 19 year old I got my first CC(just a simple, no-frills Visa) with a 500 dollar limit and now because I pay my bills on time all the time, never had a late payment my interest rate is 9.99(of course subject to change at any time for any reason) and at 21 that one single CC has a limit of 5,000 dollars. Its like they are enticing me to spend more even tho my annual income has been the same for my last 2 years at about 21-22K a year before taxes as a full time college student.

I mean on that end I barely use my card. And still only have one.

And I think it's BS how much they advertise and how many of my friends get sucked in by these intro deals and whatnot then end up in crazy debt because of the weird ass terms and conditions that needs a lawyer to be completely understood.

And the fact that I get at least one or two CC offers in the mail every week or two...someone needs to rein them in.