Because we let them

thecobblerApril 24, 2005

Now that they've bought and paid for new bankruptcy restrictions, the credit card companies are sending out new and more austere regulations. I received mine yesterday.

You'll find an increase in late charges, shorter grace times, and new conditions under which they can charge higher interest.

When you receive these notices pay attention to the changes. A short period of hardship can result in their total ownership of your life and property.

They can have their way with us because we let them. If you can get by without them, it's time to cancel your cards. If you can't do it now, it's time to make plans to get out from under their control.

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yep, the credit card companys are in this administrations back pockets. Credit card companys aren't the only thing to put us all in debt. Health care as well, if you end up very ill, you may as well say goodbye to your financial life. We all voted him in now we suffer.

    Bookmark   April 24, 2005 at 3:46PM
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Absolutely. This is exactly what the credit card companies have paid billions of dollars to get, and now they're preparing to reap the rewards. Here are a couple of other things consumers could consider doing:

1. If you anticipate that you may need to file bankruptcy, do it now, before the changes to the law take effect.
2. Cut 'em up. Do as Thecobbler advised and read those terms carefully, and cut up the cards that have unfavorable changes.
3. If you owe a lot of money on a credit card and can't just cancel it now, follow the instructions for rejecting the new terms on the leaflet they send to advise you of the "Important Changes to Your Account." You can always do this. If you reject the new terms, they will suspend your charging privileges on that card, but you will be able to repay the existing balance under the old terms. Of course, this won't change the effect that the new bankruptcy law would have on you if you needed to go that far, but it will keep the higher late charges or other new terms from applying to you. Usually all you have to do is send them a letter stating that you reject the new terms. There will be an address given on the leaflet.

Marie26, you're so right. Few people realize how many Americans are just one sickness or accident away from complete financial ruin.

One problem that the credit card companies may face (I hope so) is that these new bankruptcy laws will make consumers far less eager to go into hock to buy stuff they don't really need. In essence, they may have cut their own throats. Under the old system, yes, some did abuse bankruptcy, but credit card companies could have cut their bankruptcy losses very easily by simply refusing to grant ever more credit to people who were already overextended. But instead they've possibly created a climate in which people will be far less eager to avail themselves of easy credit, and in so doing may have reduced the demand for credit.

    Bookmark   April 24, 2005 at 6:03PM
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Good news for the rich though, loopholes were left in the new law that allows the wealthy to protect their assets.

Here is a link that might be useful: Washington Post article

    Bookmark   April 25, 2005 at 5:38PM
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Marie 26,

I take it that you mean that the credit card companies and other lenders have this administration in their back pockets, no?

That the admin. pretty well does what they ask?

It costs until millions just to run for the nomination for President and there are huge costs associated with running any political campaign - guess who pays?

Then the elected officials say that they have no idea who has been paying the bills - that's operated by other people in their campaigns.

Yeah, right.

He who pays the piper - expects to dance to an attractive tune. That s/he chooses, or at least has a major choice in choosing.

This business of the coporations becoming so huge frightens me. And now they are operating on a global basis.

If they screw the system up - where can we go?

Some religious folks don't seem to worry about squandering our precious resources - they seem to feel that just means that Christ's return is getting that much closer. That sounds lile a pile of barnyard by-product, to me.

joyful guy

    Bookmark   April 26, 2005 at 5:31PM
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i meant that credit card companys are in bushs pockets. the rich get richer....

i do think some people who could pay were using the bankrupcy system to help them. but now they won't be able to. but the really rich will walk away without a scratch.

and their is all kind of debt we dont forsee. losing our jobs-to oversea workers. health care costs. rising cost of products and gas, which our wages aren't catching up to.

we let other countries get away with billions in debt to us. but thats ok right?

    Bookmark   April 27, 2005 at 3:31PM
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I see lots of carping about the credit card companies and the administration...

But I've never had an agent from the government or a credit card company force me to use credit to live beyond my means as so many people have done in this country.

Over the years I've met a frightening number of people (I used to work in the financial services industry) whose entire plan was to ride as long and as high on credit as they could, and then declare bankruptcy.

Yes, many people are wiped out by circumstances beyond their control, but it's the other people, the people who viewed bankruptcy as a viable financial strategy, who have caused the real problems.

    Bookmark   April 28, 2005 at 1:28PM
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It was MBNA who was the largest corporate contributor to the Bush campaign.

Anyway, with supposedly less risk of default, do you think the interest rates will go down? I'm not holding my breath.

    Bookmark   April 28, 2005 at 2:54PM
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Yep, MBNA is the first company to ever contribute to a political campaign...

As for interest rates, interest rates will be what the market will bear using the principle of risk based lending inside the umbrella of federal reserve rates. Those with good credit ratings will get the best rates, those with bad credit ratings will get poorer rates.

One thing I should have mentioned is that credit companies do deserve much of the blame for the current credit/bankruptcy situation in the United States. Their lending practices border on the predatory, and they largely created the situation that exists today.

As perverse as it sounds, people with worse credit ratings are marketed more heavily, but at much higher rates.

That doesn't, however, remove the personal responsibility that borrowers should exercise in the use of credit.

    Bookmark   April 28, 2005 at 3:19PM
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Without getting into the political side of this, it is true. Do watch your new truth in lending and privacy statements you get from the credit card companies, They are putting in all sorts of new fees etc. One of the companies said finance charges will be listed, and collected even if you pay up your charges every month, until you have gone 2 months then they will be refunded.

That card will be cut up, letter sent, to close the account, asking them to notify all three credit bureaus that account was closed by customer.

    Bookmark   April 30, 2005 at 4:57PM
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Yes, it is worthwhile to keep in mind that the U.S. bankruptcy system always was one of the most liberal in the world. The idea that a consumer could walk into the bankruptcy trustee's office debt-ridden and walk out a few minutes later debt-free is pretty amazing when you think about it. And obviously there is a downside to it, since everyone knows that a lot of bankruptcies are the result of reckless spending.

Yet the problem with "reforming" the bankruptcy code, as I see it, is that it amounts to changing the rules in the middle of the game. Credit card companies are far from stupid -- they're among the most profitable industries in American business today. They know from the FICO scores that if they extend X dollars of credit to a consumer with a FICO score of Y, the percentage who will default on that is Z. That's the main purpose of FICO scores, in fact.

Yet despite the higher default rate among debtors with poorer credit histories, many creditors actively court these consumers because they know that these people are more eager to take credit if they can get it, and most important of all, they often do not even ask what the interest rate is. So, in short, even though a certain (known in advance) percentage of these people will default, the credit card companies still make a killing on that segment of the business because they're collecting such high interest rates and fees from those who do pay. If the credit card companies had any interest at all in lowering the rate of customers who defaulted, they could have achieved that simply and with no new legislation just by tightening up their credit requirements a little.

But despite what they said to Congress, they had no interest in lowering the default rate, because not only do they make more money than they lose off of poor credit risks, they can also write off those bad debts. Even better, when it's obvious that a consumer can't pay, they in many cases start piling on huge fees and charges, including ultra-high "penalty" interest rates, so that when they do write off the bad debt, a high percentage of it is no more than fees that have tacked on by the credit card company itself. It's a nice trick to be able to write off $2,000 as a bad debt when a consumer may have only actually borrowed $500 from you.

But even that sweet deal wasn't good enough for them. Now they want to tack on those huge fees, penalty interest rates, and other ridiculous charges, and then make the consumer actually pay them. That provides a far better return than simply writing those debts off.

However, you can argue that consumers willingly signed these agreements which provided for these unfavorable terms. True. But they also did so with the assumption in the back of their mind that the bankruptcy law could provide some relief if needed. That's why I would have no problem with tightening the bankruptcy law if it were written so that the new rules applied only to credit obtained after the passage of the new law. Credit obtained previously should still be addressed by the old bankruptcy law. They shouldn't be able to change the rules in the middle of the game.

    Bookmark   May 1, 2005 at 1:43PM
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Learning how money works - an interesting hobby.

That should be practised by everyone.

That pays well.

A while ago I heard that losses that one sustains in the stock market can be called, "tuition", in the vernacular - unfortunately, not in the tax system.

As cowboyind said, many people asking for credit don't consideer rates of interest - just how much they must pay each month.

Their high interest rates, plus fees, late charges, etc. could also be called, "tuition", I guess.

If one added up all of those costs annually and sent them a message saying that was what they'd paid that year for being unconcerned with how their money works, they'd be surprised, I suppose. Tuition that they'd paid for courses that they didn't take, from which they'd learned (at least almost) nothing.

Have you figued a way that someone can twist someone else's arm and force them to become un-stupid?

Have a great Mother's Day, all.

ole joyful

    Bookmark   May 7, 2005 at 4:52PM
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I don't think the credit card industry is in the present administration's back pocket. Au contraire! I think it's precisely the reverse. But that's just my opinion.

Many of my friends cut up their MBNA cards and cancelled their accounts after the election. I'm a stern advocate of financial responsibility (I'm appalled by the USA's national debt, my congressmen and senators know that, do your's?). Bankruptcy is a very serious thing indeed, needed by some, abused by others; but I don't believe the number of abuses are nearly what kframe 19 would have us believe; I believe need far outweighs fraud. But that's my opinion; I don't work in financial services and have never bounced a check, and know how much I can spend at any given moment... I'm very conservative when it comes to money. I work too hard to squander it foolishly. It was a "no brainer" for me to understand that unsecured debt is "financed" by high interest rates. Whenever a "minimum" payment is displayed it's a foregone conclusion that the "payment" required is going to maximize THEIR interest earnings... duh. Nothing in life is free, kids.

Major corporations run this country. NOT the voters, unless and until they vote with their pocketbooks or with proxy votes as shareholders. Your vote DOES count, but you can't simply cast a ballot and think, "Well, that's it! I've done my civic duty"... learn how the game is played before you say, "deal me in", and after you've received "you hand" be prepared to suffer some losses. The sooner you learn no government really cares about "lookin' out for you" the better off you'll be.

    Bookmark   May 24, 2005 at 5:29PM
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