Ramping up his campaign to crack down on credit cards, President Obama will meet Thursday with executives of 14 leading companies to press his case for new consumer protections.
The White House meeting comes a day after credit card legislation opposed by the financial services industry moved forward on Capitol Hill. The House Financial Services Committee voted 48-19 to approve a bill to clamp down on rates and fees; nine Republicans joined the panel’s Democrats in voting for it.
A brilliant time to “crack down” on the financial sector, truly more pain is just the ticket for the banks!
I am all in favor with the rules the Fed wants to make. ‘ Long over due. But having Barney Frank involved with new legislation – Help us all! He was responsible for the current Financial Crisis. Credit cards should only be issued to responsible people who prove they can and will pay off the balances before they get over their head. That is where the real problem lies.
Terry,
During our family’s move from California two credit card bills “missed us.” I had contacted them, gave them our new address, but they sent the bills to the old address anyway. By the time they were forwarded to us they were “past due.” Like most moves, there are always a number of things that are put on plastic knowing you’ll deal with it when you arrive.
Both companies instantly bumped our rates to 28%. I contacted them. Both times got mindless drones on the phone. Same with supervisors. They wouldn’t change the rates even though it was their screw-up sending the bills to the wrong address.
While on vacation last summer another company decided to move the due date to one week earlier. Did I mention we were on vacation? Anyone else here use their cards on vacation? Got hit with late fees AND the rate bumped up. They wouldn’t change either. “Sorry, it says in the fine print the due date can be changed at any time.”
Now, we don’t carry that much on our cards, usually paying them off that month or by the next. Those cards, if we still had them (canceled them all), would be locked at the higher rate.
Credit cards are a form of financial slavery. I don’t care much (not at all?) for the president’s economic policies and I deeply suspect this move is more about politics than substance … still … something really does have to be done about these companies.
Sounds like you did precisely what you need to do when such a relationship goes bad, end it! And it is surprising to see that neither your old state nor your new state had usury laws to prevent 28% rates, but most states do and there is no need for the Feds to take on that proper role of the state government! Yes, people should be aware of not getting into credit card debt and there are many financial advisors and alternative institutions to help people. I don’t see the need for more regulation.
I’m in favor with eliminating revolving debt – you pay the thing off in full each month or you can’t use the card until you do. That way people don’t get in so far over their heads. But of course the banks would hate that since it would cut their profits….
” But of course the banks would hate that since it would cut their profits….”
Let us not just moralize about banks and bankers.
This is a two-sided situation. Irresponsible credit card users and SOME, and certainly not all, banking institutions that cross the line from being responsible lenders to being greedy loan sharks.
And remember, the irresponsible credit card using consumer will hate it too. He will no longer be able to gain immediate gratification of his need to spend money.
“And it is surprising to see that neither your old state nor your new state had usury laws to prevent 28% rates, but most states do and there is no need for the Feds to take on that proper role of the state government!”
The current rule is that the usury laws which apply are those of the state in which the card-issuing bank is located, NOT those of the state in which the consumer lives. That’s why all your credit card mailings come from Delaware and South Dakota, and why only federal action can make a difference. Pretty much all banks have their credit-card-issuing arms incorporated in one of a handful of states with minimal regulation, and there’s little or nothing a consumer or another state government can do about it.
Thank God for Debit Cards.
Before the advent of Debit Cards, as a business owner (some 20 years ago), I had to have and use Credit Cards for hotel and flight reservations, small orders, etc. I used business credit cards for their convenience. It also made business sense at that time.
But for the past several years, actually since banks started issuing debit cards tied to your accounts, I have no need for Credit Cards. No member of my family uses one. And of course, we are not rich by any means, but still, we do not use any credit card at all.
Credit Card statements and headaches are one thing we do not worry about. No thanks.
Fr. Kingsley Jon-Ubabuco
Arlington Texas.
Brian, my wife and I had a 4 figure balance on a credit card with 12% interest, due to medical bills. WE asked for a lower rate and they refused. WE transfered the balance to another card at 0% for the transfer and closed the 12% account. We payed of the card in the one year 0% time alloted. The 12% COMPANY CALLED AND OFFER US A DISCOUNT RATE about 3 months after we had closed the account becuase we had been such good customers!!! It was fun tell them to bug off…
My question is, do we need the nanny state to nagotiate for us in credit cards, mortgages etc or we adults who can solve our own problems. What kind of freedom are we giving way?
The problem with debit cards is that if somebody gets hold of your card and your PIN they can clear out all your checking and savings. With a credit card, my liability is zero so long as I notify the issuer as soon as I find a problem. Our daughters both have credit cards, and they use them the way we do ours. It’s a convenience, and we pay the entire balance at the end of every month. (These days, you can check your balance online and pay from your bank online, so the missing statement problem is solved.) The rule is, never charge what you can’t pay for at the end of the month.
I don’t like the high credit card interest rates. I agree, though, that I’m an adult and I should be able to manage my finances without the government’s help.
Most debit cards can be run as credit cards (with signature verification instead of a PIN) and in that mode I believe most of them have similar fraud terms as credit cards — i.e., if you notify the bank promptly you’re not liable for fraudulent charges. Check the terms of your card carefully.
One possible solution to being worried about a thief cleaning out your bank account with your debit card would be to set up two accounts — your primary one, for which you do not carry a debit card, and a secondary one where you maintain a small balance sufficient to cover whatever you anticipate purchasing with the card. A thief who steals your debit card and PIN could only empty the small account. It would require more maintenance and paperwork on your part, but you could do it.
Nos 10 and 11 … what you said! We don’t need a nanny state to protect us. We are adults. We know the solution to credit cards. We can choose or not choose to employ those solutions and handle the consequences either way. Problem with the regulation Obama Administration is pushing is that it will make credit more expensive for responsible people. And that is not good for the bad economy right now.
Katherine #11,
You are absolutely right about the dangers of losing the debit card and getting your accounts cleaned out. I cannot tell you how many times we have had to call the banks to cancel and close compromised accounts.
Just last month, at a diocesan church event, my vehicle was broken into and my laptop, briefcase, pocket-book and various personal items were taken. To date, none of the items have been recovered. I had to get call and get to three banks in less than an hour to close accounts and change numbers. It was not what you wanted on a Saturday morning.
One thing though, we don’t link savings accounts and accounts with “good” (relatively speaking) balances to any debit card. In that way, whenever a card is lost or compromised, the chances of losing a lot of money is minimized.
I agree with you on paying off the balance on the credit card as a best way to go – if one really needs to have a credit card, as the case may be.
Bottom line: The government need only ensure that laws are not broken. But it has no business siding with the borrower or the lender. The government should be in the business of protecting all, not pitting one group (borrowers) against the other (lenders) . Fairness for both parties.
I think the most important thing, though, is educating ALL (the old, the young, as soon as they are out of the womb) on how to live within our means – distinguishing between our needs and our wants, and remembering that nothing is really free. Everyone needs to remember there is always a day of reckoning.
Fr. Kingsley Jon-Ubabuco
Arlington Texas
Working for a university, I have watched with anger at the banks pushing their credit cards with high balances to new college students. Everyone says that they are over 18 and adults. No, too many are not mature enough to make the appropriate decisions about credit. They get over their heads and it is their parents that have to bail them out. A little help from the government is needed to protect the students and their parents. I think there is a middle ground between a nanny state and national usury laws.
But Cole, as the mother of college students, I took the responsibility to tell my daughters not to take unsolicited credit offers, to stick with one credit card, never to charge what they didn’t have the ability to pay for, and to pay the bill every month in full. We didn’t need the government to do this. Do you mean all of the parents are financial idiots?
Yes Katherine, I’m sure that you told your children to slow down when driving around mountain curves. I guess the government need not install guard rails or require them to wear seat belts. Too many children seem to need to learn life’s lessons from experience, rather than from advise. I’m glad your children always did exactly what you suggested.
Ross wrote [blockquote]One possible solution to being worried about a thief cleaning out your bank account with your debit card would be to set up two accounts—your primary one, for which you do not carry a debit card, and a secondary one where you maintain a small balance sufficient to cover whatever you anticipate purchasing with the card. A thief who steals your debit card and PIN could only empty the small account. It would require more maintenance and paperwork on your part, but you could do it.
[/blockquote]
That’s exactly what my wife and I do. We have “spending money” accounts tied to the debit cards that never have more than two or three hundred in them. We use these for gas, groceries (why it gets as high as two or three hundred), eating out, etc. Also useful for budgeting. The money on the debit cards is “fun money,” another account (at another bank so overdraft protection can’t get it, we have a secondary “little savings” linked to the debit cards for that) covers mortgage, utilities, student loans etc. My wife has a high-limit credit card (mostly for work, she travels a good bit and her expense checks clear it off every month) and I’ve got a Visa with a $500 limit, essentialy just for car rentals and similar places that don’t like debit cards.
We’re very careful to keep the credit cards free. I’ve seen a lot of the harm from them with friends and family, and my wife got pretty deep years before we met.
Cole, I paid for my children to go through college and both fell to the temptation of MBNA and other lenders’ siren songs for credit cards in college, and I bailed both of them out (as the banks know and expect) to save their credit ratings after college … once. So I am familiar with the scenario you paint and sympathetic to your position.
But, if the government is going to say that children are adults at 18, then they must treat them like adults and let harsh consequences occur to them, including enforcing credit card contracts against them. If the government wants to treat 18 year olds like the children you say they are, then it should change the age of majority back to 21, like it was until the 70s, and let parents have more control over them. Credit card companies would not be able to touch them if they were still minors in college. You as a college employee can’t say they are children and need government protection in one breath, but then, for instance, refuse to release their grades to their parents without their consent, since they are legally adults, in the next breath (and you know those are the rules in most colleges). So I think your sarcasm to Katherine is a little hypocritical in # 17.
“I’m from the government and I’m here to help.” It’s always darkest just before the lights go out.
Elections (General AND Primary) produce consequences. 53% of voters visited this prolonged recession upon us. God help us.
Billy: I rather not let these discussions get too personal. I don’t think that my children would appreciate it going over the WWW. My second child (in college) learned from my first child’s mistakes. But then again, that child made other mistakes.
I don’t think I was trying to be sarcastic with Katherine. At least her children had a mother when they were in college. My children lost theirs. That did cause vulnerabilities in my family. I did tell both my children that they had to waive privacy to me over their academic records. I can just walk down the hall to the nearest academic secretary and have their grades in seconds. I was sincere in my last sentence of post 17. We all are sinners and we all do foolish things.
I believe in laissez-faire capitalism, but also believe that there is a role for government to insure fairness and a level playing field. If you think that young people just miraculously absorb the notion of caveat emptor when conducting business on campus with alleged trusted enterprises, then I disagree.
When a bank accepts our tax dollars to stay afloat, then we get to tell that bank how to treat us. This has nothing to do with a so-called “nanny state.”
But, ember, what about when the bank wants to pay it back, and the Treasury says “no” so they can continue to “supervise” that bank?
Cole, #21, I wasn’t suggesting you should get personal about your children. I told you my situation to let you know that I had experienced first hand what you mentioned about credit card banks preying on college kids. I actually am not in much disagreement with you, I suspect. I don’t think most 18 year olds are adults either. I would sincerely like to see the clock rolled back and make the age of majority 21 again. I would also like to see driver licenses deferred until kids are 18 like it is in parts of Europe. I don’t think we can imagine how many problems would be cleared up with those two changes in our society.
Any scholars here that can tell us just which section of the Constitution gives the Federal Government this power?
libraryjim, you think we still need the Constitution to form the basis for law in America? Oh my! What a quaint thought.
A mere rationalization will do. My guess is this pogrom is being foisted on us under a creative reading of the ‘Commerce Clause’ (Art. 1, Sec. 8, Cl 3.), but that is just for the window dressing. Washington can do anything and call it constitutional so long as it is achieving the ‘public good’ for us huddled masses.
As I’ve said repeatedly, elections do have consequences. We had better pay attention to that truism before it ceases to matter.