Senate slams abusive credit card practices

[dmcowen674]

Originally posted by: CountZero
Credit card companies are modern robber barons.

Yes and look how many of them support them on here.

 

[mugs]

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!

It's really not shady when you think about it. Normally when you borrow money, you start accruing interest right away. That would discourage people from using credit cards, because invariably it would cost them money. So they introduced grace periods. You don't have to pay any interest if you pay off your debt during the grace period. If you don't, you owe all of the interest. They're offering you something that many other lenders do not - so when they take that away it seems like they're screwing you.

I got bit by that once - I had just gotten a credit card, and set up online payments. My balance was $1005, but they had a limit of $1000 for your first online payment for security reasons (in case you used a stolen account). Whoops.

The case where you rack up a huge amount of debt and pay it all off except for a small amount is pretty rare.

 

[engineereeyore]

Wow, $3,200 to $10,700 without spending a dime. That's freakin terrible.

\*memo to close chase account*\

 

[mugs]

Originally posted by: engineereeyore
Wow, $3,200 to $10,700 without spending a dime. That's freakin terrible.

\*memo to close chase account*\

Pay your bill on time - even just the minimum payment - and you won't have to worry about that.

It amazes me that someone who managed to turn $3200 in credit card debt into $10,700 in credit card debt without using the card is considered a worthwhile witness against the credit card companies.

They don't hide the late fees.

 

[Miramonti]

Congress has given banks the license to steal, rape, and plunder - they're the ones that should be investigated.

 

[StrangeRanger]

Speaking of shady.... I was bored on the hopper one night and decided to read the fine print of one of the many CC offers that appear in my mail box every week. This particular card from CitiBank says not only can your rate change at ANY time for ANY reason, but they also say that by signing you give them the right to monitor your credit report and if you report shows a late payment to ANY other creditor they have the right to jack your rates up the max. And that rate was like 33.99%. Yikes!!
j

 

[armstrda]

maybe that is why you shouldn't use credit cards to buy things you couldn't pay cash for. The only good reason to use a CC is to get the incentives. Carrying a balance on a CC is probably one of the dumbest things you can do... except maybe jumping off a bridge.

 

[her209]

So I decided to pay off my balance on my credit card after carrying the balance for several months. I wrote out the check for the amount that was printed on my monthly statement and sent it off to them. Thinking that I was all good and in the clear, I didn't check my next month's statement, those bastards added a few cents to the balance and because I had a balance and "missed" the payment for the month that I didn't check, *BAM* $30 late fee. C*CKSUCKERS!!!

:|

 

[her209]

Originally posted by: armstrda
maybe that is why you shouldn't use credit cards to buy things you couldn't pay cash for. The only good reason to use a CC is to get the incentives. Carrying a balance on a CC is probably one of the dumbest things you can do... except maybe jumping off a bridge.

Poor college students.

 

[armstrda]

why not get a loan from a bank at a fixed rate rather than using a credit card?