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Dem Congress versus credit card companies

fff

Well-known member
Will Republicans block this in Congress? I hope they try. What a vote getter!

Could it be? Is Congress really ready to put an end to the credit card industry’s most abusive practices? A bill introduced a few weeks ago by Rep. Carolyn Maloney (D-NY), would change the way most credit card companies do business and provide significant consumer protection for every cardholder.

“In recent years the playing field between credit card companies and credit cardholders has become very one-sided,” Maloney said. “A credit card agreement is supposed to be a contract, but what good is a contract when only one party has the power to make decisions?”

The Credit Cardholders’ Bill of Rights Act of 2008, known as H.R. 5244, would protect cardholders from arbitrary interest rate increases and unfair fees. Maloney, who chairs the House Financial Institutions and Consumer Credit Subcommittee, is quick to point out that her bill does not have any price controls. It does not cap rates or fees.

“I firmly believe the free market works best when consumers are empowered to make their own choices,” she says. “This bill helps foster fair competition and free market values.”

The banking industry says it is committed to consumer protection and responsible lending, yet it opposes many of the provisions in the bill. In a statement, Edward Yingling, president of the American Bankers Association, says he has “serious concerns” that certain aspects of this legislation “would have unintended consequences such as more expensive and less accessible credit.”

Consumer groups are rallying behind the bill. On Thursday, they delivered more than 120,000 postcards to Congress signed by people who want credit card reform. “We’re seeing a groundswell of consumer outrage about credit card practices,” says Jeannine Kenney, senior policy analyst at Consumers Union. “People are fed up.”

The rules keep changing
Chances are the contract you have with your credit card company gives it the right to change the terms of the deal at any time and for any reason with just 15 days written notice. That includes increasing your interest rate.

Credit Cardholders’ Bill of Rights
— Protects cardholders against arbitrary interest rate increases
— Prevents cardholders who pay on time from being unfairly penalized
— Protects cardholders from due date gimmicks
— Shields cardholders from misleading terms
— Empowers cardholders to set limits on their credit
— Requires card companies to fairly credit and allocate payments
— Prohibits card companies from imposing excessive fees on cardholders
— Prevents card companies from giving subprime credit cards to people who can’t afford them
— Requires Congress to provide better oversight of the credit card industry
— Contains no rate caps, fee setting, or price controls

Consumer groups have long argued that it’s blatantly unfair for credit card companies to boost the interest rate without clearly telling customers — in advance — what will trigger a rate hike.

The Credit Cardholders’ Bill of Rights would prohibit credit card companies from arbitrarily changing their contract with a cardholder. “They’d need a specific reason to change my interest rate and that specific reason would need to be written into the contract when I get the card,” explains Ruth Susswein, deputy director of national priorities at Consumer Action.

The credit card company would also be required to give you 45 days notice in writing that your rate was going to change. Then you would have three billing cycles to say no to the new terms. This would give you time to look for another card.

Changes in how interest is charged
You can have a perfect payment record with your credit card company and still see your interest rate skyrocket — as high as 32 percent in some cases — if your credit score drops for any reason. This could be caused by a layoff, big medical bills, or a late payment to another card.

When a bank invokes the “universal default” clause, it applies the new interest rate to both future purchases and your outstanding balance. This can be devastating. Your minimum monthly payments get higher and the amount of time it takes to pay off that old debt increases.

"No other business in America could raise the price on something after you purchased it,” says Travis Plunkett, legislative director at the Consumer Federation of America. “But that’s exactly what credit card companies do when they increase your interest rate on an outstanding balance.”

Many big banks recently eliminated universal default. But this is voluntary. Consumer groups want the practice banned. The bill before Congress does not go that far, but it would prohibit a new and higher universal default interest rate from applying to prior charges.

And then there’s “double-cycle billing.” It lets the bank charge interest on balances you’ve already paid. Here’s how it works. Let’s assume you had a credit card bill of $1,200 and you paid off all but $100. With double-cycle billing you’ll be charged interest on the entire $1,200 the following month, not just on the $100 you carried over.

“That seems unfair to us and it seems unfair to a lot of consumers,” says Consumers Union’s Jeannine Kenney.

The Credit Cardholders' Bill of Rights would prohibit charging interest on debt that is paid on time during a grace period, putting an end to double-cycling billing.


http://www.msnbc.msn.com/id/23259179/
 

Steve

Well-known member
while it sounds good, like any bill that starts out in Washington...

but wait till they start amending it... tacking on earmarks and pork... by the time it hits the presidents desk... it will cost US a billion $... :cry: :?
 

Sandhusker

Well-known member
Sounds like a good deal to me. Something has to be done, the credit card industry is out of control. It has the potential to wreck us worse than this latest mortgage fiasco.
 

Mike

Well-known member
Maloney, who chairs the House Financial Institutions and Consumer Credit Subcommittee, is quick to point out that her bill does not have any price controls. It does not cap rates or fees.

From what I understand from watching her pitch her plan, it will only be a feelgood show and not do much to help.

She said that, under her plan, when a credit card company got ready to raise interest on a customer, that the cardholder would have 45 days to accept the rate increase, pay it off, or have the balance transferred to another card.

Now.......if a card holder were able to pay off the card, they probably wouldn't have the card balance to start with. If they had a bad history on the credit line, the reason for the rate increase, they probably won't be able to get a better rate anyway.

To me it's Political Pandering again. But I wish somebody would do something about the predatory card companies.
 

aplusmnt

Well-known member
Richard Doolittle said:
Maybe rather than pass more laws, people should just stop carrying balances on the credit cards.

That would take personal responsibility and them are two words the Libs are not very fond of :wink:
 

fff

Well-known member
aplusmnt said:
Richard Doolittle said:
Maybe rather than pass more laws, people should just stop carrying balances on the credit cards.

That would take personal responsibility and them are two words the Libs are not very fond of :wink:

What a crock! Look at interest rates this last few years, the rate banks borrow money has gone down, down. Interest rates paid on bank savings, CDs, has gone down, down, yet credit card interest has stayed high, and now is going up even more! Tens of thousands of Americans are living from paycheck to paycheck, partly because of this Administration's poor economic management. If the kitchen range goes out, a credit card might well be the only option for replacing it. So the family budgets for 12 monthly payments at 7-10% interest. Then the credit card simply decides to jack up their interest to 25%. They've paid their bills on time, but the credit card company can increase the interest rate whenever they want with very little warning! Do you honestly think that's fair?

When the Dems took Congress, one of the first thing they did was hold hearings with some of the large credit card companies. Industry executives promised to do better, to police themselves. They haven't done that. I think it's about time Congress did something and hope this passes with bi-partsian support.

This bill will not stop credit card companies from raising their rates. It will not cap rates. It simply levels the playing field for consumers and the big financial institutions that issue the credit cards. I think if it passes, we'll see new companies reaching out to card holders with better interest rates for people with good credit.
 

Mike

Well-known member
Then the credit card simply decides to jack up their interest to 25%. They've paid their bills on time, but the credit card company can increase the interest rate whenever they want with very little warning! Do you honestly think that's fair?

While I don't want to be misconstrued as defending credit card companies/banks, they do not raise interest rates for no apparent reason. They can raise rates when a customers credit score falls below a certain number or a person is late in making his payments on time.

They then become subprime customers because of an inherent risk.

They also cannot "increase the interest rate whenever they want".
They can raise them only to what's allowed in the original agreement.

There is absolutely a personal responsibility in owning a credit card.

The credit card problem didn't just start yesterday with the Bush Admin either. Been going on for a while........................

I know two people personally that defaulted on credit card debt in excess of $50,000.00, went bankrupt and got the slate wiped clean. Who are the best risks to credit cards? Yep, you guessed it. Those that have been bankrupt and cannot again for 10 years, and those who have been bankrupt don't owe anything.
 

aplusmnt

Well-known member
fff said:
aplusmnt said:
Richard Doolittle said:
Maybe rather than pass more laws, people should just stop carrying balances on the credit cards.

That would take personal responsibility and them are two words the Libs are not very fond of :wink:

What a crock!

Do you honestly think that's fair?

Read Mikes post above!

Reading the small print in an agreement falls under Personal Responsibility. They can not raise interest for any reason not laid out in that little pamphlet showing the rules when you get a credit card.

It is not the governments job to pass laws to protect the stupid, and most are not stupid they know this they are just irresponsible and get the cards anyways, they don't care that the interest rate is they just want to go shopping.

Are the credit companies fair? Probably not, but life is not fair that is why we must act responsible in our lives dealings to make sure we and our families are protected.

You libs just hate those two words Personal Responsibility! It bites you in the butt in so many areas ranging from Taxes to Abortions. I imagine one day the libs will try to make those words classified as hate speech!
 

fff

Well-known member
Mike said:
Then the credit card simply decides to jack up their interest to 25%. They've paid their bills on time, but the credit card company can increase the interest rate whenever they want with very little warning! Do you honestly think that's fair?

While I don't want to be misconstrued as defending credit card companies/banks, they do not raise interest rates for no apparent reason. They can raise rates when a customers credit score falls below a certain number or a person is late in making his payments on time.

They then become subprime customers because of an inherent risk.

They also cannot "increase the interest rate whenever they want".
They can raise them only to what's allowed in the original agreement.

Are you for real? Look at your credit card agreement. Most of them say they can raise interest rates by simply notifying you they're going to raise rates. We pay ours off every month, so I don't pay much attention to rates or carrying over balances, but I did just read the rules. They could up my interest rate to whatever they wanted with only 30 days notice. I don't think they will and I would simply stop using it if they did, but not everyone has that luxury.

There is absolutely a personal responsibility in owning a credit card.

Of course there is. But credit card companies have offered cards to people that should not have been eligible. Look at the push on campuses to get college students a credit card.

The credit card problem didn't just start yesterday with the Bush Admin either. Been going on for a while........................

But under the Bush Administration, there's been little, if any, growth in middle income wages. Lots of additonal millionaires in this country over the last few years, but low and middle income familes are hurting. There has been no oversight on the credit card/financial companies. It's another part of the mortgage crisis. Many people were given cards that would not have been considered ten years ago. Now they're defaulting and Bank of America is looking to their good customers to bail them out. IF BOA does it, can other credit card companies be far behind?

I know two people personally that defaulted on credit card debt in excess of $50,000.00, went bankrupt and got the slate wiped clean. Who are the best risks to credit cards? Yep, you guessed it. Those that have been bankrupt and cannot again for 10 years, and those who have been bankrupt don't owe anything.

And I know a young woman, single parent, who is left with $20,000 in unsecured credit card debt after her divorce. Her ex-husband won't pay it, so she's trying. This debt happens to be on a Bank of American credit card. She has a good job, but if BOA ups her interest rate as the following article indicates, she could be in deep trouble.

So we can both come up with stories about people who do good or don't. It's still unfair to up these interest rates.

Credit card issuers have drawn fire for jacking up interest rates on cardholders who aren't behind on payments but whose credit scores have fallen for other reasons. Now, some consumers complain, Bank of America is increasing rates based on no apparent deterioration in their credit scores at all.

The major credit card lender in mid-January sent letters notifying some responsible cardholders that it would more than double their rates to as high as 28%, without giving explanations for the increases, according to copies of five letters obtained by BusinessWeek.

Fine print at the end of the letter -- headed "Important Amendment to Your Credit Card Agreement" –- advised calling an 800-number for the reason, but consumers who called say they were unable to get a clear answer.

"No one could give me an explanation," says Eric Fresch, a Huron, Ohio, engineer who is on time with his Bank of America card payments and knows of no decline in the status of his overall credit.

Arbitrary and aggressive
Buzz about the letters is building on the Internet. Since mid-January, Credit.com, a credit card information site, has received 40 complaints from consumers whom Bank of America notified of sharp rate increases, even though they were current on their bills, says Emily Davidson, a Credit.com researcher. Complaint sites My3cents and Bank of America: Bad for America say they have received similar complaints.

The so-called opt-out letters give borrowers the option of no longer using their cards and paying off their balances at the old rates. But they must write Bank of America by later this month if they plan to do so. If they don't, their rates on existing and new balances automatically will rise.

What's striking is how arbitrary the Bank of America rate increases appear, credit industry experts say.

In recent years, many card companies have turned to a practice called "risk-based pricing," in which they will raise a regular paying consumer's rate because of a decline in the person's FICO score. FICO is a credit-risk score developed by Fair Isaac that includes a number of risk metrics the Minneapolis company doesn't disclose.

Credit reporting bureaus supply creditors with FICO scores along with other data, such as late payments and debts owed.

In a December hearing spearheaded by Sen. Carl Levin, D-Mich., senators slammed big card companies for using such pricing with customers who pay on time. By law, credit card lenders can change terms as long as they notify borrowers. Even so, JPMorgan Chase and Citigroup announced ahead of Levin's hearing that they would stop the practice of raising card rates based solely on FICO scores.

But Bank of America appears to be taking an even more aggressive stance because, beyond credit scores, it is using internal criteria that aren't available to consumers. That makes the reasons for the rate increases even more opaque.

"Congress has faulted credit card companies for lack of transparency in raising rates," says William Ryan, a financial industry analyst at Portales Partners, a New York research firm. "Bank of America is bringing it to a new level."

Analysts also say they are surprised by the magnitude of the rate increases Bank of America is imposing on affected cardholders.
Michael Jordan, 25, a software developer who lives in Higganum, Conn., says he received a letter from Bank of America in late January advising him that his card rate would rise from 9.99% to 24.99%. The software developer, who earns $80,000 a year, says he was "shocked" because his payments had been on time and his credit scores hadn't changed in the past year.

In fact, Jordan says, he has only $4,500 in overall outstanding credit card debt on two cards and that, on the Bank of America card in question, he had paid down his balance to $3,000 from $3,700 in August.

"His rate increase seems unjustified based on his credit profile," says David Robertson, the publisher of The Nilson Report, a credit industry trade publication.

When Jordan called Bank of America about the higher rate, he says, the bank representative couldn't explain why his rate was going up. On a second call, he adds, the individual told him the reason for the increase was that he hadn't been paying down his balance fast enough, though he had lowered it by 19% in the past six months and was now utilizing only 54% of his $5,500 credit limit.

Riess, the Bank of America spokeswoman, declined to discuss individual rate increases or to list all the criteria the bank was using as reasons to raise rates on existing cardholders.


Analysts say the bank's move is obviously aimed at shoring up profits. On Jan. 22, Bank of America reported a 95% decrease in fourth-quarter earnings due mostly to increases in loan-loss reserves for consumer credit, including rising card charge-offs and write-downs in mortgage-related securities.

Rejecting the new rates isn't easy
Bank of America faces another profit sinkhole with its pending acquisition of troubled Countrywide Financial. Portales' Ryan notes that boosting rates on existing credit card holders is one of the quickest levers a bank can pull to try to boost earnings.

Bank of America hasn't made it easy for consumers to reject the new rates. The letters require that consumers write Bank of America to agree to no longer use their cards and pay off existing balances at the old rates -- they can't telephone to do so, nor does Bank of America provide a form or a return envelope.

Moreover, consumers don't have much time to respond. Cardholders say they got the letters in the latter half of January: Four of the letters obtained by BusinessWeek require a written response by Feb. 19, while the fifth requires a response by Feb. 29.

A response, of course, assumes consumers read the letter from Bank of America as they sort junk mail. "It's a reasonable assumption that most don't," says Karen Gross, a legal scholar on consumer credit and the president of Southern Vermont College.

Bank of America also benefits from consumers who do agree to pay off balances at the old rates and not use their cards again, says Nathan Powell, a credit analyst research firm RiskMetrics Group.

The bank, he says, is clearly trying to protect itself from worsening credit card charge-offs ahead, something analysts widely expect in the card industry as the economy deteriorates.

Powell says the bank must have identified a list of other credit criteria besides FICO that it is using to screen cardholders and determined it's no longer worth new business if they don't accept the higher rates.

So far, Bank of America's charge-off rates have risen in line with the credit card industry, up to 5.08% of receivables at the end of the fourth quarter from 4.57% a year ago. "The bank doesn't want to get behind the curve," Powell says.

Bank of America is trying to get ahead of Amanda Pennington, 29, of Euless, Texas. She says the bank raised her credit limit three months ago from $5,000 to $8,000 because of her strong payment history. Then she got the letter from the bank in mid-January notifying that her rate would rise from 15.74% to 25.99%. When she called, she says, the bank told her it was raising her rate because her balance was now too high, though it was still under the higher new limit the bank had previously granted.

After paying tuition for a community college course, transferring another balance and paying for daily expenses, Pennington's Bank of America debt now stands at $7,500. Bank of America declined to comment on individual customers.

Adam Levin, the CEO of Credit.com and former head of New Jersey's Division of Consumer Affairs, says he is surprised Bank of America would risk bad public relations with its rate increases, given the congressional hearings in December.

The bank risks alienating new customers and existing ones by being so brazen, he says, adding, "Either Bank of America has more financial troubles than it is willing to admit or it has a level of institutional arrogance that is unacceptable."

http://articles.moneycentral.msn.com/Banking/CreditCardSmarts/IsBankofAmericaBlindsidingCardholders.aspx
 

Mike

Well-known member
Frankie wrote: Look at your credit card agreement. Most of them say they can raise interest rates by simply notifying you they're going to raise rates.

Mine doesn't say that. Mine says that they can monitor my credit rating and raise rates according to my credit scores.

This is what you get for dealing with BOA to start with.......................

You're sitting here raising hell about banks and credit card companies that swindle people but still continue to do business with those that do?

How hypocritical is that? :lol:

But credit card companies have offered cards to people that should not have been eligible.

This is really funny. You'd be the first in line to sue banks who discriminated because of income brackets. :lol:

So you're saying it's the banks fault for offering credit? That's their job! That's what they do! Loan money! :lol:

If you don't like the terms offered.......go somewhere else!
 

fff

Well-known member
Mike said:
Frankie wrote: Look at your credit card agreement. Most of them say they can raise interest rates by simply notifying you they're going to raise rates.

Mine doesn't say that. Mine says that they can monitor my credit rating and raise rates according to my credit scores.

But does it tell you what credit score will trigger an increase?

This is what you get for dealing with BOA to start with.......................

You're sitting here raising hell about banks and credit card companies that swindle people but still continue to do business with those that do?

How hypocritical is that? :lol:

I don't do business with BOA. We've had the same credit card company for well over 20 years. They are continually one of the highest rated credit cards in the US. If they change, I'll stop using the card.

But credit card companies have offered cards to people that should not have been eligible.

This is really funny. You'd be the first in line to sue banks who discriminated because of income brackets. :lol:

Credit card companies have always had income brackets. A credit card is not a "right". And they've almost always charged higher interest rates for people with weaker credit. But, just like the mortgage industry, they've mailed cards to people who should never have been qualified. Now that people are not paying the bills, they're jacking up interest rates on even those who have paid their bills on time. Is that fair?

So you're saying it's the banks fault for offering credit? That's their job! That's what they do! Loan money! :lol:

It's their job to pay interest for using my money that's in savings accounts and CDs, too. But they don't do nearly as good a job as they do with loaning that money to other people. I'm saying I hope Congress will pass a bill that levels the playing field for the big financial institutions and the people who use their credit cards. Too bad you can't even agree with that.

If you don't like the terms offered.......go somewhere else!

:roll:
 

Steve

Well-known member
fff
They've paid their bills on time, but the credit card company can increase the interest rate whenever they want with very little warning! Do you honestly think that's fair?


Nope... it is not fair... and the democratic congress should intercede with a good sound bill that actually fixes the problem... :wink:

:roll: :roll: :wink: :cry: :lol: :lol: Really after I stopped laughing... :roll: :roll: :wink: :cry: :lol: :lol: I am really serious.. :roll: :roll: :wink: :cry: :lol: :lol: the democratic congress should fix this.. :roll: :roll: :wink: :cry: :lol: :lol: really I am serious.. they should do something... :roll: :roll: :wink: :cry: :lol: :lol:

okey... your right.. expecting democratic politicians to actually put forth a bill to actually fix something is not possible.. :roll: :roll: :wink: :cry: :lol: :lol:
 

aplusmnt

Well-known member
Steve said:
fff
They've paid their bills on time, but the credit card company can increase the interest rate whenever they want with very little warning! Do you honestly think that's fair?


Nope... it is not fair... and the democratic congress should intercede with a good sound bill that actually fixes the problem... :wink:

:roll: :roll: :wink: :cry: :lol: :lol: Really after I stopped laughing... :roll: :roll: :wink: :cry: :lol: :lol: I am really serious.. :roll: :roll: :wink: :cry: :lol: :lol: the democratic congress should fix this.. :roll: :roll: :wink: :cry: :lol: :lol: really I am serious.. they should do something... :roll: :roll: :wink: :cry: :lol: :lol:

okey... your right.. expecting democratic politicians to actually put forth a bill to actually fix something is not possible.. :roll: :roll: :wink: :cry: :lol: :lol:

Unless some baseball player bought some steroids with his Visa Card I don't think there is much chance of the Democrats doing anything about it :lol:
 

Richard Doolittle

Well-known member
"A credit card is not a "right". "

This is absolutely correct and credit cards are not an essential source of credit either.

The fine print disclosures with credit card agreements are ridiculous, but the more legislated they are, the more fine print they will have in order to "be in compliance" with the laws.
 

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