Credit Card Reform

Passed and by a wide margin:

The Senate voted overwhelmingly on Tuesday to put new restrictions on the credit card industry, passing a bill whose backers say will make card-issuers spell out their terms in fewer words, using plain English, and treat customers more fairly.

The 90-to-5 vote, following a 357-to-70 vote in the House on April 30, made it likely that President Obama will have a measure on his desk before the Memorial Day recess. The differences between the House and Senate versions will have to be worked out, but given the political atmosphere it seems likely that the House-Senate negotiations will move quickly.

***

The industry has asserted that the legislation may backfire, forcing banks to issue fewer credit cards at greater cost to the current cardholders and making credit harder to get at a time when many Americans need it.

This morning there was some pre-emptive fearmongering by the credit card companies exemplified by this piece in the NY Times:

Credit cards have long been a very good deal for people who pay their bills on time and in full. Even as card companies imposed punitive fees and penalties on those late with their payments, the best customers racked up cash-back rewards, frequent-flier miles and other perks in recent years.

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.

This is nonsense on stilts, although Hot Air lapped it up, stating that “responsible” people will now be subsidizing “deadbeats.” Actually, what will be happening is the people whom Allahpundit calls deadbeats will no longer be paying for perks and other free stuff for “responsible” people. In fact, he even has the names backwards- credit card companies have long called the “responsible” people “deadbeats”:

People who routinely pay off their credit card balances have been enjoying the equivalent of a free ride, he said, because many have not had to pay an annual fee even as they collect points for air travel and other perks.

“Despite all the terrible things that have been said, you’re making out like a bandit,” he said. “That’s a third of credit card customers, 50 million people who have gotten a great deal.”

Robert Hammer, an industry consultant, said the legislation might have the broad effect of encouraging card issuers to become ever more reliant on fees from marginal customers as well as creditworthy cardholders — “deadbeats” in industry parlance, because they generate scant fee revenue.

In fact, unless things have changed radically since I last worked in small business, the only way credit card companies make any money off of those who pay their bills on time every month is by charging businesses a fee every time they accept payment via credit card. When I ran a clothing store years ago, I preferred people paying in cash or with check (even with the fears of bad checks) because the credit card companies wouldn’t get a cut. In fact, that is why they keep giving a way air travel points and other perks- so you use your card more often, and they can keep getting a cut from other businesses every time you use it. It used to infuriate me, because on top of losing a percentage of every sale, you also had to pay exorbitant leasing fees on the machines, pay for a second phone line for the card, etc. But you had to have a machine, or you would lose more sales. Again, these things may have changed, but back in the early 90’s this is how it worked.

In other words, unless I’m completely off base, “responsible” people won’t be subsidizing deadbeats, but responsible people will no longer be getting a lot of free shit paid for by businesses and other credit card holders in worse economic shape. People with bad credit or in bad financial situations and small businesses were subsidizing perks for other people, not the other way around.

Additionally, what will happen when a credit card company starts to try to charge all these “responsible” credit cardholders? Well, more than likely they will cancel their card and find a credit card company that won’t charge them. Anyone doubt that this is exactly what will happen? Why do free marketers fear the free market? And why do they need airline miles paid for by other people? I thought they opposed transfer payments?






167 replies
  1. 1
    Phaedrus says:

    Small business owners also subsidize the perks – my merchant services provider has three tiers of credit cards – basic, (something else), and preffered (which means “gives the customers perks”). I have three different rates that I’m charged for accepting each. They just tack on the cost of the perk to my bill at the end of each month.

  2. 2
    The Moar You Know says:

    Why does Congress hate America?

  3. 3
    JL says:

    Shorter message from credit card companies.. “We found a way to make a lot of money out of bilking people and by damn we are going to continue to do it.”

  4. 4
    Rick Taylor says:

    Off topic, but I’m a bit shocked to see Harry Reid joining in with Republicans in fear mongering and undermining the President.

    REID: I’m saying that the United States Senate, Democrats and Republicans, do not want terrorists to be released in the United States. That’s very clear.

    QUESTION: No one’s talking about releasing them. We’re talking about putting them in prison somewhere in the United States.

    REID: Can’t put them in prison unless you release them.

    QUESTION: Sir, are you going to clarify that a little bit? …

    REID: I can’t make it any more clear than the statement I have given to you. We will never allow terrorists to be released in the United States.

    Ugh.

    On the other side, I’m surprised and happy to see credit card reform passed.

  5. 5
    Tony says:

    Actually, credit card companie do make money off every single transaction, at no risk to themselves. Say you charge $100 at Wal-Mart. Wal-Mart gets $98.00, and Visa, along with the card issuer, and any handlers along the way get their cut of the other $2.00. To say they don’t make money off responsible people that pay their bill every month is absolutely false. They just don’t make *as much*.

    If I start getting charged annual fees to use my credit cards (that are always paid off every month) then I think I will “Go Galt” on Visa and MasterCard.

  6. 6
    Punchy says:

    When I ran a clothing store years ago

    A Republican running a clothing store, eh? I’m guessing you sold no thongs, no bras, no burkas, and no Birkenstocks. You complained incessantly about the BBB, the tax rate, the commercial property tax, and were never open on Sunday. You tisk-tisked the single moms, the woman by herself with 5 kids in tow, gay minorities, minorities, illegals, and illegal gay minorities.

    And all the clothing was made outside of your proud ‘ole Yoo-Ess-Aye. Sigh.

  7. 7

    From the Times article.

    One amendment attached to the Senate bill by Senator Tom Coburn, Republican of Oklahoma, would restore a Bush administration policy allowing loaded guns in national parks. That provision is not in the House version, so there may be discussions between the two chambers over the issue.

    WTF? I’m trying to establish a mapping between credit card reform and loaded guns in National parks and I’m failing to do so. What am I missing here?

    Voting against the Senate measure on Tuesday were Lamar Alexander of Tennessee, Robert Bennett of Utah, Jon Kyl of Arizona and John Thune of South Dakota, all Republicans, and one Democrat, Tim Johnson of South Dakota. (The credit card industry accounts for thousands of jobs in South Dakota.)

    It’s too bad that the stroke he had destroyed Tim Johnson’s brain. Of course I guess that the residents of South Dakota have to have some kind of employment, it’s a complete and total wasteland otherwise. I imagine that the next industry to move there to get the support of Johnson and Thune will be the child pornography industry.

  8. 8
    grimc says:

    Again, these things may have changed, but back in the early 90’s this is how it worked.

    Definitely still works that way. It’s why lots of places won’t take American Express–Amex’s cut is bigger than Visa/MC/Discover.

  9. 9

    I have one credit card that we use a few times a month to buy gas. We keep it for renting hotel rooms when we travel. Other than that we pay cash for everything. Haven’t financed anything in over 20 years including vehicles. Cash is king. It also helps me sleep at night knowing I don’t owe a nickel to anyone.

  10. 10
    John Cole says:

    Actually, credit card companie do make money off every single transaction, at no risk to themselves. Say you charge $100 at Wal-Mart. Wal-Mart gets $98.00, and Visa, along with the card issuer, and any handlers along the way get their cut of the other $2.00. To say they don’t make money off responsible people that pay their bill every month is absolutely false. They just don’t make as much.

    Was my post not clear? This is precisely what I am talking about when I said:

    In fact, unless things have changed radically since I last worked in small business, the only way credit card companies make any money off of those who pay their bills on time every month is by charging businesses a fee every time they accept payment via credit card. When I ran a clothing store years ago, I preferred people paying in cash or with check (even with the fears of bad checks) because the credit card companies wouldn’t get a cut. In fact, that is why they keep giving a way air travel points and other perks- so you use your card more often, and they can keep getting a cut from other businesses every time you use it. It used to infuriate me, because on top of losing a percentage of every sale, you also had to pay exorbitant leasing fees on the machines, pay for a second phone line for the card, etc. But you had to have a machine, or you would lose more sales. Again, these things may have changed, but back in the early 90’s this is how it worked.

    And I’m not trying to be a jerk, but I don’t know how to rewrite it to make it more clear. What am I communicating to you all otherwise?

  11. 11
    Keith says:

    I was 15 days late on a payment last year, and I *still* have a 29.99% interest rate on that card as a result of that single payment. Not sure what the justification was, as other than having just bought a house and inadvertantly missing a car note that didn’t get noticed for 2 months, I’ve got very good credit.
    Something tells me that this bill will not affect my interest rate one iota.

  12. 12
    JenJen says:

    John, you’re still right about credit card companies making money by charging fees to businesses (on each transaction, as a percentage) who accept the cards as payment. They make money from every account, regardless of balance, this way, indeed.

    Coming from the Food & Beverage industry I can let you in on another dirty little secret unique to the restaurant biz… in many, if not most, restaurants, a portion of both your server’s and bartender’s tips are removed from their take-home, and distributed back to the restaurant owner, in order to pay the credit card fee. The proportion varies from card to card; servers and bartenders tend to groan (amongst themselves, of course!) when you pay with an American Express card. Much bigger tip deduction.

  13. 13
    MattF says:

    It’s weird that the NYT fell for this– they have a few smart people there (not Ben Stein). Do you think it’s just a coincidence that claims that ‘deadbeats’ will have to pay interest and fees come just before the Senate vote? Me neither. Do you think that banks don’t know the cost of replacing a customer, to the nearest hundredth of a penny? Me neither. Do you think that banks have never heard of competition? Me neither.

  14. 14

    @John Cole

    When I ran a clothing store years ago…

    Punchy, John sold respectable Republican cloth coats, but told his customers that they’d look just fabulous in anything.

  15. 15
    Cromagnon says:

    The thing is customers who are the most responsible, i.e. those who keep very low or even zero balances are the most likely to have their rates raised, since the credit card companies are making the least on these customers

  16. 16
    dbrown says:

    Take a lesson from all free-market companies- free market rules are for the other guy; defense companies are all for free market forces relative to wages and unions but they can use off-shore tax shelters to protect their profits and charge fixed price plus all cost over runs for their products.

  17. 17
    PeakVT says:

    I liked what the commie proposed. But I suppose this bill is better than nothing … until the CC companies figure out how to get around it. Then we get to play this game again.

  18. 18
    Old Gringo says:

    An old (2004?) PBS Frontline report for those who may have missed it. Secret History of the Credit Card

    Forrest McDonald, a highly respected conservative historian and academic:

    The very idea of economic growth that inheres in a market economy was incompatible with this primary principle of republicanism. Plato, believing that relative equality of property is essential to a republic, proposed to limit inheritances and recommended that no republic be established on the sea or on a navigable river, for that “would expose it to the dangers of commerce” and the inequalities that resulted from trade. Lycurgus, “in the most perfect model of government that was ever framed,” ancient Sparta, had forbidden trade altogether. And Montesquieu, whom American devoutly admired, declared that if people were allowed “to dispose of property [as they] pleased,” a republic would be “utterly undone.” As disparate a pair of Americans as John Adams and Benjamin Franklin agreed. Adams denounced credit as responsible for “most of the Luxury & Folly which has yet infected our People,” and declared that anyone who could devise a way to abolish credit forever “would deserve a Statue to his Memory.” Franklin characterized commerce as “generally cheating” and wrote bitterly of its corrupting and debilitating effects.

  19. 19
    Dork says:

    And I’m not trying to be a jerk, but I don’t know how to rewrite it to make it more clear. What am I communicating to you all otherwise?

    Nobody reads your stuff anymore, Mr. Cole. We just scan directly into the comments for something funny Cleek might have said or to figure out how many glasses of wine Laura has had and if her and the other ladies will rip you for mopping naked or making dinner with 4 ingredients. It’s all good and fun, despite your intentions.

  20. 20
    Nellcote says:

    When I ran a clothing store years ago

    Is JC the ghost of Harry Truman?

  21. 21
    Tony says:

    And I’m not trying to be a jerk, but I don’t know how to rewrite it to make it more clear. What am I communicating to you all otherwise?

    You can blame me for that one. I should have read your post instead of skimming. I promise I will say 12 Hail Tunches for my transgression.

    I’m sorry, but financial industry shenanigans angry up my blood, and in my zeal to contribute something useful to the debate, I can see that point was already made.

    And now I shall slink away in shame…

  22. 22
    binzinerator says:

    When I ran a clothing store years ago…

    Tunch Tee-shirts!

    Or was that before your kitty had adopted you?

  23. 23
    schtum says:

    I thought the Senate was in the pocket of the finance industry. The fact that this passed by such a wide margin makes me think the gloom and doom from the credit card companies is like those Bugs Bunny cartoons where he’s having a limb sawed off and howling in pain, then turns to wink at the camera while revealing his “limb” is just a piece of wood. Or something like that. I haven’t actually watched a Bugs Bunny cartoon in years, but you know what I mean.

  24. 24
    The Very Reverend Battleaxe of Knowledge says:

    Punchy, John sold respectable Republican cloth coats, but told his customers that they’d look just fabulous in anything.

    In WV, wouldn’t something like:

    [Ellie May Clampett] “I don’t want no critter coat! I want a real cloth coat!” [/Ellie May Clampett]

    be more appropriate?

  25. 25
    Ryan S. says:

    @Keith: It doesn’t matter I made every payment on my capital one card and every year they jacked up the rate 5% till I hit the 29.99 and they won’t lower it unless I make the demand in writing… I’m pretty sure if they lowered it they would still find a way to bring it back up.

  26. 26
    mey says:

    This post and all your logical arguments and how you point out the obvious is so full of win. Thank you again, John Cole!

  27. 27
    Lizzy L says:

    Cromagnon is correct. I have excellent credit and I pay my credit card bills every month — so my credit card companies have jacked up my rate to 17% or so, hoping, I presume, that I break my leg and need to use my credit cards to pay my bills. Canceling the cards would trash my credit score, so I won’t do it, but starting right now, I’m not going to use the damn things. I’ll pay cash, use my debit card, or do without. Scroom.

  28. 28
    koan0215 says:

    You know, for the first time in a very long time I am completely impressed with the Senate. This bill is unadulterated goodness for the general public, stiffs the industry that contributes more than any other to campaign coffers, and the vote for it was overwhelming. Good job.

  29. 29
    Zach says:

    Responsible card holders won’t subsidize deadbeats; deadbeats just won’t be approved for credit if they can’t be exploited for profit, and there will be less risky borrowing on the whole, and we will stand less risk in the future of again thinking we have a lot of wealth that we don’t have.

  30. 30
    Laura W says:

    @Dork:

    or to figure out how many glasses of wine Laura has had and if her and the other ladies will rip you for mopping naked or making dinner with 4 ingredients

    HA!! + 1/2, since it seems to hold interest for you. That made me howl.

    Just got in, opened mail. VISA card carrier telling me that the $39 annual fee will show up on my next statement. Paid this low limit card off a year ago. 18.99% interest rate on purchases. Asked self: “Self – why don’t we just call them and tell them to go to hell tomorrow. Close the card?” And then that obnoxious Suze Orman started yelling in my head to LEAVE IT OPEN ‘CUZ CLOSING IT WILL FUCK YOUR FICO.

    I dunno. It’s such a low dollar limit I can’t imagine it’ll cause much damage to my scores, but on the other hand, $3/month isn’t anything I’ll miss, especially if I drink cheaper wine. Guess I need to decide if I want to make a point or not.

  31. 31
    John Cole says:

    We sold Mossimo, Quicksilver, Birkenstocks, Doc Martens, Polo, Tommy Hilfiger- that kind of shit.

  32. 32
    Zifnab says:

    Why do free marketers fear the free market? And why do they need airline miles paid for by other people? I thought they opposed transfer payments?

    I’ve been hearing the same song and dance for years. Just replace “credit cards” with “taxes”. A guy paying $25k / year on 15% of his capital gains minus deductions and credits and losses and expenses is a hard working American and should be admired. A guy earning a salary of $25k / year before insurance and child care and house payments and energy bills is an economic leech who is sucking the economy dry.

    Or with unions versus monopoly. Big oil company wants to charge you $5 / gallon from the only gas station in town? That’s the free market, kids! But if the folks at that gas station want to unionize and demand a living wage, it’s unfair business practices and price gouging and class warfare!

    :-p

  33. 33
    koan0215 says:

    Laura, call the bank and threaten to close the line. They should remove the fee. If they don’t close the damn thing. The hit to your FICO is temporary and small. Variations of a few points either way don’t matter unless you are in the process of buying some big thing on credit.

  34. 34
    Balconesfault says:

    I applaud measures to force the credit card industry to be less predatory. It shouldn’t take a masters degree and constant vigilance to be able to understand when they’re raising your rates.

    That said, I will keep using my SW Airlines Visa, which usually generates 2-3 round trip vouchers per year, for virtually all my purchases (except at Costco, where I have to use my Costco AmEx card) until the program is cancelled, whereupon I will switch to some other company which wants to take advantage of the 30-40K/year Ms. Balconesfault and I drop on our cards by enticing us with some other shiny bauble.

  35. 35
    PeakVT says:

    Argh. Making permanent links to thomas.loc.gov is a pain.

  36. 36
    Paul L. says:

    what will happen when a credit card company starts to try to charge all these “responsible” credit cardholders? Well, more than likely they will cancel their card and find a credit card company that won’t charge them.

    Of course their credit rating will take a hit.
    I am one of those evil “responsible” credit cardholders. Always pay off the credit card every month. But that is because I am too cheap to pay interest.
    You are right in this case John. My old credit card tried to charge me a annual fee, I immediately called and canceled the card.

    in many, if not most, restaurants, a portion of both your server’s and bartender’s tips are removed from their take-home, and distributed back to the restaurant owner, in order to pay the credit card fee.

    For Cash too?

  37. 37
    mey says:

    The Consumerist comments on a thread regarding this bill also agree with John pointing out the likely bluster of these fear-mongering tactics from the banks. One of the few times (recently, had to stop reading the comments pre-November), where the Consumerist comments don’t seem to be filled with right-wing galters.

  38. 38
    Shawn in ShowMe says:

    The fact that this passed by such a wide margin makes me think the gloom and doom from the credit card companies is like those Bugs Bunny cartoons where he’s having a limb sawed off and howling in pain, then turns to wink at the camera while revealing his “limb” is just a piece of wood.

    [Bugs]Oooooooo agony, agony, agony, agony![/Bugs]

  39. 39
    gopher2b says:

    This post is silly. First, every credit card I can think of that offers “perks” charges an annual fee. I have a United Visa and it charges $50 a year per card. American Express charges $50-$350 per card depending on the card. Nearly every financial advisor out there will tell you that these types of cards are a waste of money because you rarely get back in “perks” what you pay in annual fees.

    You also admit that you would have lost sales if you didn’t accept credit cards. Yet you don’t think you should have had to pay for that “service”? Why? Why should the credit card company have to help you get business at no cost to them? This doesn’t make sense to me.

    The fact is..if you assume consumer financing is a competitive business (i.e. no collusion) then this legislation will absolutely raise the cost to people who pay off their bills every month because they are the only consumers that do not directly benefit from this legislation. Someone has to make up the difference-and it will be “responsible” people. (the entire notion that people who don’t carry credit card balances month to month are not “responsible” is, frankly, ridiculous).

    I do agree with the provisions that require more plain language, easier to understand terms. But if you agreed to pay a $35 late fee and you are then late….well, tough.

  40. 40
    Libby says:

    I had the same reaction as you John, but I have to admit, I get suspicious when Republicans start voting for a bill. I wonder what’s tucked in there that we don’t know about yet.

  41. 41
    SpotWeld says:

    Keep in mind a lot of redit card companies are in the business of selling off debt as an asset.

    You get pennies on the dollar for the debt they sell of, so it’s in their interest to pump up the debt as much as possible before selling it off.

    They have tables and huge databases that track when it looks like you’ve paid all you can, and then they pump the debt so the selling of that asset can be also maximized for profit.

    Credit card companies are in the business of keeping you in debt. Only regulations keep it form being total usury.

  42. 42
    Laura W says:

    @koan0215: Thank you! I will do exactly that and probably would’ve heard Suze Orman reminding me about that part too but I also opened a medical bill from my insurance company (Principal! Swell.) at the same time that really angered me. $500 of unpaid lab pathology tests on GI tests I had done a month ago that I postponed for two months so I could be sure my IN-network doctor performed them at an IN-network hospital (he gets to use the scopes the first Wed of every month there) and not at his own OUT-of-network surgery center. Now it seems after all the trouble I went to to stay IN network, he had the audacity to send my biopsies down to some OUT-of-network lab in GA without consulting me. I already owe $2,000 out-of-pocket for all this fun (my deductible and co-insurance). Yes, I know. I AM lucky to have coverage at all. I should shut up.

    Honest to Christ.
    Where’s R-Jud? I want to marry a Brit. Any lurking Brits in the room?

  43. 43

    .
    The government is going to tell the BANKS what to do? Noooo, you’ve got that backwards. Civics 101, Dude!

    Yeah. Oh, and, sorry. The trend has come to an end. From now on, you’re all upwardly immobile. So get nostalgic about those OLD credit-card bills!
    .

  44. 44
    John Cole says:

    You also admit that you would have lost sales if you didn’t accept credit cards. Yet you don’t think you should have had to pay for that “service”? Why? Why should the credit card company have to help you get business at no cost to them? This doesn’t make sense to me.

    In the early 1990’s we were moving from a cash and check society to a credit card society. Hell, my hometown did not even have an ATM machine until after I got of the Army in 1992.

    So yes, many small business owners did resent being charged by credit card companies for a service they did not need. And yes, you would have lost sales you would not have lost a couple years before. And yes, credit card companies were raping you for fees as a small business. And yes, the machines were retarded expensive (several thousand dollars for a small business) and the maintenance and all that was a total PITA.

    Don’t say things are stupid unless you have a clue WTF you are talking about.

    The fact is..if you assume consumer financing is a competitive business (i.e. no collusion) then this legislation will absolutely raise the cost to people who pay off their bills every month because they are the only consumers that do not directly benefit from this legislation. Someone has to make up the difference-and it will be “responsible” people. (the entire notion that people who don’t carry credit card balances month to month are not “responsible” is, frankly, ridiculous).

    You mean you responsible people don’t want to pay for the service of having a credit card and not having to carry around cash? Why should the credit card give you credit for no cost to you? What was that shit you were just talking about to me? You wanted something for nothing?

  45. 45
    asiangrrlMN says:

    Many years ago, my wonderful credit card company threatened to tack on a ‘pay on time’ fee for people who carried no debt at all on their cards–like me. People made such a huge stink about it, they dropped the premise instantly.

    I don’t use any credit card except my bank one. I hate the whole credit card scam that is going on. Good for the Congress that they actually had the balls (and ovaries) to pass this bill. I still carry cash around with me because I don’t like not having real money on hand.

  46. 46
    The Moar You Know says:

    For Cash too?

    @Paul L.: No, that practice is specifically against the law. Not to say that it isn’t done, but it sure as shit isn’t legal.

  47. 47
    Shawn in ShowMe says:

    Close the card?” And then that obnoxious Suze Orman started yelling in my head to LEAVE IT OPEN ‘CUZ CLOSING IT WILL FUCK YOUR FICO.

    I often hear this but if it was really true in every case I wouldn’t still have a great credit rating after cancelling my highest limit card four years ago. Methinks that Orman and the rest of the self-styled money gurus exaggerate.

  48. 48
    koan0215 says:

    Actually, no one has to make up the difference, as the banks can simply take a hit to their profit margins, which is what I assume will happen by and large. They won’t lend unsecured lines to low FICOS any longer, and since they don’t have the option of penalizing late payers with default rates for the life of the loan, they won’t make as much money on people who carry balances and then miss a payment for sixty days. The current system is extremely profitable, the new one will be less so. There is no way that banks could make up the difference through annual fees, and that would antagonize so many cardholder I doubt they will do it.

  49. 49

    OT: Am I wrong for being just a little bit in love with Jesse Ventura today?

  50. 50
    joes527 says:

    The problem with the idea that this will drive credit card companies to turn the screws on the good customers who pay the card off every month is that it entirely misses the point that these are *exactly* the customers who have other options.

    I will continue to use my credit card everywhere possible and get cash refunds from my CC company so long as it is free to me. The minute that the CC company decides to alter the arrangement, I’m gone.

    The CC companies make money off of me by squeezing the merchants. If they can’t be happy with this then they will lose the business altogether.

  51. 51
    SpotWeld says:

    What you’ll see is a new line of credit card products.
    The “opt out” cards (they’ll be named something else) will have a lower introductory rate, but more small print (which will all be “easy to read” per the lawyers) and still give the card companies to the ability to add fees, back-charge interest and all sorts of lovely stuff.

  52. 52
    John O says:

    Thanks again, John. Go Galt for a while if you must, and being never-read makes it easy for me, but be sure and come back.

    You’re fast entering the “National Treasureosphere.”

    It isn’t worth much, since I think IOZ and Heywood J are members, too.

    You sure do articulate wonderfully the sanity-challenging swirl of outrage bouncing around in my brain like so many lottery balls in the confined wind, on any number of subjects.

    Mostly, I just jump straight to the chase: I’ll cut the card up if the company jacks me around. And this from someone who uses only “straight” credit cards; I don’t get any flier miles, cash-back bonuses, et al because I just can’t be bothered with what is increasingly a never-ending life of accounting.

    I read blogs instead to find someone who can bother.

    Yours makes me glad I’m not alone. And that means the commentariat, too.

  53. 53

    @gopher2b:

    if you assume consumer financing is a competitive business (i.e. no collusion)

    You had me until “if.”

  54. 54
    kay says:

    @Libby:

    It looks pretty good. I looked at the summary of the Senate bill.

    I had no idea credit card companies could send you a pre-approved credit card, unsolicited, and then report it if you then cancelled that unwanted card, thereby changing your credit score.

    Now you have 45 days to cancel the card, which is better, I guess, but why were they permitted to do this in any event?

    Come on. That’s extortion, plain and simple. Use it or we’ll hurt you? What is that?

  55. 55

    @gopher2b:

    Someone has to make up the difference-and it will be “responsible” people.

    Explain to me exactly *why* someone has to make up the difference if they’re making so much on the entire scam?

  56. 56
    John O says:

    RE: Ventura.

    Can’t we get him on with Cheney and Co. in a national debate?

    People always thought I was weird for liking the man and his politics, but I think he’s a great blend of fiscal conservatism and social libertarianism where I believe a lot of Americans stand when pressed.

    It’s weird that the GOP can’t find anyone to co-opt Ventura’s message, because therein a comeback lies.

    Sooner or later, Jesse would call Big Dick a pussy, and that’s pay-per-view material.

  57. 57
    Dreggas says:

    @Paul L.:

    With regard to the question on tips, yeah most likely. In many places now a waiter or waitress doesn’t even get to keep their tips when they are given. Instead all the tips get put into a pool, the hit for any extra charges (ie credit cards) is taken out and the rest is divied up between the wait staff. In fact because of tips many places (at least back when i worked in restaurants) get away with paying below minimum wage to their wait staff!

  58. 58
    JenJen says:

    @Paul L.:

    For Cash too?

    No, and it’s why almost any small business, as well as a tipped employee who works at a small business, prefers customers who pay in cash. Formally, restaurants only dock the server’s credit card tip to help them with the transaction fee. It is illegal (though, to be honest, is still practiced) to withhold cash tip earnings to offset business costs.

    If anyone out there in Juice-Land wants to test the theory, go to your favorite bar and pay with a credit card, leaving the tip on the card, and then pay again with a credit card, leaving the tip in cash, on the bar rail.

    Note the response of your bartender, and report back. :-)

  59. 59
    Brachiator says:

    Here’s the part I love. Keep in mind that the GOP is going to stand up to Obama because, after all, they are men of Steele:

    “Voting against the Senate measure were GOP Sens. Lamar Alexander of Tennessee, Robert Bennett of Utah, Jon Kyl of Arizona and John Thune of South Dakota, as well as Democratic Sen. Tim Johnson of South Dakota. But other senators didn’t want to face voters in the 2010 election without proof that they are listening to constituents crushed by foreclosure rates and joblessness.”

    Good times.

  60. 60
    Warren Terra says:

    What about the rule I saw in the new law saying that 21-year-olds can only get a credit card if they get it co-signed by their parents, who assume liability in case of default? Or did I get that wrong (a newswire story said that, but the New York Times version just says it will be “harder” for people under 21)?

    I mean, I’m all in favor of the other parts of the law that I’ve seen (and I pay my bill in full every month, making me what the industry terms a “deadbeat” and meaning I can only suffer if the credit card industry has to find a business model other than screwing the delinquent), but there are 18, 19, and 20-year olds with jobs and cash flow but who don’t have solvent parents they’re on good terms with. Heck, some of them are in the armed forces. The 21-year-old rule seems misguided.

    P.S. Gopher2b @ #39, it is absolutely possible to get a credit card with a 1% back, plus more back on selected purchases (including groceries and gas), with no fee. I know this because I used an online tool to browse credit card offers and got such a card, which I won’t bother to name because although they’ve done alright by me I feel no need to advertise them. Gawd knows what will happen to my deal now, though.

  61. 61
    DarrenG says:

    The fearmongering is completely misplaced, but not (entirely) for the reason you mention.

    The merchant fees payed by those who accept the cards go almost entirely to the credit card processors who run the EFT networks, not the banks who issue the cards to consumers.

    Granted, there’s some crossover (Chase is still the largest processor and one of the largest issuers, for example), but even then there’s a fairly large brick wall between the divisions.

  62. 62
    John O says:

    Note to self and others: “P**sy” will get you on the moderation track.

    Shoulda used “coward.” Since that’s the word I think Ventura would use.

    My bad.

  63. 63
    Jess says:

    Laura,
    Why not open a CC account with one of the cooler companies (such as Credo), and then cancel your card? While you’re at it, you could also open a bank account at a Credit Union, and then apply for their card, which shouldn’t be so devoted to ripping off customers.

  64. 64
    Crockpot says:

    Seems I’m being pushed to use debit cards and off my credit cards because I carry no balance on my credit card. I can only assume that this means the rules are different on debit cards and that me dropping my credit card for a debit card is going to be good for someone other than me. Or am I being paranoid?

  65. 65
    kay says:

    @arguingwithsignposts:

    A credit card isn’t much good to the consumer if no retail outlets take it, and there isn’t a whole lot of interest collected if you can’t buy anything with your credit card.
    I look at it the other way. I think retailers should be charging credit card companies to provide an outlet where credit cards are accepted, and credit card companies can them make boatloads of money off interest.
    This was a massive marketing effort, by lenders.
    They sold easy credit, and retailers provided the storefront. They should have to pay for the access to the retailers customers, not the other way around.

  66. 66
    Dreggas says:

    @Shawn in ShowMe:

    When I got my car (just bought an 02 Nissan Sentra with only 34k miles for 8500 off the lot) I was talking with them about my credit scores, the lowest was 675 or some such the rest were 780+.

    They said that if I had had more credit card debt and oprn lines of credit I could have gotten a lower interest rate (still locked in at 10.9% with payments of 173 a month on a 5 year car note and 0 down.).

  67. 67
    JenJen says:

    @Crockpot: I offed the credit cards too, as soon as the debit cards became readily acceptable and useable. They are fantastic and I do think we owe the banking industry at least a little credit for offering them as an option for people who want the advantages of credit card convenience without carrying debt.

    Debit cards are deadly at hotels and rental car places, though, because they can sap your access to available monies for seven days at a time. If you travel on business, or are planning a vacation, access to at least one line of credit on a major card is well worth having. Other than travel, and access to a fee-free line of credit in case of emergency, I wish everyone would just pay their cards off and shred them forever.

  68. 68
    dbrown says:

    Don’t you love it how companies find ways to make the poor support the rich? That reminds me of the the assholes that were so-called first class on the Titanic. First class passengers caused the comany to lose(!) money on their tickets but it was the third class passengers that gave the White Star line its huge profits and allowed them to make a killing … in the true sense of the word since over 95% of the first class passagers got seats on the life boats and it was the third class that got the shaft (or the waterly grave.)

    I find this interesting (if it is true) that history still covers up (for legal reasons of liability) the real reason the ship was at high speed leading to it hitting the iceberg at night (the Captain was highly experienced and not one to take chances.) The reason the ship was traveling at top speed was due to a fire in the main coal storaged locker (deep within the coal; comman danger in that era). Unable to stop the fire and considering the danger to the ship the Captain choose to try and use all possible speed to get to New York. Also, the ship would arrieve at night (very early morning) and no one would see the fire companies that would be needed to put out the fire.

    At the hearing most of the lower class grunts told of the coal fire but the officers lied and covered it up. Otherwise, the actions of the Captain would not have been “irresponsible” and the company would be responsible since the Captain was following procedures to get to port as fast as possible to protect the ship. Still, the company (it still exists) threatens anyone who tries to report this information as fact or so I have read (alone with this story.)

  69. 69
    The Very Reverend Battleaxe of Knowledge says:

    Plus: Every Republican voted against the stimulus bill (except the New England traitors,) and that was apparently during the “honeymoon period,” according to Michael Steele. Now that “The honeymoon is over,” all but four voted for this bill? Am I too stupid to grasp the reasoning here?

  70. 70
    gopher2b says:

    First, I did not call anything stupid. I said it was silly. Anyway…

    So yes, many small business owners did resent being charged by credit card companies for a service they did not need. And yes, you would have lost sales you would not have lost a couple years before.

    Why would you take something you do not need? By your logic, you did not need those sales.

    You mean you responsible people don’t want to pay for the service of having a credit card and not having to carry around cash? Why should the credit card give you credit for no cost to you? What was that shit you were just talking about to me? You wanted something for nothing?

    First, I disagreed with your premise – that by using credit cards with perks you are getting something for free – because all the cards (that offer perks) I know of charge fees. Of course there are people who win on the margins (people who charge vast sums of money on their cards) but I am willing to bet $5 those people are small business owners who use their cards to run their businesses.

    Second, your comparing apples and oranges. On the one hand, if I don’t have a credit card, I will use something else to make the transaction. It will be of little cost to me. A business owner, on the other hand, cannot replace the business lost because he does not accept credit cards without expending more money (advertising, for example).

    Third, the credit card is giving me credit “for nothing” because the credit card agreed to: its a contract. If I pay late, it wins. If I don’t, and pay everything off every month, I win. You are expressing a sense of entitlement where I am advocating the protection of contractual rights. Both the credit card company and the consumer is free to end the contract at anytime – as is the small business that believes its getting shafted.

  71. 71

    @John Cole:

    In the early 1990’s we were moving from a cash and check society to a credit card society. Hell, my hometown did not even have an ATM machine until after I got of the Army in 1992.

    That’s crazy, I was using ATM’s in the late 70’s in Delaware.

  72. 72
    joes527 says:

    @Crockpot: debit cards are dangerous.

    Drop your credit card in the subway, it gets picked up and used to charge a vacation in Tahiti. So long as you notify the CC company in a reasonable amount of time after noticing that your card is gone, then this is all the CC company’s problem.

    Someone gets your debit card number and pin in any way – they can clean out your account and it is all your problem.

  73. 73
    TenguPhule says:

    Am I too stupid sane to grasp the reasoning here?

    Fixed and Yes.

    SATSQ.

  74. 74
    sgwhiteinfla says:

    This is off topic but I think everyone is gonna want to know about the weaksauce Harry Reid just pulled on closing GITMO. He now has come out fully in support of the wingnut meme that national security would be hurt if we housed detainees here in this country. And he will, get this, oppose any move for them to “be released” into the country. And he says his definition of “be released” includes into regular or military prisons.

    http://thinkprogress.org/2009/.....uantanamo/

    What a fucking political coward. I want to scream right now.

  75. 75
    Olliander says:

    From the Times article.

    One amendment attached to the Senate bill by Senator Tom Coburn, Republican of Oklahoma, would restore a Bush administration policy allowing loaded guns in national parks. That provision is not in the House version, so there may be discussions between the two chambers over the issue.

    I swear its nonsense like this that people scratch their heads and get so disillusioned with government. To W.E. Coyote’s point:

    1) What the hell does this have to do with credit card legislation?

    2) Why would the Senate vote to allow anyone to bring a loaded weapon to a national park, concealed or not? That really doesn’t make my family and I feel any safer.

    Morons.

  76. 76
    Betsy says:

    @gopher2b:

    First, every credit card I can think of that offers “perks” charges an annual fee.

    Nope. My AmEx Blue card gives me points that can be used toward a lot of things, and charges no annual fee. I use it for almost everything. I got it when Capital One announced it was bumping my interest rate up so something outrageous. I’m one of their so-called “deadbeats;” I always pay off my entire balance on time every month. So I think they must have been trying to drive me away or something. I still keep the card, because AmEx isn’t accepted everywhere and I like to know that I have one I can use in an emergency. But otherwise, I put everything on the AmEx, pay it off every month, and end up with lots of points I can use for airline tickets etc.

  77. 77
    Shawn in ShowMe says:

    I will continue to use my credit card everywhere possible and get cash refunds from my CC company so long as it is free to me. The minute that the CC company decides to alter the arrangement, I’m gone.

    This is how realignments happen. Of course the realignment the credit card companies are afraid is the lowering of profit margins and the subsequent downgrades by Wall Street analysts.

  78. 78
    gopher2b says:

    Explain to me exactly why someone has to make up the difference if they’re making so much on the entire scam?

    Last time I checked, all the issuers of credit cards are broke. Whether they should still exist, well I think I’ve been pretty clear where I stand on that front.

  79. 79
    Shawn in ShowMe says:

    That’s crazy, I was using ATM’s in the late 70’s in Delaware.

    Which was Credit Card Central until quite recently.

  80. 80
    Dennis-SGMM says:

    @Olliander:
    Nothing would make me feel more safe than to have some idiot with a handgun blazing away at a bear that was trying to get into a dumpster in the middle of the night.

  81. 81

    Someone gets your debit card number and pin in any way – they can clean out your account and it is all your problem.

    That’s not exactly true. Not all debit losses are complete losses.

    I had a debit card which I used for a purchase at a convenience store. While the store clerk was ringing up my purchases, he bagged my items and put the card down UNDER the bag and I accidentally walked away leaving the card behind.

    Two hours later I looked at my online account balance and found that someone had taken my card to about 5 different stores and charged up a shitload of goodies (Bass Sportswear was like $300 alone). I immediately called the bank and reported the card stolen. The card was confiscated at a KMart about an hour later. I had to fill out a report and they had to investigate the claim, but I got the money returned to my account. It was a Visa debit card, but still, a debit card.

    They didn’t use my pin and wipe out my account, but, they did charge up a shitload of money and I got it back.

  82. 82
    gopher2b says:

    Someone gets your debit card number and pin in any way – they can clean out your account and it is all your problem.

    This is actually not true. Its on the bank to verify identity. This also happened to me…someone got a lot of money out of my account before I knew and the bank fully refunded it once they verified it was not me (I’m assuming they looked at the photos).

  83. 83
    grimc says:

    And then that obnoxious Suze Orman started yelling in my head to LEAVE IT OPEN ‘CUZ CLOSING IT WILL FUCK YOUR FICO.

    My understanding is that closing a credit card might only be a problem if you do it and try to get a big chunk of credit–like a mortgage–within the next year or so after doing so. But I heard that from a couple loan officers, and what do they know?

  84. 84
    JenJen says:

    @John Cole:

    So yes, many small business owners did resent being charged by credit card companies for a service they did not need. And yes, you would have lost sales you would not have lost a couple years before. And yes, credit card companies were raping you for fees as a small business. And yes, the machines were retarded expensive (several thousand dollars for a small business) and the maintenance and all that was a total PITA.

    I have managed many a restaurant that was a strictly cash-only business, and judging by the amount of people lined up at the door, I don’t think our business was suffering. Which, all the more, bolsters your point… it was a complete PITA when the credit cards became de rigeur and we only accepted them because our regular guests wouldn’t stop bitching.

    To this day, I admire the few, remaining cash-only independent restaurants who bucked the trend and still survived. By definition, if you’re a cash-only joint with spenders lined up around the block, you’re a good restaurant. Free market decides, and everything. :-)

  85. 85

    @Shawn in ShowMe:

    True, but, ATM’s existed in the late 70’s and not only in Delaware. Hell I was using ATM’s in Alabama in 1981.

  86. 86
    Nicole says:

    Until Congress limits how much interest can be charged (like they do with credit cards issued by credit unions) they aren’t doing anything close to enough. I hate the credit card industry.

  87. 87
    John Cole says:

    @Little Dreamer: The very first time I saw an ATM card had to be in the late eighties- 1986 to 1988. Where I lived they were called OWL cards. I still remember the little Owl on the wax paper protective case the card came in. Hell, in my small town, the General Store had their own charge system they ran. You just had an account and charged stuff on it until payday, then you paid it off.

  88. 88
    Laura W says:

    @Jess: I do like the Credit Union idea a lot, Jess. Just need to see if I can qualify for one in these parts. Not a bad idea to get my employer to look into joining one since a lot of all of the the other employees are WAY younger than me and would certainly benefit more than I.

    I have several other cards, only one of which I use, and I try really hard not to carry (too big of) a balance on it. The others I have either paid off in full, transferred balances, or closed and am still paying off (ie, before they raised my rate they gave me the opp to close at the previous rate or suck it up and accept the new rate.) I had a BK and a foreclosure in 2002-2003 and only now is my credit report looking a lot better. Thus my hesitancy to throw it into reverse by closing accounts. But I agree with others above; this one is so minimal it won’t even matter so if they don’t delete the $39 fee I’ll cancel. Assuming the fee is proactive and for the coming year and that they don’t find a way to screw me out of it and claim I owe it to them for last year or the like.

    Edit: I LOVE CREDO. They are my long distance carrier and I’ve posted here about their annual charitable giveaway breakdowns. I thought about applying for their card a couple years back, but IIRC, my BK ruled me out. Might look into it again so thanks for reminding me.

  89. 89
    DarrenG says:

    Some more food for thought for those getting all up in arms about the fees and discount rates credit card processors (again, not issuers) charge to businesses for accepting cards:

    – Handling cash and checks isn’t free, either. Cash on hand means increased risk of robbery or employee theft, and requires secure handling and transport. Fees for check processing are often higher than those for credit/debit card processing. Both require more effort in accounting and settlement than purely electronic transactions.

    – The huge networks and computer systems that let you use a piece of plastic in a bazillion locations in hundreds of countries around the world with little or no pain aren’t free, either.

    There’s plenty wrong with the credit card industry, but merchant fees aren’t going away as long as the two points above continue to be true.

  90. 90
    Martin says:

    Honestly, I think credit card companies should dump the 30 day grace period on interest rates. Debit cards are now pervasive enough that those of us who never pay interest on their cards can purchase just as easily with the debit as the credit card. As to the risk of debit cards, that’s somewhat silly – it’s your ATM card and people have been carrying them forever.

    The reality isn’t that people like me are subsidizing deadbeats, it’s that people that don’t have 800+ credit ratings are subsidizing me. I’ve never paid a monthly fee. I’ve never paid any kind of fee for a credit card AT ALL, and I routinely defer payment for up to a month on all of my purchases thanks to the card, which means my bank is putting up a 30 day loan for me for nothing. Anyone paying cash is subsiding me, because the 4% + $.25 that the vendor needs to pay the banks/CC companies is also built into the cash purchase price, and that surcharge is allowing me to not pay for anything for a month. And that extra month does add up – I’ve bought cars with my credit card, and having 30 days of that money sitting in the bank really does pay off.

    Because all the cards (that offer perks) I know of charge fees.

    I have two cards that offer perks that I don’t pay fees on. Seriously, I’ve never paid a fee to a bank or to a credit card company *ever* in my life, and I got my first credit card 23 years ago when I was 17. Every time they’ve tried, I’d call up and tell them I’m canceling the card, they’d ask why, I’d say because of the fee, and they’d waive the fee.

  91. 91
    Martin says:

    There’s plenty wrong with the credit card industry, but merchant fees aren’t going away as long as the two points above continue to be true.

    The problem with merchant fees is that it is now effectively a sales tax paid to a handful of corporations. I have a problem with that. Anything that looks that much like a tax should be nationalized, indexed to actual expenses, and actually called a tax. It’s a system that is impossible to opt out.

  92. 92

    @John Cole:

    I’ve never heard of or seen the OWL logo. Was that something you could travel out of your area and use elsewhere?

    When ATM’s first started up in the late 70’s, I believe the network they were on was Cirrus.

  93. 93

    @John O:

    “Can’t we get him on with Cheney and Co. in a national debate?”

    I would pay so much good money to see that. I’d take out a second mortgage on that if Ventura could demonstrate SERE techniques on Cheney.

  94. 94
    BombIranForChrist says:

    I don’t have any balances on my credit cards, and I can tell you with 100% certainty that if they start charging me interest at the point of purchase or annual fees or what have you, I am gone. The rewards are the ONLY reason I have credit cards.

  95. 95
    John Cole says:

    The reality isn’t that people like me are subsidizing deadbeats, it’s that people that don’t have 800+ credit ratings are subsidizing me. I’ve never paid a monthly fee. I’ve never paid any kind of fee for a credit card AT ALL, and I routinely defer payment for up to a month on all of my purchases thanks to the card, which means my bank is putting up a 30 day loan for me for nothing.

    Precisely my point.

    And here is the thing. Banks are not going to start fucking people like you because of this change to the law, because your answer will be simple- get bent. You will rip up your card and say to hell with the company.

    More than likely what will happen is that rather than doing business with large credit card issuers, more people will start getting credit cards from their regional bank that they already do business with, who is under no such pressure to charge fees for good credit risks they are already doing business with. Likewise, creditors will stop lending money to people who should not have credit cards in the first place. Like, for example, people who are unemployed, underage kids, or Daryn Kagan’s dog.

    Likewise, they probably won’t have obscene profits anymore. Just really good ones.

    I fail to see how any of this is bad.

  96. 96
    Scott says:

    @Laura W:

    Laura,
    Bank of America sent me a note announcing my 9.9 fixed rate was hence forth a variable rate of some base plus 11.5%.
    New rate: 15+ %. I have an excellent FICO score, No missed payments to anybody. So I called them and was told you may reject the change and pay off your balance at the fixed rate. But, if you do, DO NOT USE the card or automatically every thing goes to 15+%. The rep said BA was doing that across the board. Now, in the last few months I had been paying down our balance as a conservative move given the state of the economy. The rep said that had no effect on the decision…
    So I asked for the payoff balance and canceled the card. In the past when one threatened to cancel you were immediately switched to an account savior who offered attractive options.
    Not this time. rep says OK I canceled your card. BTW, had the account for 8 years.
    Bottom line they don’t want good customers; just the high balance minimum payers….
    Cheers,

    S

  97. 97
    Nellcote says:

    OT: Michael Savage turns on Rush!

    SAVAGE: And yet here in America, I’ve had some people come to my aid. They see the bigger picture. They’re not like [Bill] O’Reilly; they’re not like Limbaugh, who’s the biggest disappointment of all. Limbaugh has turned out to be the biggest phony of all of them, all of them. Amongst all of them, he is the biggest fraud. Rush Limbaugh is a fraud. When he was accused of the drug usage, I supported him. But that man is a one-way street. It’s all about him. He’s in it for nobody but himself.

  98. 98
    John Cole says:

    @Little Dreamer: It was part of the cirrus network.

  99. 99
    Shawn in ShowMe says:

    And that extra month does add up – I’ve bought cars with my credit card, and having 30 days of that money sitting in the bank really does pay off

    What bank are you using where 30 days sitting there really pays off? I need to move my account there ;-)

  100. 100
    DarrenG says:

    The problem with merchant fees is that it is now effectively a sales tax paid to a handful of corporations. I have a problem with that. Anything that looks that much like a tax should be nationalized, indexed to actual expenses, and actually called a tax. It’s a system that is impossible to opt out.

    Of course it’s possible to opt-out. There are plenty of businesses that don’t accept plastic.

    And for the rest of us, we make the decision on purely financial reasons (i.e. we make more money accepting cards than we do by not accepting them), and use as much leverage as we can muster to negotiate the best rates among the various processing companies.

    …and the thought of nationalizing the card processors is going to give me nightmares for weeks (cf. 1970s Ma Bell).

  101. 101
    Laura W says:

    @joes527:

    Someone gets your debit card number and pin in any way – they can clean out your account and it is all your problem.

    This is SUCH an important point and is the reason I stopped using my debit card on amazon, paypal, etc. I use only a Discover card online now. A while back I noticed 3 really bogus $1 charges on my Wachovia bank statement (that I check online every morning), being run thru my debit card. The merchant names were really bizarre and tied to something like Ancestry Tree.com? Like I care about my roots, to begin with? and iTunes! I’ve never paid a dime to iTunes.

    I did a ton of googling and quickly saw it was a very prevalent scam whereby they got my debit # online somewhere, ran a pre-auth for $1, so they could then follow up with hundreds of dollars worth of withdrawls. Wachovia worked with me and immediately canceled the old card and issued a new one. All a hassle, to be sure, but I will never use my debit card tied directly to my main checking account online again.

    Much like John will never mop himself into the bathtub naked again.
    Once burned, twice shy.

  102. 102
    Dave C says:

    I’m 26 years old and have one credit card with no balance. I only have it for emergencies and the occasional time when I forget to transfer money from my savings to my checking in time to pay my car insurance bill! :) Like others, the minute the credit card company wants to start charging me anything other than interest for late payments, I’ll find a new credit card company.

  103. 103
    Don says:

    This bill means diddly-squat without a usury provision. It’s unbelievably offensive to me that we’re in a situation where individual states are having to pass laws placing limits and putting these sleazy payday loan places but no such limit exists for Visa/MC.

  104. 104
    Shawn in ShowMe says:

    In the past when one threatened to cancel you were immediately switched to an account savior who offered attractive options.
    Not this time. rep says OK I canceled your card.

    I had the same experience when I cancelled my card with Washington Mutual (now JP Morgan Chase) earlier this month. It looks like the days of putting up a fight to keep low-profit customers is over.

  105. 105
    JL says:

    Since I am refinishing a house, I use my credit card which I pay off monthly for the points. The points are used for gift cards that I use at the local hd. I don’t mind paying a small annual fee but if the rewards disappear, I would only use the card for emergencies. Small businesses might benefit from the changes because I don’t think that I am alone in my thinking.

  106. 106
    Martin says:

    What bank are you using where 30 days sitting there really pays off? I need to move my account there ;-)

    Well, it used to pay off better… Right now we’re doing a half-dozen revolving 6 month add-on CDs at about 2.5%. Even that shitty rate for a month turns $30K into dinner and a movie for my wife and I.

  107. 107
    TenguPhule says:

    Honestly, I think credit card companies should dump the 30 day grace period on interest rates.

    Never! What would be the point of having credit then?

    They need to extend it to 45 days, if anything, seeing as how they love to mail the bill late.

  108. 108
    Martin says:

    There are plenty of businesses that don’t accept plastic.

    In Southern California? Are you fucking kidding me?

  109. 109
    Eric K says:

    Olliander,

    They all know that will be removed in the reconciliation process. Coburn gets his pet issue in the bill and he’ll probably send fund raising letters to gun nut groups and tout it.

  110. 110
    Jess says:

    @Laura W:

    I’ve been really happy with my Credo account. I charged up a boatload on it when I first got it (moving expenses and setting up a new household), and even went over my limit, and they were very nice about it and kept my rates low–they’ve stayed at 9.9% for the last two years. It is through BofA, but I guess Credo calls the shots regarding rates and fees.

  111. 111
    JenJen says:

    @Laura W: It is an important point. My bank’s debit card, like most major-brand cards, is a zero liability card, which is all well and good, but you’re right; attaching it to your bank account is scary business. The card issuer seems obligated by contract to come through, eventually, on unauthorized charges, but it’s the “between here and then” that counts. I have a bit in checking and a bit in savings though, and can move it around fee-less, so my entire cash-in-hand is never fully-exposed to debit card shenanigans, I think…

    I do like the “rewards” that come even with a branded debit card. I use the rewards to offset my Yankee Candle habit, personally.

    On the non-fraudulent front, again, don’t give debit cards to hotel or rental car front desks. Ever. Don’t. Seriously.

    I’m going to look into this Credo thing. They’ll buy out your contract up to $200?!

  112. 112
    TenguPhule says:

    On the non-fraudulent front, again, don’t give debit cards to hotel or rental car front desks. Ever. Don’t. Seriously.

    As well tell a bunch of wizards not to open that thing built by Bloody Stupid Johnson.

  113. 113
    Comrade Darkness says:

    @Scott, unfortunately your credit score would take a hit because you get a bonus for length of time you’ve had the oldest card, but taking a stand is worth it.

  114. 114
    joes527 says:

    @Martin:

    It’s a system that is impossible to opt out.

    Challenging != impossible.

    Ask Arco.

    All the gas stations used to have separate cash and credit prices. They would just tack the credit card fees back onto the credit price. Now, they just let cash customers subsidize the credit customers.

  115. 115
    Comrade Darkness says:

    @JL: We would still use ours without the bonus deal. I hate carrying cash, and I like the zero liability and the full accounting of where the money got spent if a receipt gets lost.

    We’ve been having serious issues with paypal, so ALL of our online shopping has gone over to credit cards because of the zero risk. They call a lot asking if we really did what their computers say we did, but now that our phones are all VOIP and follow us, this is okay.

  116. 116
    Laura W says:

    @Little Dreamer:

    They didn’t use my pin and wipe out my account, but, they did charge up a shitload of money and I got it back.

    @gopher2b:

    This is actually not true. Its on the bank to verify identity. This also happened to me…someone got a lot of money out of my account before I knew and the bank fully refunded it once they verified it was not me (I’m assuming they looked at the photos).

    OK but where this becomes difficult is if you run your account close and there is not a lot of float money to cover these robberies. Let’s say you’ve paid all your bills and rent and have $200 left for food and some asshole helps himself to your debit card. All those bills bounce. Sure the bank will work with you to make good on the bad checks and reverse all those $20/check overdraft fees, but at what price to your sanity? How many hours on the phone have you wasted telling your creditors it wasn’t your fault and that you’ll send them another “really good” check? Not everyone carries a huge balance in their checking.

    Listen, I use my debit card on average 2/day. But only in local stores, gas stations, etc. Never a problem. The point is, don’t use it online. Maybe I’m just misunderstanding the points and you’re saying what I’m saying. I have a headache. I probably need more wine. This subject gets me all wound up.

  117. 117
    joes527 says:

    @JenJen:

    The card issuer seems obligated by contract to come through, eventually, on unauthorized charges

    Banks assume with debit cards that all transactions where the pin was provided are authorized. It is up to the consumer to prove that transactions were unauthorized. (and by prove, I mean *prove*) Unless and until the consumer can prove to the card companies satisfaction that it was unauthorized, they will mark it down as an authorized transaction and your money is gone.

  118. 118
    Martin says:

    What would be the point of having credit then?

    To actually *use* the credit. See, I don’t use it. I use it as a 30-day deferred debit card. As it is, anyone with a balance is getting charged interest the moment something hits the card, but not me, I get a free ride for a month.

    So, what should be happening is that I would use my debit card for all the things that I usually use my credit card for, and pull out the credit card in emergencies when I need to buy something that I don’t have enough cash for.

    But that’s my point in a nutshell – I don’t need the credit. A lot of people don’t need it, but everyone subsidizes us because we’re paying the least into the system.

  119. 119
    DarrenG says:

    There are plenty of businesses that don’t accept plastic.

    In Southern California? Are you fucking kidding me?

    Sure. Think low-end, high-end, and illegal. Does your favorite taco stand, Ferrari dealer, or weed connection take Visa?

  120. 120
    JL says:

    @Comrade Darkness: You’re correct. I always use my credit card online. I just don’t do a lot of shopping anywhere except at the local HD at this point. That will of course change when I sell my house for a large profit and become a woman of leisure. lol

  121. 121
    joes527 says:

    @Martin:

    … To actually use the credit. …

    Use a credit card for credit? Are you insane? The interest rate will kill you.

  122. 122
    Laura W says:

    @John Cole:

    or Daryn Kagan’s dog.

    Did her dog get that offer because she slept with Rush?
    ‘Cuz my dog is looking at me kinda weird from her place at my feet right now thinking about the foam bed she could buy for herself on Overstock.com if I could work some kind of deal like that for her.

  123. 123
    Martin says:

    Let’s say you’ve paid all your bills and rent and have $200 left for food and some asshole helps himself to your debit card. All those bills bounce. Sure the bank will work with you to make good on the bad checks and reverse all those $20/check overdraft fees, but at what price to your sanity?

    Online bill pay really needs to go along for the ride, but you raise a good point. With the online bill pay, the funds are usually frozen immediately. They still earn interest until they are transferred, but the available balance is reduced so it can’t get overdrawn.

    We’re down to about one check per month on average. Our current checkbook ledger still shows checks we wrote when our son was born. He’s 11 now. I estimate we’ll still be using the same ledger when our 8 year old daughter goes off to college.

  124. 124
    joes527 says:

    @DarrenG:

    Does your favorite taco stand, Ferrari dealer, or weed connection take Visa?

    You say that like they are three different places.

  125. 125
    JenJen says:

    @joes527: Fair enough, and as LauraW said, I think using your debit card online is a tricky proposition and caution is advised. Paypal helps to solve that problem in my experience.

    At any rate, I’ve never, ever provided my PIN during any online or other transaction. Does that happen, for serious?

  126. 126
    Old Gringo says:

    Sure. Think low-end, high-end, and illegal. Does your favorite taco stand, Ferrari dealer, or weed connection take Visa?

    Call girls and escorts do. I do recall Jerry Springer paid a hooker with a personal check once. I think he was the mayor at the time.

  127. 127
    JL says:

    Probably ten years ago, I was a victim of credit card theft. Fortunately a Sears rep contacted me about someone trying to open an account in my name. I had a Sears card but had not used it in years. Anyway I called Equifax and got a list of companies checking my credit rating and issuing cards. There were five major credit card companies and I personally called each one to put a stop on it. MBNA was the only company that I could not reach someone directly. They kept switching me to other people. It is quite amazing how some can spend 10,000 within a few hours. An MBNA detective called a few times and when I pointed out that my long distance phone bill showed that I tried to contact them and I’m sorry but they were out of luck, the phone calls stopped. Actually I said that if my credit was affected, I would sue them, then the calls stopped.

  128. 128

    @DarrenG:

    There are plenty of businesses that don’t accept plastic.

    outside of Waffle House, what are those?

  129. 129
    JL says:

    @Laura W: Sleeping with Rush has never been part of my fantasy … ICK What was she thinking?

  130. 130
    Martin says:

    Does your favorite taco stand, Ferrari dealer, or weed connection take Visa?

    Yes, yes, and probably.

    The run down concrete bunker the next town over that must have a dozen health code violations and makes the worlds best burritos takes Visa. Nobody there speaks english, but they have a merchant license.

    I can’t specifically vouch for Ferrari (we have several dealerships nearby) but I know Honda does, and I can’t imagine Ferrari not catering to a payment method. I know someone who bought a Bentley recently. I’ll ask her if she paid with a credit card. I know she doesn’t have a loan, so it’s likely assuming she has that kind of limit. Honda is less likely to take the card, to be honest, and they were not happy when I used it last time.

    I’ve not bought weed in two decades but I’d put money that within 24 hours I could buy some with my AmEx.

  131. 131
    JenJen says:

    @arguingwithsignposts: Actually, restaurants that operate on a cash-only basis are among the best restaurants in any given city. Quite serious, here. Look, or better yet, ask around your own town; I bet you’ll find it worth the hunt.

    @Martin:

    I’ve not bought weed in two decades but I’d put money that within 24 hours I could buy some with my AmEx.

    Am I alone in wishing you’d go through with the experiment and report back? ;-)

  132. 132
    Martin says:

    You say that like they are three different places.

    I can see tacos+weed and Ferraris+weed, but not tacos+Ferraris.

    What a country!

  133. 133
    Laura W says:

    @JL: No, it’s not my fantasy for me either.
    It’s Leah’s fantasy for me, however, now that she saw John’s link and thinks it might score her some shiny plastic.
    I hope for your sake Moxie is not at your feet.

  134. 134
    MikeJ says:

    I’ve not bought weed in two decades but I’d put money that within 24 hours I could buy some with my AmEx.

    I’ll order a pizza and switch the TV over to on demand. Come on over.

  135. 135
    Don says:

    Listen, I use my debit card on average 2/day. But only in local stores, gas stations, etc. Never a problem. The point is, don’t use it online

    You are so much more likely to get skimmed by a human than you are to have an issue with charges to Amazon, Paypal or Google Checkout. Admittedly there is a potential -long-term- vulnerability to an online use (they store the number and have a data breach X days/weeks/years down the road), but on the whole credit fraud happens as a result of local bad actors, not online folk.

  136. 136
    Rosali says:

    Serious question here- Does anyone know Joe Biden’s position on the CC reform? I know that, as VP, he has no say on bills but I’d like to know if he’s changed his mind since he so zealously represented the CC companies, most of which were Delaware corporation.

  137. 137
    Dennis-SGMM says:

    @Martin:

    I can see tacos+weed and Ferraris+weed, but not tacos+Ferraris.

    You’ve never been to El Monte, California. Tacos + weed + Ferraris + weapons. It’s the ultimate in one-stop shopping.

  138. 138
    MikeJ says:

    I’d like to know if he’s changed his mind since he so zealously represented the CC companies, most of which were Delaware corporation.

    I thought getting him out of the senate for these votes was the single best thing about naming him veep.

  139. 139
    Martin says:

    You’ve never been to El Monte, California.

    My wife grew up in El Monte, actually. Graduated from Arroyo High. And no, I’ve never actually been there since she never found a good reason to return once her parents moved out.

  140. 140
    JL says:

    @Laura W: Nah, Moxie went Galt, years ago and has been resting on her favorite chair.

  141. 141
    Old Gringo says:

    The Credit Card industry moved to the Dakotas some time back. Someone here must have the facts on that. Processing, or something?

    Voting against the Senate measure were GOP Sens. Lamar Alexander of Tennessee, Robert Bennett of Utah, Jon Kyl of Arizona and John Thune of South Dakota, as well as Democratic Sen. Tim Johnson of South Dakota.

  142. 142
    Woody says:

    It was, literally, the least they could do…

  143. 143
    Woody says:

    Martin:

    I’ve not bought weed in two decades but I’d put money that within 24 hours I could buy some with my AmEx.

    I don’t accept plastic. Nothing but cash or barter…

  144. 144
    John D. says:

    @arguingwithsignposts:
    Waffle House takes plastic now.

  145. 145
    Martin says:

    Processing, or something?

    Tax breaks and cost of living. The same reasons they previously went to Delaware.

  146. 146
    The Very Reverend Battleaxe of Knowledge says:

    @Old Gringo:

    The Credit Card industry moved to the Dakotas some time back. Someone here must have the facts on that. Processing, or something?

    South Dakota, in particular, allows them to charge any interest rate they want to. I still remember over 20 years ago, getting my MasterCard bill and discovering they’d moved to SD and raised my interest rate enormously.

    Seriously, this is something that needs reforming. If they expect mail-order companies to nick you for your state’s sales tax (not theirs,) then credit card companies should damn well be required to abide by your state’s interest ceiling, not theirs!

  147. 147
    Rosali says:

    I’m still waiting for the repeal of the 2005 bankruptcy bill with its draconian provisions that allow CC debts to continue.

  148. 148
    Kiran says:

    No one points out that if the credit card industry could get away with charging customers who don’t keep a revolving balance a fee … THEY ALREADY WOULD.

  149. 149

    @Laura W:

    Does that mean you’d be willing to sleep with Rush? Say it ain’t so, please!

  150. 150

    @Laura W:

    I am very discriminating about where I choose to use plastic online. I would never provide a pin number if asked and I do have a paypal account which I haven’t used in ages. I also don’t buy much anymore.

  151. 151
    Laura W says:

    @Little Dreamer: Oh Geez Louise no. It was all my dog’s idea! And she is totally insane. “What’s in it for me?” is pretty much her life’s mantra.

  152. 152
    The Other Steve says:

    Credit Cards were the worlds biggest Ponzi scheme. Poor people would borrow money from banks to pay fees to banks because they racked up their credit cards…

    that is until easy credit was no longer available.

    Now they’re panicking, because the Ponzi scheme has collapsed.

  153. 153
    NonyNony says:

    @John Cole:

    Likewise, they probably won’t have obscene profits anymore. Just really good ones.

    Possible. But equally possible their little Ponzi scheme collapses around their ankles as they’ve been basically sucking people dry for years to shore up bad decisions in other parts of their businesses.

    We’ll see. I wouldn’t be surprised to find out that the credit card industry as we know it is unsustainable without the levels usury built into the system that we’re seeing today. I guess we’ll find out.

    (Personally I’d be quite happy to see local banks as the issuers of choice for credit cards rather than Citibank and Capital One anyway. I’m always in favor of the local business over the giant mega-corp, as they tend to make better long term decisions.)

  154. 154
    peaches says:

    No credit to anonymous liberal for this post. He was hours before you and dealt with the very same exceptions.

    And nothing about the GQ article about Jouhn Walker Lindh.

    Your commenters are getting lazy. Perhaps they are distracted by the new ads or the pretty pictures.

  155. 155
    John Cole says:

    @peaches: If I had known AL posted about it or read his/her post before writing this, I would have credited him. As it is, I read Hot Air and the NY Times.

    It is a big internet.

  156. 156
    Jackie says:

    @Laura W: I hope Monty and Iggy bragging on their foam beds didn’t get you in trouble with your pooch.

  157. 157
    Comrade Kevin says:

    @Dennis-SGMM: El Monte, California. Go for the weed, stay for the kick in the head from the cops.

  158. 158
    Comrade Darkness says:

    @peaches, I ONLY read Balloon Juice.

    It’s much better than Cats.
    I’m going to read it again and again.

  159. 159

    @Don

    You are so much more likely to get skimmed by a human than you are to have an issue with charges to Amazon, Paypal or Google Checkout. Admittedly there is a potential longterm- vulnerability to an online use (they store the number and have a data breach X days/weeks/years down the road), but on the whole credit fraud happens as a result of local bad actors, not online folk.

    Amazon’s credit card security is pretty awesome. Everything about your credit card is tokenized so that no one gets to see all of your CC information. If customer service reps have to do any internal processing involving customer credit cards all they can see is the type of card, the expiration date and the last four digits of the card.

    When I worked at Amazon in the late 90’s I was, for a four month period in 1998, primary website administrator. If anything went wrong with Amazon’s website I was the guy who got the call. At the time I could have shut down all of Amazon.com and taken the company offline if I had wanted to. I had the passwords to the web servers, the back end database servers, all of the servers at the distribution centers and the enable passwords on all of the routers and switches. The one thing I didn’t have was entry into the credit card system, that was on an incredibly tight and well run need to know system rivaling anything used for classified information. Amazon also has a very aggressive fraud department and jumps all over fraudulent orders.

    That being said one of the things we feared most at Amazon aside from our CC security being breached was for another e-retailer to have a CC breach, because a breach at Barnes and Noble or Wal-Mart would have tainted all of us.

  160. 160
    Irony Abounds says:

    You have to wonder about the business model of an industry that requires profits from people who default in use of their product in order to be successful.

    Also, you have to wonder about an industry that relies so much on fine print to obscure all the most important provisions governing the relationship between the industry and its consumers. That alone should tell you it is an industry based not upon providing a quality product but rather about keeping all the bad side effects hidden as much as possible. All the bloated fees and interest rate hikes are akin to the anal leakage and similarly disgusting side effects of a prescription drug, without the prominent disclosure.

  161. 161
    asiangrrlMN says:

    Wow. I don’t use any of the perks on my one credit card. I just use it to charge, and then I pay. I don’t have an Amazon account. Huh. This is all very interesting.

  162. 162
    edmund dantes says:

    Whoa on the debit cards. The difference between a credit card and debit card is you are out the money in your account until the bank decides you didn’t make the charges.

    So what happens when you have a large balance in your checking account waiting for your rent/mortgage check to clear and someone gets ahold of your card number? You need to come up with the extra 1200-2000 (or more dollars that are now frozen) while the bank takes its time figuring out if you charged it. They are in no rush because its not their money on hold. Whereas the credit card is the banks money on hold and they are motivated to figure it out as soon as possible so they can either write it off or start charging you interest.

    The Consumerist has a ton of stories on this stuff. It’s also a pretty good blog to read in general. Occasionally get the crank or two there, but the commenters usually do a good job of pointing out the scamming “consumers”.

  163. 163
    Kim says:

    I made ontime payments on a US Bank Credit Card that I had for 15 years. Most of the time I payed the balance off or paid significantly more than the minimum. My husband ws laid off and I made one payment that was 10 days late. They raised my interest rate on my balance to 29%. I refused to pay it. Fuck the credit card companies and the banks. They are run by a bunch of vultures hiding behind terms like “risk”. That’s just code word for “rip off”.

  164. 164
    over_educated says:

    I’m one of those customers who pays off credit cards every month that credit card companies hate. I’m also one of those consumers who uses a credit card to pay for EVERYTHING that merchants hate. But basically putting all my living expenses on a CC I make literally hundreds (possibly more) of dollars a year in free money merchandise (Christmas time I hit the rewards program and give out gift cards to all my friends/family, saves me a lot of money).

    Of course I am alos a militant jerk about monitoring my interest rate, if I see it go above 9% I call the company and basically make them an offer: lower my rate or I will cancel my card and move to another with a better deal. This is particularily jerkish because I have not paid an interest payment on a CC in over 10 years.

    On reflection, this is not particularily fair or reasonable of me, but I am stingy enough with my money that I will go Galt on any CC company that tries to jack up my fees. That the problem CC will face, the 1/3 of customers who pay off balances every month are most likely like me, and they know if they try anything that business will just evaporate. As such I imagine any changes to the profit model will be on the small business end, as they raise the rates on them and try to get more vigourish from the transactions.

  165. 165
    gopher2b says:

    @The Other Steve:

    Please identify the person/company that forced your or others to get and use a credit card. Once identified, I will personally punch them in the face.

  166. 166
    werewoozle says:

    Personally, I never make online purchases from my checking accounts. Never. At Wells Fargo I get a giftcard for say $500, and use that number (and “gift card” for the name). Wells cards have (had?) a negligible ($2.50) annual service fee and good for a couple of years. However, I was once given a U.S. Bank card that lost that much every month, so shop around. You can also have a checking account (a bank different from your main bank – YOUR LOCAL, INSURED CREDIT UNION!) solely for automatic monthly type deductions and online purchases.

  167. 167
    Eb says:

    Weed with a Visa? Done it multiple times. Fairly regularly as a rather large “tip” on a pizza delivery, and as a solo transaction to someone using an iphone app. What the iPhone guy fronted his sales as, I have no idea.

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