Streams

Credit Debit

Friday, April 24, 2009

Yesterday Barack Obama did what many of us have always dreamed of: he chastised the heads of the credit card industry about their dubious conduct. Congresswoman Carolyn Maloney's, whose "credit card bill of rights" will be up for a house vote soon, discusses how Washington hopes to help the average credit card holder. What would be on your Credit Card Bill of Rights? Comment below!

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Comments [55]

yeaaa

james b -- you doned!

May. 04 2009 09:25 AM
James B from NYC

For the most part, Americans are not poorer than they were 25 years ago, before the arrival of credit card for the masses. Hence, the claim that they cannot 'get by' nowadays without incurring debt on credit cards at usurous interests rates fails to explain why this is so. Standards of living may have stagnated somewhat, but we are not on average poorer than we were 25 years ago - so the plummeting savings rate & increase in propensity for many to live beyond their means has to be explained some other way.

Apr. 24 2009 03:17 PM
James B from NYC

# 50 above: "one should never tell other people what they "should" do" - ok, so stop doin it! (Personally, I don't subscribe to that self-contradictory injunction, so I can keep on at it :)

Apr. 24 2009 03:06 PM
cyndy from new york city

I have read all of the above with great interest.

to the folks who say people should live within their "means"-very hard to do in certain parts of the country. Where I live rent for a studio apt is over $1500. How about employers paying decent wages? Why do 'capatins of industry" i.e. Jamie Dimon, John Thain have to be compensated to the tune of hundreds of million dollars?? What makes them so great?
Their companies are crumbling and they are taking money from taxpayers with one hand and slapping them with the other.

Enough of this type of garbage!! How about if poeple demand their rights? These credit card companies and banks need to be seriously reined in and it has been a long time coming. Keep inundating congressmen and Senators to stop these practices, if they don't-vote them out.

Apr. 24 2009 01:59 PM
peter-- from NJ

James B [49] excerpted:
(James, I see this type argument often... I just picked your post because it concisely listed so many... and I humbly take issue with so much of it- fond regards!)

"... Our saving rate has plummeted & our spending has gotten ahead of our incomes..."

OK, so let's see to it that people have access to 1) a living wage; 2) education that is affordable and assures a rewarding profession; 3) better info so consumers don't overspend on staple goods (if milk is worth $5/gallon, how much should cream cost?) There is a practice in American business to get the consumer to pay whatever they CAN, and Gasoline prices that vary between $2/gallon at one pump and $3 a mile down the street is an example.

"... People need to stop worrying about the 'fine print' in their credit card agreements & start worrying about their propensity to spend more than they can afford to. "

Consumers need to know terms don't change by CC Company whim! and it must be legible.

"... A credit card can be a useful way to consolidate monthly payments, but should hardly ever be used to incur debt on which one will have to pay usurous interest rates."
Almost everyone who carries a balance expects
it to be short-term, but the usurious rates are imposed at-once, frustrating that goal.

"... We got along just fine without credit cards until the early 1980s when they burst upon the scene when the rules on usury were abandoned...

(Who's WE?) and simultaneously were marketed to pre-teens and parakeets! Why do you think that is (was)?

"... maybe we should restore those limits on interest rates... "

So... after all that, you agree with the thrust of MOST comments here... Brian, you have another example of CONSENSUS! (let's stop now!)

Apr. 24 2009 01:06 PM
simpsonsmovieblew from

49: "but should hardly ever be used to incur debt"

one should never tell other people what they "should" do

Apr. 24 2009 12:32 PM
James B from NYC

Congresswoman Maloney & President Obama should be leading Americans AWAY from the slavery of debt-living, NOT enabling them to continue living beyond their means by spending more than their incomes. Ever since President Reagan sold America on the idea of tax cuts without spending reduction, our country has been hooked on debt & living beyond our means. Our saving rate has plummeted & our spending has gotten ahead of our incomes. That is the road to poverty - for indviduals as well as the nation. People need to stop worrying about the 'fine print' in their credit card agreements & start worrying about their propensity to spend more than they can afford to. Americans need to re-learn the wisdom of frugality & thrift - spend LESS than they can afford to - i.e. SAVE some money. No poor, or working class or middle class person should be using credit cards to the extent of incurring interest charges at ALL. A credit card can be a useful way to consolidate monthly payments, but should hardly ever be used to incur debt on which one will have to pay usurous interest rates. We got along just fine without credit cards until the early 1980s when they burst upon the scene when the rules on usury were abandoned & the finance industry discovered a way to take advantage of millions of ordinary people's inability to manage their spending to make obscene profits. If people can't control their own financial behavior to avoid becoming enslaved by debt, then maybe we should restore those limits on credit card interest rates so that the finance companies will no find hooking people on debt so profitable & thus will exit the credit card business altogether thus depriving people of this new-found 'right' to spend money they don't have.

Apr. 24 2009 11:41 AM
todd from Cleveland-Just moved from NYC

Michael wants everyone else to take good with the bad except him and those like him. The "smart people" messed up and all they want is the good.

Apr. 24 2009 11:37 AM
peter-- from NJ

I also wanted to include some of my own fine-print:

Theirs is often of smaller, 'condensed' type faces, often gray ink on powder-blue paper, and even 'screened' (composed of dot patterns instead of solid color), all to make it impossible to read by anyone with corrected vision or 'elderly' eyes (in other words: those likely to have a life-savings).
A standard should be established
(i.e., solid Black ink on White paper using Roman [non-condensed] typeface measuring 9 points [1/8 inch tall] and divided into paragraphs and columns. Further, stylistically similar to the [legislation to define: newspaper of record or Federal Register] as used for Public Notices and Requests for Bids.)
Anything failing the above or a (not yet established) visibility test would be rendered Unenforceable.

(Similar standards needed on television disclaimers... but that's another show, Brian!)

My vote for most important goes to:
restore Usury limits!

Apr. 24 2009 11:28 AM
peter-- from NJ

My favorite - Your check gets into the mail on a weekend... arrives a day later than you thought, still within the 'grace' period. But they don't handle late incoming mail there... they have a Second address for overnite deliveries and mail arriving within 3 days of the 'end of grace.' Thus, you owe a late fee, while not being late!
How about ONE ADDRESS serviceable by US MAIL and UPS and FedEX?

(BTW: I never send to the pre-printed address where a second exists... if we all did that, they'd probably go nuts!)

Late-payment "fees" should be X-dollars or 8% of outstanding invoice, whichever is less; not $50 for a $12.00 invoice.

A standard format to invoicing.
This should list:
Statement date, past due amount, late fee, previous balance, interest thereon, payments made, net balance, new charges, interest thereon, new closing balance, minimum payment due and the due date.
Then list credit available, credit in use, credit remaining, and effective APR(s).
Then list (In Bold Type) the name of Payee, and the payment address. (I often find these quite well buried!)
All on one page and in One column similar to an accountant's ledger... not scattered about or separated by columns, paragraphs and pages.
Account activity belongs on the next page.

Make billing dates flexible and consistent... (I want to be billed on the 23rd of this and Every month... make it happen.)

And BEST OF ALL... There should be no restrictions on competition from non-credit payment types - specifically, there should be no clauses on vendors that forbid or restrict the offers of
"Discount for CASH"
(I bet most people aren't even aware of this one!)

Ah, this is just a wishlist, as yet. So, since they make terms retroactive.. make your legislation retroactive!

Apr. 24 2009 11:26 AM
Jack manhattan from jjarendt@msn.com

The last time i had credit card debt (viz. I did not pay down the monthly balance) was ten yrs ago when: 1) it was a recession 2) my ex wife left which forced me to come up with huge legal costs and 3) I was out of work for over a year. I got out of this mess and have been saving to make sure it never happenes again. For years I have had my monthly credit card (really used as a charge card) paid automatically so i never have to think about it. Alas, if everyone had this attitude, credit card companies would go out of business.

Apr. 24 2009 10:48 AM
Elena from NY

To the caller who said we should not be having this discussion, and should simply be more prudent spenders:

This caller clearly is in sympathy with crooked corporate interests. Usury and loan-sharking are illegal in this country, and should always be loudly protested, as should obscure, unfair consumer contracts.

Yes, people should live within their means. But if a person's refrigerator breaks down and they want to continue their rate of savings rather than drain their account, and choose to take a loan of $800 from their credit card company to cover the purchase of a new appliance, that is a responsible decision, regardless of those who would scold or judge them for it.

In the event they make that choice, it IS irresponsible to cheat that consumer (1) by making the payment date unclear, (2) by raising their interest rate without warning, (3) by raising that rate to a usurious level, (4) by changing the billing or payment cycle in an effort to levy exorbitant fees on conscientious borrowers, or (5) by altering the contract in any way that cripples the borrower's ability to uphold their end of the contract, or levies hidden and usurious fees.

Whether you approve or not of your neighbor's spending habits, your neighbor should have better than an icecube's chance in hell of keeping up their end of the borrowing contract, rather than being legally swindled by credit card companies.

Apr. 24 2009 10:41 AM
markBrown from sos-newdeal.blogspot.com

#35:

I agree: I think a GREAT deal of the forthcoming financial crisis (and I have a pretty good prediction track record,seemy blog)

is going to come from what I call the 75/25 rule.
25% of our economy's crash was from the
'subprime mortgage fiasco'

BUT 75% of the crisis (that HAS NOT come yet),
will be from the defaults that are caused by
CONSUMER credit debt that has ALSO been made into "CDO's"
or packaged into MUCH larger pieces of (then sub-divided) loans.

THIS consumer debt that was sold (just like the subprime notes) was sold ALL over the world,. (look here on my blog. I discuss it all over... http://sos-newdeal.blogspot.com/2009/04/failure-of-mediaanalysts-to-seie.html )

I predict that the forthcoming consumer based credit (made into default obligations by merging and then slicing and dicing them)

WILL MAKE the sub-prime fiasco look like a walk in the park.

AND I predicted this over 18 months ago...

And I predicted our current 'depression 2.0'
over 2 years ago

Apr. 24 2009 10:38 AM
Yves Leroux from New Rochelle, NY10804

One thing the Bill of Rights does not mention is the practice of charging outrageously high late payment fees on top of the high interest rate.
I was caught in a station where a sales person at Lord and Taylor talked me into signing up for their credit card as I was purchasing a pair of pantyhose worth about 8 dollars.

I did not pay the 8 dollars balance on time, and got charged a 25 dollars late fee on top of the interest. When trying to call Lord and Taylor, they would not respond, and I did not want to call the Credit card company...

This has been going on for 2 years and now the balance is over 300 as late fees have accumulated, and the credit card company has transferred the file to a credit collector. I tried to call Lord and Taylor to no avail.

This practice is totally unacceptable, and shows that credit cards company have a lot of leeway to impose usury kind of rates and, even worse, use their power to impose high late fees out of proportion with the amount due.

I must say that I have always stayed away from store credit cards, but that time the salesperson was so insistent that I gave in.

I will certainly never do that again...

Apr. 24 2009 10:34 AM
eve from manhattan


I urge that the bill include the right to OPT OUT--remove one's name from all lists that facilitate the marketing of credit cards.

in particular, parents of college-age youth should be able to opt out for them . . . students are the most vulnerable market for these usuerers.

my recommendation: an easy way to join a "do-not-call-or-mail-to-offer-me-or-my-child-credit-cards" list.

i commend ms. maloney on her vigorous pursuit of this measure!

Apr. 24 2009 10:32 AM
Raj from New Jersy

Credit card companies should be banned from targeting any one below the age of 24 - college students. They were charging a college student I know 27%!

Retailers should have the right to charge a lower price if the shopper pays in cash. Some of the gas stations do it. That way only people who want the convinience of a credit card pay more. That will bring down prices.

Thanks.

Apr. 24 2009 10:32 AM
markBrown from sos-newdeal.blogspot.com

#22" payday loans WOULD BE ILLEGAL if a CAP on usury (see my post # 2 for link) were enacted.

It is because of that 1970's supreme court ruling that overturned a 'national' ban on usury, we are in this situation.

For ms. maloney to give the BS answer that it should be up to the states is horse manure.

It is UP TO CONGRESS to overturn decisions by the supreme court. IT IS IN HER TERRITORY.

AND by the way..

BL Producers.:: why dont you contact someone and TRACE the actual causes of the problem (usury...see post #2 for a link to the links of the cause....)

It is utter bs that ms. maloney is not challenged by brian as to whom her finacial campaign donors are.

(more to producers.

Look at my top 10 list: http://sos-newdeal.blogspot.com/2009/02/top-ten-list-what-i-believe-and-want.html

to see why I believe a truth and reconciliation commission (and campaign finance reforms) are the TRUE paths towards solving these problems...
mark brown in nj

Apr. 24 2009 10:30 AM
hjs from 11211

buyer beware. we can live with less credit (and debt)

Apr. 24 2009 10:30 AM
hjs from 11211

glenn
Commonsensical is a word in english

Apr. 24 2009 10:28 AM
Kerrie from Bronx NY

My issue is I have canceled several credit cards but they don't always get canceled. This just happened recently when I called AMEX and canceled a card, then called a week later to find the card was not canceled along with an additional card that I had canceled years ago. BoA and Macy's has done this to me as well. What do you need to do to cancel a card forever?

Apr. 24 2009 10:27 AM
Carl from Long Valley

How many forclosures arer being caused, at least in part, by the credit card problem?
This should help thta crisis also.

Also, increase the minimun payment requirements to help get the balance paid.

Also, I just heard a caller imply that evryone with a balance is irresponsible.
I do not ahve a balance - I pay it every month. BUT, I have a son and a daughter that both have balances becasue they can't get a decent job to help pay the basics of life.

Apr. 24 2009 10:26 AM
adam, james -- from

You can't change the terms on money already borrowed unless you are committed to being an Ahole. Same as changing the price of a burger after it's been eaten.

If cc's business model is based on changing the price after the money has been spent, and they can't think of another way to make money, then they indeed should go out of business. Precisely as the free market has already instructed them to do.

Apr. 24 2009 10:25 AM
markBrown from sos-newdeal.blogspot.com

Ms. Maloney

Your bill does NOTHING without the USUARY limits.

It is just PANDERING to us, and NOT giving us WHAT WE NEED.

Universal default is NOT explicitly prohibited in your bill,

A new USURY Law (as required to overturn the supreme court ruling in the 70's )
IS NOT in your bill

COME CLEAN

...I wish brian and producers would let me back on the show...

WHO are your financial campaign donors??? come clean

Apr. 24 2009 10:24 AM
Alison from Upper West Side

Bank of America reported profits during this past quarter. How much is estimated to be from jacking up consumers credit card interest rates? A lot of people I know with good credit and good payment histories have been subjected to this - we feel the reliable payers have been penalized to help BOA to make up for the massive losses they incurred when they bought JP Morgan. They are refinancing themselves on the backs of good credit card payers and in the process jeopardizing their good consumer base.

Apr. 24 2009 10:24 AM
the truth from bkny

I agree with him too but, that is NOT the way in this Country!

Apr. 24 2009 10:24 AM
sue rosenthal from manhattan

I thank the congresswoman for pursuing this!
The one issue I have--though I haven't read the bill of rights she's proposing (plan to)--is that even if I have 45 days to cancel a credit card:

My understanding is that if I cancel a card and get another one, this may adversely affect my (now good) credit rating. In a certain respect, I don't care, because I always pay on time and don't have to pay the fees. But still...it's a catch 22

Apr. 24 2009 10:24 AM
sclark

Yet another CC company scam for people who pay electronically-

A friend pays her cc online. As she fills out the information, the payment date defaults to day after the due date. She corrects this everytime she makes a payment but for those users that aren't careful; they're considered late.

Apr. 24 2009 10:23 AM
Robert from NYC

Bear in mind it was congress who voted in the laws changing the laws in favor of the banks on these and other issues. I don't know her voting record on this but it was her colleagues who aided in getting these laws passed thanks to Phil Gramm and his friends.

Apr. 24 2009 10:23 AM
Fred Orden from Brooklyn NY

What about a non-credit-card holders' bill of rights? There are many transactions that are impossible to engage in without a credit card, such as renting a car, etc. etc.

Apr. 24 2009 10:23 AM
Colby from Manhattan

I have two credit cards from major banks and have paid them on time for 5 years. Both cards have, within the last two months, raised my interest rates (one from 7.9% to 14% APR, the other from 11.9 to 17.9% APR)

The first I chose to "opt out" and will no longer be using that card. The other I was going to do the same, however, this all affects my credit. I recently checked my credit and one of the factors counting against me was that I had not had a card for a long enough amount of time.

45 days or not, canceling credit cards negatively effects your credit. Can you ask the congresswoman about that?

Apr. 24 2009 10:23 AM
Carl from Long Valley

This is correct and reasonable and would take away the unfair and imoral advantages that have come about by deliberate actions to hurt people and squeeze more money into the pockets of those already taking our money.
This should be positioned as a stimulus friendly item. It will clearly enable real people to spend more on real products and less on interest and fees. This would do more for the economy than any 'shovel ready' project.
Also need to MAKE ther credit industry clearly show the calcualtion of the credit score and make the credit card companies publish you score and the credit report info for you every 6 months, and if they are changing anything regarding your rates.

Apr. 24 2009 10:22 AM
Safiya

Question!

What if you want to go credit card free? If you don't have credit cards you can't establish credit and that affects everything. What is someone to do with the rules changing all the time and no one being able to keep up?

Apr. 24 2009 10:22 AM
the truth from bkny

What good is a 45 day notice if you have been carrying a balance for 6 months?

Very unfair to apply the 13% rate hike to existing balance also!

This is an outrage!

Apr. 24 2009 10:22 AM
Kristy from Morningside Heights

What about payday loans, which have effective interest rates far higher than credit cards and target the lowest income person?

Apr. 24 2009 10:22 AM
William Hampton-Sosa from Washington Heights

One thing I haven't heard discussed has to do with due dates. If your payment is late because the post office took a little longer than usual to deliver your payment, you get penalized. How about using the post mark to determine whether you payment is late. This works for the IRS.

Apr. 24 2009 10:22 AM
Robert from NYC

The only difference between banks and the mafia these days is that the banks don't pay their taxes by way of legal loop holes!!!

Apr. 24 2009 10:21 AM
markBrown from sos-newdeal.blogspot.com

As I said in post # 2 (see reference)

USUARY WAS the law of the land UNTIL the 1970's when the supreme court allowed the STATEs to
set their own laws, leading to this sad state of financial ruin

Ms. Maloney:

Stop accepting $$ from the banks, and TELL us

WHAT FINANCIAL companies give YOU campaign cash

AND WHY won't you UNDO this law caused by the SUPREME court
(like congress is REQUIRED to do???

these companies are OUT of control

COME CLEAN and tell us your donors NOW

Apr. 24 2009 10:21 AM
Che from Soho

why not institute a rate cap formula based on the card-holders income. This way different economic groups can pay to play in their own rate zones...

Apr. 24 2009 10:21 AM
Peter from manhattan

My credit card bill of rights would include a provision aimed at facilitating private enforcement. Today, most credit card agreements force all disputes between cc company and client to binding arbitration, where class actions are not allowed. The credit card companies know that no one will go to the expense of arbitrating over a $100 or $200 dispute.

Apr. 24 2009 10:21 AM
David Rakowski

Until the late 1970's there was a nationwide cap on interest rates.

Apr. 24 2009 10:21 AM
Rachel from UWS

They should not be allowed to cut the amount in your line of credit without at least 30 days notice--they did it to me with no notice, despite my excellent credit rating, perfect payment record, etc.

Apr. 24 2009 10:21 AM
Alison from Upper West Side

I am angry with Bank of America and Amex for raising my interest to 25% after being a very long time customer (over 36 years) and having an excellent payment history and high credit rating. I'd like to cancel both but, I understand that doing so will impact my credit rating adversely. Will the new bill allow consumers who owe nothing to cancel without any reprcussions to their credit rating?

Apr. 24 2009 10:20 AM
superf88 from

Brian ... Please persist:

1. Maximum national usury rates (she didn't answer the question

2. Link between minimum monthly payment and final payment date of balance plus interest.

She is talking tough but these are the 2 main no-discussion points of the industry -- As she well knows.

Apr. 24 2009 10:19 AM
Mitch from Manhattan

In addition to being a consumer, I am also a vendor (in healthcare) that accepts credit cards. One of the outrages that I think few are aware of is that after credit card companies got us all hooked on Rewards Cards (myself included) they began to pass along the cost of the rewards to vendors. My agreement with my credit card processor allows them to charge up to 5 or 6 percent per transaction on a rewards card. While most fees are generally negotiable, these fees are not. These fees are far higher than what they give back in rewards, and I think that few people are aware that the credit card companies are not covering the cost of the rewards programs -- the vendors are.

Apr. 24 2009 10:17 AM
Adam

I think the credit cards should be allowed to do what they want as long as there's 60 days notice. People don't have a 'right' to credit cards, nor a 'duty' to use them.

If people want fixed rates they should use a reputable company or better, get a proper loan from a bank.

Apr. 24 2009 10:17 AM
Pamela from Midtown

Credit cards companies have been raising interest knowing about this Bill.
Does this Bill will propose to reduce the outrageous 30%; they suddenly increased for the last months? Bank of America Credit Card: interest was 8%, and then went up to 19% now it is 24%. I have never - never- been late with my payments. I called them to ask about it. I was told they are not offering any lower rate.

Apr. 24 2009 10:16 AM
qew from NJ

bank of america

just last month sent out a notice -- pamphlet in 2 point type -- raising interest rates on good accounts by 10 percent UNLESS you call them and ask them NOT to!

Apr. 24 2009 10:16 AM
Glenn from Manhattan

It's a privlege and a choice to borrow money, not a right and a need. People have a choice to spend or not spend money.

And its a competitive marketplace, so if you don't like the terms of one company, then get a different one, or borrow the money at a regular bank and pay it back like you would a regular loan (without complicated rules that credit cards impose).

The ease of use of credit cards allows ease of fraud, by crooks, and such helps to drive up rates and fees that banks charge. Got a solution to stop credit card fraud?

Apr. 24 2009 10:16 AM
cyndy from new york city

Why are Credit Card Companies being allowed to continue with their interest rates and other penalties and not being curbed until June 2010?

Why is this legislation not going into effect immediately? This will only cause more problems with an already terrible economy.

These companies need to be stopped now
They are worse than loansharks!!

Apr. 24 2009 10:15 AM
Voter from Brooklyn

Current usury and racketeering laws don't protect against any of this?

Apr. 24 2009 10:14 AM
markBrown from sos-newdeal.blogspot.com

Ms Maloney. after reading the pdf, I say:

USUARY Limits.

Remove Universal Default

adding These two items will STOP
95% of all the abuses.

(oh, and changing the billing date stuff too.)

Apr. 24 2009 10:12 AM
rick

cap interest rates, retroactively, at 15%; cap, or eliminate, late fees. several of these companies now charge late fees of 40, 50 dollars.

Apr. 24 2009 10:10 AM
Glenn from Manhattan

Commonsensical? Cmon Barack, speak English

Apr. 24 2009 10:10 AM
markBrown from sos-newdeal.blogspot.com

number one on my 'consumer bill of rights'
Ban Usuary NATIONWIDE. anything over 24%.

As I said in my blog post last week:( http://sos-newdeal.blogspot.com/2009/04/proposal-economic-reform-very-simple.html )

This came about from a lawsuit in the supreme court in the 1970's.

Bring it back, MOST abusive stuff goes away.

NEXT:

Second: Eliminate Universal default

A CEO/Shareholder bill of rights.
All shareholders should demand that CEO's no longer take more then 20 times the least paid salary of their least paid employee (contractor).

This will help equalizze the country.

Nex

Apr. 24 2009 10:08 AM
superf88

So long as interest rates on balances remain uncapped, Bank of America, Citi and America's other Welfare Kings will base their business models on their corporate activities taking place not in their Wall Street offices but those on Capitol Hill.

Indeed, they are wise to do so: Middle class usury is the last, great untapped profit center and can be fully exploited only with U.S. regulators as their full partner.

While Rep. Maloney's "Bill of Rights" does address a number of injustices, the biggest fix would be consists of simply putting a cap the amount of annual interest that can be charged. And that remains missing.

Another omission I noticed relates not to fairness but ordinary transparency: where is that link, in plain ink, between the monthly payments and the date of the final payment?

From the consumer's perspective, after all, isn't this the only line in the statement that really matters?

Apr. 24 2009 10:03 AM

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