Wednesday, April 01, 2009

Credit Card Reform

Great that Chris Dodd did a guest post at MLN yesterday on his credit card reform.

But, what happens when the postal service decides not to handle mail 6 days a week anymore?

It's time to get the post office out of the process and revisit this bill
that makes the date of payment the postmark date, not the receipt date.

Of course, the big bank lobby knocked this down, but I say it's time to put it back on the table. That is, unless you completely trust your credit card companies to post a payment to your account the moment it is received to avoid your being charged a late payment and having your interest rate hiked.

And, while we're at it, how about the other sneaky trick in which credit cards are now being canceled for not being used enough, which decreases your available credit, which lowers your almighty credit score, which can then trigger an interest rate hike?

Chris, you're on the right track. Now keep going.

15 comments:

Nopartisan said...

The best credit card plan would be simply to not use them. As a people we should all step back from the consumer society and learn to live without debt. I know people who for example had a 42" plasma television, their neighbor bought a 50" LCD and you guessed it they ran out and bought an even bigger set. Sadly they still haven't finished paying for the first one. Credit cards are nothing more that a form of voluntary servitude, while Dodd's bill addresses some abuses, ultimately it is we who willingly accrue the debt.

VizierVic said...

Credit card companies' playing games with the receipt date has been going on for a long time. A work colleague of mine had a credit card account with Fleet which got transferred to Bank of America with the merger they conducted. BoA processed all of their credit cards in the Carolinas, even though the return address on the credit card statement went to Hartford, CT, Fleet's old payment center. BoA would bundle all of the incoming payments and send them by their own transport (not USPS) to the Carolinas, like, weekly. Of course, some of the payments were credited late, even though they arrived at BoA in Hartford three or four days before the due date. That caused a bit of a dust-up.

Nopartisan said...

Just another reason to cut up the credit cards. Don't play the credit game, it is rigged.

CT Bob said...

Dodd really needs to listen to what his constituents are saying. The MLN live blog was a great step in the right direction.

Oaktown Girl said...

It's all well and good to say "don't use credit cards", and it's easy to point out examples of excessive consumption, but we need some serious reform. These banking/finance companies are unspeakably corrosive to our Democracy, and they need to be confronted directly. Simply wagging the finger at consumers isn't going to get the job done.

Thank you, Kirby! (And love that photo, by the way).

Nopartisan said...

I don't understand the mentality of buying a service or product on credit and then paying interest on that purchase. I have messed my finances up by playing the consumer game, buying on credit and owing my financial freedom to the whims of the credit holders. I understand that it is easy to talk about going credit card free, but the first step is get rid of them and live within your needs. Even if interest was lower the point is we still OWE the money because we bought something when we coudn't afford it. So in the end if we lived simplier and wiser then this issue would just go away. Other than a mortgage and car why would you need to buy anything on credit anyway?

CT Bob said...

Nopartisan, sadly, there are a lot of people who don't show the restraint or good judgment that someone like you possesses. When simply given those kinds of credit terms, they'll take full advantage of them, without considering the consequences. That's why credit card reform is so important, because, just like the mortgage crisis, people can get into trouble when they buy into the idea that the money will always be there.

Believe me, many times in the last five or ten years I've had the opportunity to "step up" to a more expensive home. But with our mortgage paid off on our current home, we're doing much better than a lot of people. Part of that reason is because we didn't simply leap at the chance to upgrade when possible. If my wife or me loses our job, we'll be able to save our home.

I think a large part of the problem is that nearly everyone under the age of 60 has been raised in this "consumer culture", where having that giant flat screen TV is more important than paying for medical insurance. This will change, I think. We're undergoing a massive paradigm shift right now, and my guess is that we'll eventually see something of a return to the common sense economic values that our parents and grandparents prized during and immediately after the Great Depression.

mattw said...

Other than a mortgage and car why would you need to buy anything on credit anyway?

Ever try to buy a plane ticket with cash?

CT Bob said...

Or make a hotel reservation?

Or rent a car?

Or sign up for a pay porn website?

(oops! did I just say that?)

West Haven Bob said...

Glad YOU did!

Nopartisan said...

Not to beat a dead horse, but all the things listed above can be bought with a debit card. You will be spending money you have in your checking account with the convenience of a credit card. Best thing about it? No interest and no cares. But if credit we must have then I agree reform is long overdue.

West Haven Bob said...

Ever try to get a checking account with no credit?

That horse might be dead, but it keeps goin' round and round.....

TrueBlueCT said...

Nopartisan is brilliant.

Out of necessity, a struggling consumer is forced to put his or her car repair on a credit card, (say a blown transmission on a car needed for work), and when BoA jacks their rate from 9% to 29% his solution is that you should never use credit?!!

My solution is that the govt. should re-instate usury laws, preventing a credit card company from charging ungodly interest rates. It's modern-day loan-sharking, and it's friggin' un-American.

Nopartisan said...

Rather than paying interest on endless revolving balances, why not purchase less items not really needed for everyday life? The money saved can go into a rainy day account to pay for emergencies such as car troubles. This is what people such as the post depression generation used to do. It's strange but what I seem to be seeing here is people really just want to charge and have lower interest rates. In the end it's the same result you're spending money you don't have and for many people it's being spent on stuff not really needed. A simplier lifestyle leads to better mental health.

West Haven Bob said...

"Simplicity, simplicity, simplicity" ... as Thoreau once wrote... "Make your affairs as three or four..."

Thanks only partly to the wealthy-oriented policies of the past 30 years, regular Americans have little choice but to maintain at least one or two credit cards and/or credit lines.

I for one have an Amex and a MasterCard, which I use just enough to (a) keep the accounts active; and (b) pay off the balance immediately. I keep these necessary evils specifically in case of emergency.

NoPartisan, I have no problem striving for utopian ideals; we all should do that. However, I am under no illusions that these will -- or even should -- be attained.