Good news: Responsible credit-card users to “subsidize” deadbeats now
posted at 11:40 am on May 19, 2009 by Allahpundit
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Just a little friendly congressional intervention in the marketplace to shift risk from people who can’t afford the product to people who can. Hey — it worked out with mortgages, didn’t it?
Now Congress is moving to limit the penalties on riskier borrowers, who have become a prime source of billions of dollars in fee revenue for the industry. And to make up for lost income, the card companies are going after those people with sterling credit.
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.
“It will be a different business,” said Edward L. Yingling, the chief executive of the American Bankers Association, which has been lobbying Congress for more lenient legislation on behalf of the nation’s biggest banks. “Those that manage their credit well will in some degree subsidize those that have credit problems.”…
The industry says that the proposals will force banks to issue fewer credit cards at greater cost to the current cardholders.
You’re already helping to pay off deadbeats’ homes. Why not help free them up to rack up some more credit-card debt too? I’m going to poll this one just because I’m curious to see what HA readers’ habits are, but I’ll tell you it’s been at least 10 years since I let any part of a monthly bill carry over to the next month. Good to know I’ll be paying interest now regardless. Exit question: Er, isn’t this an exceedingly bad idea during a recession? People with good credit will be less likely to make major purchases for fear of the monthly interest and people with bad credit will be more likely to start charging, and then inevitably defaulting. Good work, Congress.
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You apparently either don’t understand the meaning of the word “force” or you are trying to deliberately not answer my question. “Banksters” cannot force you to buy things you cannot afford. They cannot show up at your house with guns and take you to jail if you refuse. That is what our government does and will do to enforce their immoral laws that force people to pay for irresponsible people. Credit, by definition, is something that allows a person to purchase something without paying for it at the time of the exchange, usually because the purchaser cannot afford it at the time of the purchase. When a purchaser chooses to enter into an a credit agreement, it is solely their own responsibility to understand the terms of that agreement (a tall order given the current state of compulsory public education).
My original question to you was rhetorical. It is impossible for you to explain to me how “banksters” force people to buy things they cannot afford. Please quit trying because it does you no good.
King of the Britons on May 19, 2009 at 2:55 PM
Banks are responsible for people violating their contracts. Responsible borrowers are also responsible for other people violating their contracts – and thus, need to be hit with increased fees.
lorien1973 on May 19, 2009 at 2:56 PM
I have a problem trying to be clear, as my wife would say. I did say in an earlier comment to this thread that the banks have been raising interest rates because right now that’s about the only big source of cash they have, and they really need cash to make up for the stock market tanking. This has the predictable effect of upsetting consumers and getting the attention of politicians, who say this isn’t fair. The banks say, if you limit our ability to extract cash, we’ll have to do some bad things to those customers of ours who are nice, in hopes of creating a little political backlash of their own on Capitol Hill. At least, this is how I see the game from the bleachers.
starfleet_dude on May 19, 2009 at 2:58 PM
Ah, Allah, so naive. You still haven’t realized that Obama and friends aren’t just full of “bad ideas”… They are in fact fully aware of what they’re policies are doing and what they will do in the future. These are socialists and fascists who hate the values of this country and haven’t really made that a secret (the media has tried to do it for them though).
RightWinged on May 19, 2009 at 2:59 PM
I commented on this guys post twice, and he holds my comments for moderation. I asked “ah what are you doing phishing?” Than I asked something like why everyone was getting their comments published but not mine. This is up in the headlines. This guy thinks he works for the NYT?
http://pajamasmedia.com/ronrosenbaum/2009/05/18/come-out-anonymous-cowards-this-is-your-chance/
Dr Evil on May 19, 2009 at 3:00 PM
King of the Britons, I’m not interested in excusing the bank’s role in all this by blithely blaming the victim, when the real life victims I see are just guilty of falling on hard times.
starfleet_dude on May 19, 2009 at 3:01 PM
You need to get a new seat in the bleachers then, to complete your metaphor. The view is obstructed. Re-read what is happening here.
A business (even a cc business) does not survive by penalizing it’s best customers (people who have a good credit history) and reward it’s worst customers (people who have a poor credit history). But this is exactly what congress wants to do. Only a politician gets these things back-asswards.
CC’s don’t only make their money from interest and annual fees. They actually do, you know, make money from people paying off their bills 100% each month. If you don’t know how that works, I’m sorry.
lorien1973 on May 19, 2009 at 3:02 PM
The banks are just trying to stir up opposition to the bill, but people hate them just as much as they do congress. The banks are making money off every purchase made by people that pay their balances in full each month. For an industry in crisis, it seems irresponsible for government to institute restrictions that will reduce the industry’s revenue streams as consumers move to cash or debit transactions in response to goverment meddling.
The free market will respond by having some company develop a business model that courts prudent consumers for a smaller but more secure revenue stream that does not have high risks of defaults.
After that, we get to hear about discrimination in lending practices and that credit is now a civil right.
rw on May 19, 2009 at 3:04 PM
Go home, Congress. Take a long break. Get to know how your constituents live day to day. Pay attention to the responsible ones who make this economic engine work. We really do not want or need your interference in our lives. You have done enough damage.
onlineanalyst on May 19, 2009 at 3:04 PM
I stopped using credit cards back when visa/mastercard started feeing everyone to death. I have no debt except for my house (4 more years) and my brand new explorer (3 more years) which I got at $10,000.00 off msrp.
Anyone still living on credit cards gets what they asked for.
Learn to live within your means, not your rich neighbors…
Ltlgeneral64 on May 19, 2009 at 3:05 PM
By definition, people who get into debt and don’t have a backup plan to hold them over for six months are not behaving responsibly. Debt is not designed to fund a lifestyle in lieu of income, it is a cash flow management tool. I would never borrow unsecured money that I could not pay back immediately .
Vashta.Nerada on May 19, 2009 at 3:06 PM
Economically it is hard to find anything that Obama or congress has done right lately. This is just another case of saving the “deadbeats” at the expense of everyone else. The Obama people do it on purpose. Congress (mostly) doesn’t know any better (I don’t think lawyers have to pass Econ 101).
duff65 on May 19, 2009 at 3:08 PM
I suppose people buying houses they couldn’t afford in the first place is just another example of people falling on hard times.
Upstater85 on May 19, 2009 at 3:09 PM
No one’s talking about rewarding bad customers, but limiting the penalties they may face as well as doing more to make the terms of credit plainer to consumers. You seem to think that the only alternative to this is to penalize good customers (which is after all what the banks are saying), but the truth is that banks could do just fine by taking more care about extending credit in the first place. The problem for banks is that when one bank decides to start wheeling and dealing, the rest feel they have no choice but to follow. Hence, having some reasonable regulations to follow helps to prevent the sort of race to the bottom that hurts both creditors and debtors alike.
As for how banks make money off cards, my wife is a small business person who takes credit, and gets dinged for every credit card and debit card sale she makes. So I’m at least aware of the basic business model.
starfleet_dude on May 19, 2009 at 3:10 PM
Pretty much. And when interest rates higher, fees are higher, and credit is harder to get; people will blame banks not the actions of their overlords. So it works – and people like starfleet_moron say “yeah! get those evil banks!”
lorien1973 on May 19, 2009 at 3:10 PM
So, what you are saying is that you are not interested in discussing the major flaw in your logic – that people who spend more money than they make and buy things they cannot afford are somehow victims. If I were you, I wouldn’t be interested in talking about it either because that 800-lb gorilla is tough to carry around in a debate.
King of the Britons on May 19, 2009 at 3:15 PM
Not really. You aren’t. If you think you’re wife’s discount rate is any significant part of the action, at least.
But I like that you think you have an idea of the “basic business model” and think you have any sort of handle on what they “should” be doing in your eyes. It’s cute and silly all at the same time.
Why do I always have to explain simple things to idiots? It’s so frustrating.
If you have $1000 you need to raise, right?
You currently get $600 from one customer and $400 from another. Someone tells you that you can only get $500 from the first customer. Who gets punished? The guy who only pays $400 now. See how difficult that wasn’t?
These companies have expenses to meet. By limiting the amount they can raise from “bad” customers, you force them into raising money from “good” customers.
And then, in your next sentence, you say “or they can make credit harder to get” which, yes, will be the other side effect of this.
So take it a step further. You have less “bad” customers and you still need to meet your expenses. So you have to raise fees on “good” customers to meet the difference.
It’s not exactly difficult.
lorien1973 on May 19, 2009 at 3:17 PM
Great, but don’t you think banks should also not lend money to those who don’t have six months worth of income in savings? If not, why not? I’m in agreement with you regarding living within your means, but I’m thinking about the current problems with credit facing us now, not with how I’d like things to be.
Too often the discussion gets sidetracked into a dynamic where it’s like we’re arguing about whether or not it’s wise to keep a can of gasoline in the garage when the damn house is on fire. Could’as, should’as and would’as are a dime a dozen. Dealing with the here and now is a bit more expensive.
starfleet_dude on May 19, 2009 at 3:17 PM
And then we’ll have rocket scientists like Barney Frank say “credit cards aren’t giving enough credit to low income people” and then we’ll do round two. And then you can enjoy your “race to the bottom” in all it’s glory.
lorien1973 on May 19, 2009 at 3:19 PM
One other thought on the “law of unintended consequences”. If this results in credit card companies charging interest from “data of purchase” then individuals who don’t carry a balance will bail. After all, there are still checks or cash and credit cards are only a quick way to pay. I understand that the card companies like people with balances but if that is all they have they are in a “heap of trouble”.
duff65 on May 19, 2009 at 3:22 PM
Give me a break. Now would actually be a good time to remember all those people living in ghettos without health insurance etc. They don’t have credit cards. They often use cash. And they somehow survive through real hardship.
You hit hard times? Superwalmart sells pasta and pork for cheap. You can live like that even for a year on several hundred dollars a month between you and your wife while paying a mandatory (for us) health insurance. Ask me how I know all this.
Not that I support socialism in any case but it would be one thing if truly poor people living in horrendous conditions received help. At least I’d be like: alright, this is inefficient but we’re clearly helping the right people. But when there was all this talk about people losing houses, you know what I did? I would watch a news report waiting for the name of the city, and then check online the average house price in that area. At which point I would yell at TV (no, I don’t yell at TV. it’s a figure of speech): cry me a river.
radiofreevillage on May 19, 2009 at 3:22 PM
Not at all – I think they can lend to whomever they want, and charge a rate commensuate with the risk. The problems facing us now were caused by the government interfering with the mortgage market, and distorting it. Distorting the unsecured debt market isn’t a fix, it is just adding to the problem.
Vashta.Nerada on May 19, 2009 at 3:23 PM
Credit; it’s unsecured debt. Look into the concept.
lorien1973 on May 19, 2009 at 3:25 PM
Give the poor redshirt a break in his timeline there are replicators and holodecks for everything….expecting Mork to grasp that a credit card is a contract or the modern day version of a promissory note is like asking Clyde from Any Which Way But Loose to explain relativity to you….
sven10077 on May 19, 2009 at 3:31 PM
So, is it ok for lenders to crank up the interest and fees to loan shark levels on people that make their monthly payments?
Anyone thinking thats ok has rocks in their heads. I dumped most of mine a while back for pulling that crap. If someone makes a contract with you for x interest they should not be able to turn around and ratchet it up to the moon, because its hidden in the small print.
Or they have to tell you they are going to do that in advance. At least that way you can make an informed decision.
dogsoldier on May 19, 2009 at 3:32 PM
Credit cards were something of a status symbol before my time, because they were harder to get. It’s not good to have a lefty government installing boundaries now, but I don’t know how else society could’ve started curbing the debt culture (other than accidentally like this). Television is the worst tool of brainwashing around and it goes for more than just politics. I think every part of society was out-of-control on things like credit.
Many people need a good dose of libertarianism, but I see it used as a shield for the excesses of one sector. Drink too much of anything, even water, and it turns into the Kool-Aid.
Feedie on May 19, 2009 at 3:32 PM
If you advocated prohibiting such people from borrowing, then at least you’d be consistent. Wrong but consistent. You on the other hand think that it’s the bank’s responsibility. Because banks have shiny doors, I guess.
radiofreevillage on May 19, 2009 at 3:32 PM
Personal bankruptcy.
radiofreevillage on May 19, 2009 at 3:33 PM
Hay I’ll play, I’ll be the guy in line using my CHECK BOOK.
upcountrywater on May 19, 2009 at 3:35 PM
if the credit card companies start charging interest from the date of purchase, then i will stop using credit cards.
they don’t care about me anyway as i pay off my balance the instant i get my bill. they make not one dime from me (except from the point of merchant).
kelley in virginia on May 19, 2009 at 3:38 PM
\
Shrug. I do think merchant fees on credit & debit cards are a significant source of revenue, but by no means is it the only sort of fee banks collect from their credit or other merchant-related business.
You’re zero-sum model of credit though is leaving out a lot of alternatives for banks to deal with their risks, IMO.
starfleet_dude on May 19, 2009 at 3:38 PM
and its too bad if the CC companies do decide to charge interest from the date of purchase because the CCs are so damn easy.
too easy to abuse as well. but since i don’t abuse my credit, i guess i’ll have to bailout every slacker out there.
kelley in virginia on May 19, 2009 at 3:39 PM
Heh, yeah that’s another way, all right.
People did, but before the crash, I didn’t notice it making much impression on the culture.
Feedie on May 19, 2009 at 3:40 PM
Hay I’ll play, I’ll be the guy in line using my CHECK BOOK.
upcountrywater on May 19, 2009 at 3:35 PM
Good thought. This is sure going to bug a lot of people waiting in the check out line though. Maybe that will get the message through to congress.
duff65 on May 19, 2009 at 3:41 PM
This has been happening for years, I’ve had to switch banks twice because of it. The last one was 5th/3rd, they wanted you to make all purchases with their debit card as credit (signature required). If you used it as a debit they nicked you .50 each time! And the kicker was, you coulndn’t really control what the merchant reported the tranaction type as to the bank, so you were likely to get nicked even if you did choose “credit”. I skeedadled from them pronto. But my current bank has considered doing this as well. Fortunately, their customers put up a big stink and they decided not to implement, but that doesn’t mean they couldn’t do so in the future. Coming soon to a bank near you…
bspoogeferd on May 19, 2009 at 3:44 PM
Oh, I’m well aware of that much at least. Banks do like to know that you have some collateral or potential for income before lending you money, but it seems that some people think they should not need the money before they borrow it!
starfleet_dude on May 19, 2009 at 3:44 PM
Great.
How much do you want to bet, a few years down the road, the Republicans will be blamed for this?
Damn that Bush for destroying our economy.
12thMonkey on May 19, 2009 at 3:46 PM
What about an “I don’t use credit card” option?
Sgt_H on May 19, 2009 at 3:55 PM
Responsible citizens shouldering the burden for incompetents. Your Socialist dollars at work. Today credit card deadbeats. Tomorrow the state of California.
MaiDee on May 19, 2009 at 3:58 PM
If the CC companies start charging interest at the time of purchase (I guess that 3% fee is not enough?), then the economics of holding a credit card no longer make sense. Card holders would pay 3-4x in interest expense vs. whatever freebies that were being offered.
Let’s say you charge $2K/month and pay off your balance each month. The credit card companies are already clipping about $800/year in fees (3% of $24K). So, if you drop your card and go debit, the credit card company then loses $800/year in merchandise fees per customer. How does this make business sense?
johnboy on May 19, 2009 at 4:01 PM
Businesses pay a lot of money to have debit and credit card machines. Here in California, someone told me it’s illegal for him to offer discounts for cash. If that’s true, it’s likely banks bought the legislation. That s*cks!
Feedie on May 19, 2009 at 4:03 PM
lorien, my Disinterested Advice to you and others is that…
you shouldn’t try to reason with Obamorons who don’t understand the basic difference between spending their money and spending Other People’s Money
Janos Hunyadi on May 19, 2009 at 4:07 PM
They charge the same fees for a debit transaction?
mr.blacksheep on May 19, 2009 at 4:09 PM
I’m exhausted. I haven’t even finished paying for my neighbor’s mortgage default yet!
PattyJ on May 19, 2009 at 4:09 PM
Jeez. And you haven’t even begun to start paying for Kookafornia, NJ, Michigan, etc. Don’t you know Michelle O says Big Barry’s gonna make you work and sacrifice?
mr.blacksheep on May 19, 2009 at 4:11 PM
They can go ahead and impose an annual fee on me and I will impose my right to cancel my credit card and go back to spending via check and cash.
Either way they will lose because I do most of my spending on my credit card that I pay off every month so they get the processing fees for each of those transactions. This is one of their sources of income. If they just remove my rewards I will probably leave the card open and just go back to paying my bills directly out of my checking account because there is no incentive for me to use my card.
Oh if they start charging for debit usage as stated by “bspoogeferd on May 19, 2009 at 3:44 PM” then its back to cash buying for me. Buying with cash I would guess is more costly for banks. They have to count it coming and going instead of letting their system automate the credits and debits from accounts. And if they want to start charging for having a checking or savings then I stop using a bank all together.
End result is I have options and they don’t. They have already given it all for free and by starting to charge they are just hurting themselves.
nobleclem on May 19, 2009 at 4:12 PM
Unsecured debt. Credit history.
Two concepts you might want to become familiar with.
If you have bad credit, and a company chooses to lend you money (at a higher rate of course, cuz you are a risk) and you violate their rules, maybe you shouldn’t blame them for upping your interest rates more.
Just a thought.
lorien1973 on May 19, 2009 at 4:13 PM
What’s funny is that starfleet-moron is probably in here every day defending the crushing debt that Obama is piling on us.
lorien1973 on May 19, 2009 at 4:14 PM
We don’t use credit cards.
Stopped using them back in the 90’s.
This is just another example of the Obama administration sending an overall message to the Nation that if you work hard
and pay your bills,you are pretty much a sucker.
Bought a house or car you could not afford.
No problem, the government will tax us to death and increase the cost of business to pay for it.
Jacked yourself up on credit cards trying to keep up with the Joneses.
No problem,the government will tax us to death and increase the cost of doing business to pay for it.
Illegal immigrant or deadbeat who does not pay for their own health care.
No problem, the government will tax us to death and increase the cost of doing business to pay for it.
Cap and Trade cost increases,
Tax increases on foods and other goods,
Higher energy cost,
Massive taxes on the businesses and owners who create jobs
and opportunities,
No problem, we are all going to be paying for the idiotic and transparently socialist policies of Mr. Hope and Change.
According to Obama,we are in the worst economic crisis since the Great Depression.
What better way to address a bad economy,high unemployment,and the dollar tanking than to quadruple the deficit (inflation anyone) make it harder and more expensive for people to do business and take more money from people who barely have any by taxing them to death.
I bet liberals think that California and New York are actually examples of successful economic leadership by the democrats.
They must find it hard to walk around with their heads inserted so firmly up their butts.
Baxter Greene on May 19, 2009 at 4:14 PM
Anna on May 19, 2009 at 12:06 PM
You’re not alone there. Had to do that when a heart attack snuck up on us. We recovered, paid off the debt and moved on. Sometimes bad things happen, doesn’t mean you’re a bad person.
Also did a lot of silly things with those damn cards when I was younger, and it cost me dearly, but I paid them back, every single one.
I cut them all up years ago. I could care less how my credit looks right now, and who knows just what the hell ‘creditworthiness’ is going to mean in the near future anyhow?
koz on May 19, 2009 at 4:15 PM
Heh!!
So true.
Baxter Greene on May 19, 2009 at 4:16 PM
Ha ha! Make sure you don’t even think about looking for the checkbook until they give you the total.
I’ll be the guy behind you completely losing my mind.
Kensington on May 19, 2009 at 4:16 PM
I bet liberals think that California and New York are actually examples of successful economic leadership by the democrats.
They must find it hard to walk around with their heads inserted so firmly up their butts.
Baxter Greene on May 19, 2009 at 4:14 PM
Baxter you nailed it.
duff65 on May 19, 2009 at 4:18 PM
If you use your credit card to borrow money, you’re a fool. Do it so you don’t have to carry cash, and so you can download your transaction history to your bookkeeping program, but never, never use your credit card to spend money you don’t have.
That used to be rule number 1 of financial survival. That, of course, is going to change in the Unicorn Utopia, where protection from the consequences of foolish action will be guaranteed by Big Brother. Until, of course, they run out of other peoples’ money, the interest rate on government debt is 20%, unemployment is 15%+, and GDP enters its 3rd year of free-fall. But even then don’t worry, because inflation will make your mortgage look tiny when compared to the price of a loaf of bread. Won’t things be grand then?
mr.blacksheep on May 19, 2009 at 4:22 PM
I guess I was a fool then when back when I had to drive to the job I was working to put myself through college to charge $500 to pay for it. I didn’t have the money otherwise, and wouldn’t have been able to earn it without a working car.
The real world isn’t a neat little morality play, dude.
starfleet_dude on May 19, 2009 at 4:29 PM
the real world is gonna hit when the Chinese nuke our economy next year…..
Live Long and Prosper Spork
sven10077 on May 19, 2009 at 4:40 PM
Dude I didn’t say it was a moral imperative, but I do understand that, as an apparent liberal, you probably have only a vague grasp of morality, so I will overlook that, dude.
What I did say, dude, is that it was the rule of financial survival. Get it? Financial not moral got that, dude?
Dude, anybody who can get a credit card can get an unsecured bank loan at probably 1/3 to 1/2 the interest rate. So, dude, in your little stupidity play, you were a fool to use a high-interest-rate card when the worldliness and sophistication of a real starfleet dude would have pointed you to a bank, dude.
So where’s your spaceship, dude?
mr.blacksheep on May 19, 2009 at 4:43 PM
Earlier:
Cognitive dissonance, you say?
lorien1973 on May 19, 2009 at 4:44 PM
Now that I think about it, this bill might have prevented starfleet_moron from getting credit, since it’ll squeeze bad risk people out of the picture. So, instead of having $500 to make his life better, this bill would have him living in a cardboard box – since he wouldn’t have access to money any other way – which, I’m sure we’d all agree would make us happier.
lorien1973 on May 19, 2009 at 4:49 PM
It’s not illegal, just against the Visa/MC processing rules for us merchants. That’s why you’ll see for example, truck stops offering cash discounts per gallon, but not an extra amount for payment by credit card. This is just an easier or perhaps a lazy way of some merchants understanding and explaining the rules. The thing is, once you get into a non-commodity retail situation; it’s marketing negative to offer a cash discount over a credit card payment.
sannhet on May 19, 2009 at 4:52 PM
Not at all. My credit history was good, even if my savings account was empty, and I was working and had decent prospects after getting out of college.
The point is that life happens, and sometimes things don’t work out as neatly planned. Unlike Scrooge, I’m not a fan of debtor’s prisons. Or credit card interest rates that border on usury.
starfleet_dude on May 19, 2009 at 4:56 PM
mr.blacksheep, time is money and it was better to charge it to the card than to apply for a loan and lose a week’s worth of pay.
A little imagination, not to mention empathy, would be a nice thing to see more of around here.
starfleet_dude on May 19, 2009 at 4:59 PM
And what happens to all of those companies who do business on the Internet? I only use cc’s for convenience and “float”. If the bank wants to charge me interest from date of charge, I stop using.
BTW, I made a large deposit last week and was told at the time that it could take up to 48 hours for the money to be available. Not. I just received a letter from my bank today that my funds will not be available until tomorrow – 6 days after the deposit! Why? Because it was over $5000. So, they don’t pay me interest and the source loses interest, they get the “float” this time? By their logic (on cc’s) they should pay me interest from date of deposit. Will they? I’m not holding my breath.
IrishEyes on May 19, 2009 at 5:01 PM
“In God We Trust – All others must pay cash.” Anyone want to bet that our grandkids will see that sign as much or more than our grandparents did, when they were growing up?
Do all of us in line behind with spoiling milk and melting frozens a favor, please, and look into a check card. Speed of the bad sort of “plastic,” but draws from the same place your check book does. No interest either; if a digital check is going to bounce it either pulls out of your savings (with a fee of course, “pour encourager” as it were), or the computer rejects the purchase outright.
Blacksmith on May 19, 2009 at 5:02 PM
Not gonna happen. Here’s what Paul Krugman told the Chinese on his recent visit there:
China actually hurts us more by buying our t-bills, rather than our goods. Which thus also hurts them. So the thing to fear is China doing more of the same, not less.
starfleet_dude on May 19, 2009 at 5:04 PM
I agree with you on this one.
For instance, why is it OK for an insurance company to jack up your rate by 75% more bcs you had a lapse in coverage?
Why is $hit like that OK?!
Badger40 on May 19, 2009 at 5:07 PM
I’ve had a lot of trouble with my debit card getting rejected on & off again.
I don’t use it often, but when I do, I would say I get a rejection rate of about 25%.
It is not due to lack of funds or internet or other pending charges.
Just plain old failure of the system-which is why cash really is king.
Imagine the system has gone down & you have no $$ with which to buy your necessities.
Imagine the system is down for weeks.
What do you do then?
Badger40 on May 19, 2009 at 5:10 PM
I’m starting to think that a requirement for congressional membership is being a complete f*ing moron. Please – somebody prove me wrong.
redfoxbluestate on May 19, 2009 at 5:12 PM
Timely subject. I just received a notice from Capitalone that my rate was increasing from 9.99% to 17.99%. I have had this Mastercard longer than I can remember. I sometimes carry a balance and always pay promptly. I called and got an idiot that could only read the
teleprompterbullshit notes and he made no sense at all. I checked online and there are some consumer sites which state this is an across the board rate hike.PC14 on May 19, 2009 at 5:13 PM
To paraphrase Winston Churchill – Never have so few made a bad situation worse so quickly.
jdkchem on May 19, 2009 at 5:13 PM
Time to start closing all my credit card accounts.
James on May 19, 2009 at 5:14 PM
I just had a nightmarish thought. What if CapitalOne sent you to India when you called about a bill?
NOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO!!!!!!!
(I still have scars just from talking with my parents about their wonderful experience with Dell’s tech support.)
starfleet_dude on May 19, 2009 at 5:18 PM
Ouch!
It looks like this brilliant strategy is going to push more people over the edge just for the sake of “fairness”. Leave it to the corruptocrats to find a way to dig a deeper and larger hole.
jdkchem on May 19, 2009 at 5:20 PM
What in the world is wrong with the government? I guess those T.E.A. parties really turned the tide, now Washington is listening to the American taxpayers. (bitter laughter).
So now the adults in society have to parent all the over-grown children who buy what they can’t afford?
Mulligan on May 19, 2009 at 5:30 PM
Oh, I have plenty of empathy. I also attended university when I was young, and did more stupid things than I care to remember, or will ever admit publicly. If putting $500 on your credit card when you were at college was your worst financial blunder, then congratulations; that hardly qualifies as wild irresponsibility.
I know people who have $40k to $50k in credit card debt who are really behind the 8-ball with no way to pay it off. I feel bad for them because their situation would be a waking nightmare, but the hard truth of it is they chose to be there by buying things they couldn’t afford, plain and simple. They had a choice: do without or put it on plastic. They chose not to do without.
As much as I care for them as people, I have no desire to pay for their foolishness. As a good neighbor, I have no problem every once in a while “accidentally” making too much dinner and giving them some if their kids are looking a little thin (metaphor alert), but I shouldn’t be forced by the government to block the bullet they fired at themselves.
mr.blacksheep on May 19, 2009 at 5:34 PM
“starfleet dude,” your claim of empathy ends when it hits my pocketbook. Plan for a rainy day in the future and gut your daily expenses, or sell crap. Ramen’s a hair over a quarter a cup, after all, and it will sustain you. In the meantime, I don’t work to provide you any kind of living.
The warning signs were there several years ago, and should have prompted everyone to start planning for a rainy day had they not already done so. This is a pretty trivial exercise if you are even moderately successful (ie, anything above minimum wage, which should never be a benchmark for “making a living”), provided you live within your means. In the meantime, do not feel free to extort money from me and mine to salve your conscience if you see others who did not. There is no virtue in robbing Peter to pay Paul. Let the current pain be a lesson to them, so that the next time the economic crap hits the fan they will have taken those precautions. Hopefully they’ll have taught their kids to take them as well, reducing the overall impact these periodic fake “crises” incur.
Blacksmith on May 19, 2009 at 5:34 PM
Sigh.
My wife is a highly sought after CPA that specializes in SOX compliance. She is currently working for one of the biggest companies in the world. I’m a network/system/electrical engineer with a degree in electrical engineering, graduated top of my EE class, member of Golden Key and Tau Beta Pi (national honor society for engineers).
Together, we gross ~200k. We have two kids and we pay our bills every month.
However, I’m coming to regret doing things the right way and trying to make it on my own. The system has gone crazy and its completely out of my control. It used to be that if I worked hard (or not), I was rewarded with my efforts. Now, it seems that no matter how hard I work, the irresponsible and incompetent around me do as well as me and on my dime. Its bad enough when there are people at work that do *NOTHING* and spend all of their time trying to look busy while I do the heavy lifting (I’d rather do it all myself ‘right’ than to depend on some loser farking it all up and having to fix what they broke or designed badly), now I’m going to have to suffer the same in my private life as well.
Well, enough is enough. I think its time that I let the bank foreclose on my house, to stop paying on my credit card bills, to stop paying my utilities and to just go out and rack up a bunch of bills buying new TVs, computers, the latest iPhone (eat your heart out Allah), etc. and let the rest of society foot the bill. I’m running out of options here, I can go down fighting and getting stressed out from the fight to keep afloat, or I can just piss it all away and let someone else worry about it…
Really, this is quite depressing and I’m left wondering why I ever tried so hard in the first place… :*(
Geministorm on May 19, 2009 at 5:38 PM
Cash is king (again).
redfoxbluestate on May 19, 2009 at 5:45 PM
There are only ~4 weeks in a month. When are they supposed to mail out statements? Right after they finish printing out the previous one?
BTW, my bank lets me call and know what my CC balance is at any given point. Don’t know if that’s standard, but people who have trouble w/ reading/getting statements should look into having it.
Techie on May 19, 2009 at 5:47 PM
In the exact situation described, I re-evaluate my “need” of whatever I’m trying to buy; and if necessary, start seeing if anyone has a fence that needs painting. ::grin:: But in all seriousness, that is a “threat” to the modern networked society we’ve become. Which is why it’s a good idea to have a spare twenty or two hidden somewhere at home. Plus another folded small and tucked into a hidden corner of the wallet.
Side note: If your debit card is nonresponsive about 25% of the time, and it’s not all at the same one location, I’d go to the bank and express a “very strong desire” to “discuss” the problem with the manager (whom, I’m sure, will just kick it upstairs). The Badger State should have good access for banking nets, as it was an early adopter of the fiber-optic high-volume broadband lines.
Blacksmith on May 19, 2009 at 5:50 PM
Never say never.
I have to use credit cards in my business. Many of my suppliers require us to use credit cards to purchase parts and supplies. The purchases are between 30 and 40 thousand a month. On a business trip to Kansas, I was hit by a car that had run a red light. I had a thirty plus thousand dollar hospital bill of which Blue Cross paid 75 percent. I could not work for almost a year and I soon had some very large credit card bills. When I went back to work, I started to pay repay the credit card bills as fast as possible. I had almost repaid the credit cards, when I had a major surgery. I had another huge hospital bill, which Blue cross paid 75 percent. I went almost another year unable to work. And guess what; more credit card debt. The problem is, when you are unable to work it is almost impossible to get a bank loan, so the credit cards are sometimes the only choice. If I had not had them I would have lost my business. I am paying them down again, but I have got a long way to go.
Johan Klaus on May 19, 2009 at 6:19 PM
One way to fight it. Pay every damn thing off. Thats what I am doing. Day trading my 401K, borrowing against myself with the profit from that at 4% and paying those cards off and being done! I get my own interest now since there isnt much growth going on anyway I’m not at much of a loss. I cut up one card this month already and they nearly begged me to keep it but I said nope. Soon it will be just them and no one who wants their stinkin money until they straighten the hell up.
johnnyU on May 19, 2009 at 6:28 PM
Didn’t read through all the posts… darn job interferes with keeping up, such a inconvienence. Anyhoo, my plan, cut up the credit card, transfer some money to a specific account and finally break down and get a debit card for 24 hour emergency cash needs. If I borrow out of it, I pay it back interest and annual fee free.
Problemo solved.
Hog Wild on May 19, 2009 at 6:32 PM
On a purely personal level….I usually pay off my balances, but currently I’ve got around 3 grand on a Bank of America card. My credit score is excellent, no late payments…they are raising my interest rate from 3.94 to 10.25% for no reason at all. And, of course, Obama warned them to do it before he started talking about putting regulations in place. The way I see it, they are already making people with good credit pay for the issues with them giving out bad home loans and allowing people to much credit and it is unfair. I can get a better rate on a 30-year mortgage than I can on a credit card right now.
njpat on May 19, 2009 at 6:52 PM
Credit cards, unfortunately, are needed a lot of the time. To hold hotel reservations, to rent cars just to name the two that I might use most often. At present I have only one card which I recently acquired for just those two purposes. Never carry a balance–or at least never have yet. Surely even the likes of Congress can see the probelms with this. How about the simple step of just taking away the cards of dead beats once they have identified themselves. Suppose this is out of the question, since their rights supercede those who pay up on time apparently.
jeanie on May 19, 2009 at 7:09 PM
The word “credit” comes from the Latin “credere” which means: to believe, as in the person giving the credit believes that he will be paid back. That definition is, of course, becoming outdated and now means, particularly with Capo Obamalini, I hope I get paid back.
MB4 on May 19, 2009 at 7:28 PM
I wouldn’t let all that soon-to-be plastic confetti go to waste. Why not mail it with compliments to your local senator or representative? Better yet, how about a convoy of community organizers with bags of the stuff repairing smartly to a disclosed location for deposit: say, Capitol Hill?
Barnestormer on May 19, 2009 at 7:29 PM
it all makes sense now Hope(I get paid) and Change(you’ll barely get back)
sven10077 on May 19, 2009 at 7:29 PM
Thanks for explaining that. On an odd note, I came across this article today:
Yikes, I agree with Turban Durbin. Danger! Danger!
Never fell into the credit card trap, but I don’t like what those companies are doing. There are horror stories on radio shows like Handel on the Law and Clark Howard.
Feedie on May 19, 2009 at 9:07 PM
The idiocy of this idea aside, who else is seeing a real disturbing trend here? It seems Obama wants to make all of us who pay their bills and don’t borrow more than they can pay back essentially take up the responsibilities of those who are essentially irresponsible idiots. Obama is going for equality of outcome, the only way that can work is to take everyone down to the bottom, because there are some people who will just never rise up off of it. (double entendre if I’ve ever seen one)
I do think the credit industry needs to be regulated from sticking good on-time paying customers with extremely high rate raises just because they are losing so much money from the ILLEGAL ALIENS with false identities they have been handing out credit cards to. HELLO B OF A??? That was a pretty stupid idea wasn’t it?!?
Bikerken on May 19, 2009 at 9:17 PM
When the credit card co.’s call me I tell ‘em ACORN & Obama promised to pay my bills in exchange for my vote. I forward the statements to the White House. It’s the Chicago way.
BHO Jonestown on May 19, 2009 at 9:20 PM
Yes.
You know I’ve seen some good Ayn Rand quotes on here lately. I was pleased and surprised by the moralistic tone of some of them. I’d like to know if she ever anticipated lefty Wall-Streeters, anti free-market corporatists funding left-wing causes, unpatriotic internationalists who sell us into sharia law for bonuses, mansions, and corporate jets…
Just wondering.
Feedie on May 19, 2009 at 9:30 PM
Go ahead, I’ll pay cash then.
Idiot Democrats think this will be static, because they are too inane and addled to understand that human beings respond to incentives.
Never underestimate the stupidity, the corruption or the clown like incompetence of a Democrat politician. They will exceed your expectations every time.
NoDonkey on May 19, 2009 at 10:47 PM
Looks like TOTUS won’t be raising gazillions in internet donations in 2012. Funny that!
TN Mom on May 19, 2009 at 11:13 PM
We’ll see where the market actually goes with this, but I do know the following.
Credit card companies began gobbling up smaller regional banks credit customers many years ago. Then, we saw them establishing no credit requirements and offering cards to everyone. But they became nothing short of plastic loan sharks in doing so.
Now, they went to far. Is anyone surprised?
My guess is that we’re in for a shift again.
AnninCA on May 19, 2009 at 11:47 PM
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