By JLP | April 21, 2009
Saw this in today’s Wall Street Journal and just had to mention it:
Credit-card companies are going to have to start adhering to the followin rules, which take effect in July 2010:
• Banks can’t treat payments as late unless consumers have a “reasonable amount of time” to make the payment; at least three weeks before the due date.
• Banks must allocate minimum payments to balances with the highest rate first, or pro-rata among all balances.
• Banks cannot raise interest rates from the opening amount unless it’s a variable rate or an introductory rate with an increase disclosed in advance; or a year after the account opens, a 45-day advance notice has been made; or if a minimum payment is received more than 30 days after the due date.
• A ban on double-cycle billing, which allows banks to calculate interest based on a prior month’s balance in addition to the current month, even if the prior month had been paid off.
The comments from “advocates” and politicians are what bug me (emphasis mine):
Consumer groups have been pushing lawmakers to act, saying cardholders need relief now. The current rules “give very little help to families that are struggling with their debt,” said Lauren Saunders, managing attorney at the National Consumer Law Center.
“I don’t think the issuers should wait for these rules to come out to start dealing fairly with consumers,” she said. “The issue that’s hurting consumers the most right now are these big retroactive rate increases. They could just stop doing those tomorrow.”
Okay, here’s the deal:
If you are a debtor, you are a slave! You don’t get to pick your payment and you aren’t entitled to help when something bad happens and you can’t pay your bills. That’s the RISK of credit card debt (or any debt for that matter). You made that choice when you opened the account and started using the card—for whatever reason that was.
As much as I disliked the consumer advocate’s comments, these comments from Lawrence Summers really get on my nerves:
Over the weekend, White House economic adviser Lawrence Summers said President Obama would focus on “credit-card abuses” and “the way people have been deceived into paying extraordinarily high rates that they wouldn’t have paid if they knew what they were getting themselves into.”
Mr. Summers, speaking on NBC’s Meet the Press, added: “We need to do things to stop the marketing of credit in ways that addicts people to it and so that our households are again saving, and families are again preparing to send their kids to college, for their retirement and so forth.”
I’m not sure that people were really deceived into paying high interest rates. I’m pretty sure all the terms were spelled out in the fine print. If they weren’t then people should have the right to take legal action.
I also think Mr. Summers is smoking somthing if he thinks the big bad credit card companies are the reason why people aren’t putting money back for their kid’s college educations. If people are so stupid that they are “deceived into paying extraordinarily high rates” do you really think they are going to be smart enough to figure out how much they should be saving for their kid’s college education?
The victimization of America…
Where does it end?